The data that is collected to answer the research question is analyzed to develop the results. The results of the study indicates the risk mitigation policies of Saudi Arabia regarding the foreign exchange rate risk. From the past several years Saudi Arabia has pegged its currency against US Dollars. Over the years this policy of Saudi Arabia and other GCC countries prove effective for the countries and through this GCC countries have efficiently managed exchange rate risk. When the currency is pegged with dollar it cannot float from a specific limit which allow country to manage the risk.  However this policy does not prove effective in certain cases which are going to be discussed further in the analysis section.

        In recent years Saudi Arabia is facing the crises of oil prices decline which has decrease the revenue which Saudi Arabia generates from oil exports. Saudi Arabian economy is highly depended on oil exports and due to heavily reliance on oil exports the changes in prices of oils not only effect the exchange rate but also effect the economy of the country. Recently Saudi Arabia economy has faced serious challenges because of oil prices decline. As discussed earlier Saudi Arabia has pegged its currency against US dollar which does not allow to float it independently. The pressure has built up recently to allow Riyal to float so that the decrease in revenue which Saudi Arabia is facing can be managed accordingly (Atrill, 2014).

        The Findings of the research states that the oil prices have significant impact on the exchange rate of Saudi Arabia. When the oil prices increase the exchange rate of Saudi Arabia also increase as a result. However when the prices of the oil decrease the exchange rate of Saudi Arabia decrease as result. In other words when the prices of oil decreases Saudi Arabia have to face problems because its economy currently is majorly focused on oil and oil related products. Due to heavy reliance on oil related exports the economy experience major shock when [prices decrease up to lot of extent. The solution of this problem is the diversification of the economy. Therefore it can be said that changes in oi prices does have impact on the exchange rate of Saudi Arabia (Melville, 2017).

        The Government of Saudi Arabia have taken initiatives to manage the foreign exchange rate risk. For managing the foreign exchange rate risk the Government of Saudi Arabia has pegged its currency with the US dollar as discussed earlier. After pegging the currency with the US dollar the government tries to reduce the uncertainties that occur in payment and the loss that occurs due to sudden exchange rate fluctuations. In other words if the currency is unpegged the revenue which the Saudi Arabia generates from oil export will decrease significantly if sudden exchange rate fluctuation occurs. It means that the policy of Saudi Arabia to manage exchange rate risk have proven quite effective over the past several years.

        Since the oil prices are usually fixed in dollars the pegging the currency with the US dollar has allowed Saudi Arabia to manage the currency risks exchange rate risk. Through this the trader can easily trade without any difficulty and will want to invest again in the future. Overall it can be said that the policy of Saudi Arabia has managed the foreign exchange rate effectively however the flexibility in the monetary policy has to be compromised. It means that the Saudi will have to follow the direction which are made by the United States. In other words if scenario changes and Country like Saudi Arabia needs flexibility in its monetary policy than it will have to face issues (Sercu, 2009).

        The recent condition which the Saudi Arabia faced is due to the inflexibility in the monetary policy. The country has faced decline in oil prices due to which its revenue has decreased. It means that if Saudi Arabia keep on following the pegged policy than it will have to sacrifices the growth because of tough monetary policy. In recent years Saudi Arabia cost of keeping peg has increased which has open the opportunities for Saudi Arabia to look for other alternatives through which it can manage its decline of revenue. Saudi Arabia have to think critically it chooses to unpeg its currency because fluctuation in exchange rate can have drastic impact on the economy of the country. It is important for Saudi Arabia to analyze the situation from various angles and then take the decision regarding the scenario which it is currently facing.

        The exchange rate changes will definitely have impact on the United States as well. If the oil prices increase the Exchange rate of Saudi Arabia will also increase which means that revenue of Saudi Arabia will increase but on the other hand US will have to pay more for the oil it means that it will have impact on United States. The increase in oil prices will allow Saudi Arabia to generate significant amount of profit because Saudi Arabian economy primarily based on the oil exports. The Countries which export oil from Saudi Arabia pay huge amount for oil exports (Melville, 2017).

        If the changes in exchange rate occurs it means that the US will also suffer from the uncertainty. It is important that the exchange rate stays stable so that traders can trade goods efficiently without any financial loss. If the exchange rate keeps on changing than the investors will not invest in businesses and trading will face financial difficulties. The increase in oil prices will allow Saudi Arabia to generate significant amount of profit because Saudi Arabian economy primarily based on the oil exports. The Countries which export oil from Saudi Arabia pay huge amount for oil exports.

        The findings of the research study shows that the oil production decline have significant impact on the GDP growth of the countries. Due to low oil production the speed of the growth reduces. The findings of the study further discuss that when the oil production decline it effects on the inflation rate as well. This study has huge significance for the economists and policy makers. The research studies shows that various factors have major influence over the exchange rate of oil producing countries. It means that when oil prices changes the exchange rate of Saudi Arabia and other oil producing countries will have significant impact.

        The results of the findings show that the oil price changes do have impact on the stock price changes. The stock prices changes however does not show any impact on the oil prices. It means that the investors who are investing in the oil sector should look at the stock price changes to evaluate any change in prices. From the past several years Saudi Arabia has pegged its currency against US Dollars. Over the years this policy of Saudi Arabia and other GCC countries prove effective for the countries and through this GCC countries have efficiently managed exchange rate risk.

References of Findings & Analysis of Exchange Rate of Saudi Arabia & Its Impact on United States

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Kalyanaraman, Lakshmi, and Basmah Al Tuwajri. 2014. "Macroeconomic Forces and Stock Prices: Some Empirical Evidence from Saudi Arabia." 5: 81-92.

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