The significance of the research can be understood from the fact that how exchange rate effects the economy, inflation and trade of any country. The fluctuation in exchange rate can cause negative impact on the economy and customers might have to pay more prices to purchase the product. When the economy experience decline its effect not only the purchasing power of the customers but also standard of living of the people changes. In short making strategies regarding the exchange rate is important and that is why governments intervene to stable the exchange rate to avoid disastrous impacts. For keeping the exchange rate stable the countries sometimes peg their currency with the dollar so that it won’t float much in the international market.

            Saudi Arabia has Peg its currency with US dollar which does not allow Riyal to float excessively in the market. Since the Riyal is being pegged with US dollar it does not float much in the market which means that much difference in the exchange rate does not occur. In study it will be investigated how the policies of Saudi Government help them to manage the exchange rate and what impact the Saudi Arabia & other countries experience which import oil from Saudi Arabia. The study will provide detail information regarding exchange rate policies of Saudi Arabia and whether it is managing the exchange rate risk effectively or not.

Scope of Study

        The study has vast scope because it is evaluating the exchange rate from various aspects and providing deep insights regarding Saudi Arabian risk management policies. The study is majorly based on Saudi Arabia and its Exchange rate. Moreover various factors are going to be analyzed which have impact on the exchange rate. In simple words the study will investigate how Saudi Arabia is managing the exchange rate and those factors that influence the exchange rate. In addition the recommendation will be provided through which Saudi Arabia can enhance its economy and can manage exchange rate risk efficiently (García, 2017).

Objective of Research

        The aim of this research is to provide deep insights regarding the foreign exchange rate risk mitigation strategy of Saudi Arabia. Along with the policies the current situation of Saudi Arabia is being discussed which provide an overview regarding exchange rate risk management and effects on the economy. The study is focusing on majorly over the foreign exchange rate and how it being influenced by various factors. The exchange rate of any country is influenced by various factors such as trade etc. therefore in order to get clear idea about exchange rate it is important to focus on the factors that affect the exchange rate. As Saudi Arabian economy heavily dependent on oil export the major factor that influence exchange rate is the oil prices. The key Objectives of this research are explained as follows:

Investigating the Saudi Government Policies Regarding Management of Exchange rate Risk

To determine whether policies of Saudi Government have effectively manage exchange rate risk.

To investigate the relationship between oil prices & exchange rate.

Investigating the impact of Saudi Exchange rate on major oil importing countries e.g. United States (Christoffersen, 2011).

Research Questions

        The study is focusing on various key issues which include exchange rate policies, oil prices and factors that influence exchange rate. The research questions will allow to examine various issues which the Saudi Arabia is facing due to their current exchange rate policy. The main research questions which are going to be answered in the study are mentioned below:

How Saudi Arabia is managing its Foreign Exchange rate Risk

How the oil Prices changes impact the Saudi Foreign Exchange Rate

Does the change in Saudi Exchange Rate have any impact on the oil importing countries

How far the policies of Saudi Government proved successful in managing the foreign exchange rate Risk.

References of Significance of research of Exchange Rate of Saudi Arabia & Its Impact on United States

Christoffersen, Peter. 2011. Elements of Financial Risk Management. Academic Press.

García, Francisco Javier Población. 2017. Financial Risk Management: Identification, Measurement and Management. Springer.