Conclusion of Exchange Rate of Saudi Arabia & Its Impact on United States

        It is concluded that 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.

        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.

        The changes in exchange rate have huge impact over the trade, economy, inflation and other economic factors. The business and various organizations face significant impact of the change in exchange rate. The government take special initiatives to control the exchange rate or make it stable so that the country won’t face different issues that immerge from changers in exchange rate. By keeping the significance of exchange rate in mind and its impact over the world economy. It has been decided to perform research to investigate how the governments regulate exchange rate. The study will be conducted from the perspective of Saudi Arabia. In the study the exchange rate of Saudi Arabia will be thoroughly examined and its impact on various countries will be evaluated.

        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.

        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.

        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.