Pound to Riyal Exchange Rate: Comprehensive Analysis and Market Factors

The exchange rate of the Egyptian pound against the Saudi riyal is considered one of the economic indicators that experience significant fluctuations due to economic and political factors in both countries. Historically, the Egyptian pound exhibited relative stability until the mid-last decade, fluctuating between 2-2.5 pounds per Saudi riyal. However, the economic conditions in Egypt, particularly since the pound's flotation in 2016, led to a noticeable decline in its value against foreign currencies, including the Saudi riyal. By 2020, the exchange rate reached approximately 4-4.5 pounds per riyal, and with ongoing economic pressures and inflation, the pound continued to decline. At the beginning of 2024, the exchange rate recorded around 8 pounds against the Saudi riyal, meaning that one riyal is approximately equal to 8 pounds. This long-term decline reflects the economic challenges in Egypt: limited foreign currencies, trade balance deficits, and rising external debts, along with the Egyptian government's ongoing need to support the currency through foreign currency sources. On the other hand, the stability of the Saudi riyal, due to its peg to the US dollar and the policies of the Saudi central bank, has made its value more stable against the pound. The general trend in recent years has been a decline of the pound against the riyal, driven by factors such as domestic inflation, declining exports, and increased demand for the dollar for import and remittance purposes. This trend has direct implications for the prices of goods imported from Saudi Arabia to Egypt and vice versa, as well as affecting the purchasing power of Egyptians working in Saudi Arabia when sending remittances. In light of this background, understanding the dynamics of the pound to riyal exchange rate becomes essential for analyzing the impact on Saudi companies and Egyptian consumers, especially in sectors related to bilateral trade.

The exchange rate of the Egyptian pound against the Saudi riyal is determined by the interaction of a set of economic, financial, and monetary factors that intertwine to shape the dynamics of the exchange market between the two countries. Firstly, foreign reserves at the Central Bank of Egypt play a crucial role in providing the necessary liquidity to support the local currency, especially during times of economic pressure or external crises. When these reserves decline, pressure on the pound increases, leading to its depreciation against the riyal. Secondly, remittances from Egyptians working in Saudi Arabia directly affect the exchange market. Saudi Arabia hosts millions of Egyptian workers, and their remittances represent one of the most important sources of foreign currency for Egypt. Any fluctuations in the levels of these remittances, whether due to changes in labor policies or labor market conditions in Saudi Arabia, immediately reflect on the exchange rate. Thirdly, the Egyptian currency is affected by local inflation levels, as rising inflation erodes the purchasing power of the pound and increases demand for foreign currencies such as the riyal. Additionally, interest rates play a role in attracting or repelling foreign investments; the greater the gap between interest rates in Egypt and Saudi Arabia, the more capital flows change. Finally, external factors such as oil prices indirectly affect the Saudi economy and, consequently, the pound through the volume of Saudi government spending and Egyptian remittances, along with geopolitical factors and changes in economic policies. All these elements interact continuously, making the pound to riyal exchange rate sensitive to any sudden changes in the economic or political environment in both countries.

Fluctuations in the exchange rate of the pound against the Saudi riyal play a key role in shaping the contours of bilateral trade between Egypt and Saudi Arabia, as exchange rate differentials directly affect the cost of exported and imported goods and services. When the pound depreciates against the riyal, Egyptian goods become relatively cheaper for Saudi importers, which may boost Egypt's exports to Saudi Arabia and make Egyptian products more competitive in the Saudi market. Conversely, the cost of Saudi imports rises for Egyptian consumers, as a strong riyal means needing more pounds for each Saudi riyal. This affects the prices of Saudi products in the Egyptian market, from cars and electronics to food and building materials. Additionally, exchange rate fluctuations affect companies engaged in bilateral trade, as managing currency risks requires financial hedging or repricing products to avoid sudden losses in profits. On the other hand, exchange rates influence the flow of Saudi investments into Egypt; the weaker the pound, the more attractive investment opportunities may appear for Saudi companies due to lower costs in local currency. As for the financial remittances of Egyptian workers in Saudi Arabia, a weak pound enhances the local value of what workers send home, increasing their spending or investment capacity in their home country. Overall, fluctuations in the pound to riyal exchange rate represent a strategic factor in making trade and investment decisions between the two countries, prompting companies and individuals to adopt flexible financial solutions to keep pace with these changes.

Hail Cement Company is one of the leading industrial entities in the Kingdom of Saudi Arabia, playing a pivotal role in the construction materials sector, especially in the northern region. The company was established to meet the growing local demand for cement, supported by its strategic geographical location near urban development projects and roads in Hail and surrounding areas. Hail Cement falls under the basic materials sector in the Saudi financial market (Tadawul) and is listed in the 'MT30' index, which includes the top 30 companies by market capitalization. This classification reflects the company's relative importance within the larger industrial sector in the Kingdom. The company relies on modern production lines capable of meeting the needs of large infrastructure and housing projects. Furthermore, the company is supervised by the Saudi Capital Market Authority and adheres to disclosure and transparency standards, making it a preferred destination for investors seeking relative stability and returns from dividends. With the expansion of Saudi Vision 2030, the role of cement companies has emerged in supporting housing projects, new cities, expansions of the Two Holy Mosques, and mega transportation projects like the Northern Train. Thanks to its operational policies and financial discipline, Hail Cement has maintained its position as a key supplier in northern projects, with the potential to export part of its production to regional markets when opportunities arise. Thus, the company's performance is closely linked to government spending rates and the level of construction activity in the Kingdom.

Recent financial data for Hail Cement Company indicates a continued moderate growth trend in operational and profit performance. In 2023, the company recorded revenues ranging from 1.1 to 1.2 billion Saudi riyals, achieving a net profit of approximately 140 – 160 million riyals, reflecting relative stability in demand for its products. In 2024, the company saw a slight increase in net profits, with net profit approaching 200 million riyals, driven by rising cement selling prices and steady demand in major projects. The annual earnings per share during this period were around 0.4 – 0.45 riyals, after accounting for taxes and provisions, reflecting an improvement in profit margins. In terms of market valuation, the price-to-earnings ratio (P/E) remained between 8 and 10 times, a level classified as average to low compared to some competitors in the sector like Yamama Cement or Saudi Cement. Regarding dividends, the company maintained an attractive distribution policy, with cash distributions around 0.60 – 0.70 riyals per share, equivalent to an annual yield ranging between 5% and 6% depending on the stock price in the market. These indicators indicate the continuity of the company's good operational performance, with the ability to achieve stable returns for shareholders, despite challenges related to demand fluctuations, energy prices, and rising production costs at times. The financial results reflect the company's commitment to cost control and enhancing production efficiency, while benefiting from government support for energy prices in Saudi factories.

The fundamental indicators for Hail Cement's stock are among the most important points of interest for investors and market watchers in the Saudi financial market. By the end of 2024, the stock's closing price was around 12.5 Saudi riyals, with its highest level for the year recorded at 13-14 riyals and the lowest at approximately 10.5 riyals. This fluctuation reflects the interactions between demand for cement and economic developments in the Kingdom. In terms of market capitalization, assuming a total of about 150 million outstanding shares, the company's market capitalization ranged between 1.8 and 2.0 billion Saudi riyals during the last months of 2024, placing it within the small to medium-sized companies category in the Saudi market. The P/E ratio fluctuated between 8 and 10 times, indicating a moderate valuation of the stock compared to the sector, attracting investors seeking stable returns with a medium level of risk. Annual dividends ranged between 0.60 and 0.70 riyals per share, equivalent to an annual yield of approximately 5% to 6%, which is a significant rate in the cement sector characterized by stable dividends. Collectively, these indicators paint a picture of a relatively stable traditional stock, appealing to investors looking for steady income, with the potential to benefit from any future improvement in the construction and building sector in the Kingdom. The company's policies on dividend distribution and operational improvements remain a key factor in maintaining shareholder confidence.

The Saudi cement sector is one of the cornerstones of the national industry, heavily reliant on demand generated by large government projects, such as the Saudi Vision 2030 initiatives, the expansion of the Two Holy Mosques, and housing and infrastructure projects. The sector is characterized by its high capacity to meet local demand, with an export surplus directed to regional markets when needed. Cement plants are distributed across various regions of the Kingdom, ensuring proximity to major project sites and reducing transportation costs. In terms of competition, major companies such as Saudi Cement, Yamama Cement, Southern Cement, Qassim Cement, and Hail Cement share market shares based on geographic areas. Hail Cement focuses on meeting demand in the north, while other companies dominate the central, southern, and eastern regions. The sector experiences relative price stability due to the presence of regulatory mechanisms and informal production coordination among companies, with limited competitive margins. Challenges include fluctuations in fuel and energy prices, the need to update production lines to meet environmental standards, and periodic impacts from the level of real estate activity and government spending. Nevertheless, major government projects ensure continued demand in the medium term, supporting sector stability. In light of this environment, Saudi cement companies, including Hail Cement, continue to benefit from strong local demand while monitoring regulatory and technological changes that may affect operational efficiency and profitability.

Although Hail Cement Company focuses its activities primarily in the Saudi local market, fluctuations in the pound to Saudi riyal exchange rate may have some indirect effects on the company's operations. If the company exports part of its production to regional markets, such as Egypt, a weak pound against the riyal may reduce the purchasing power of Egyptian importers, negatively affecting demand volume or profit margins from exports. Conversely, if the company imports some equipment or raw materials from Egypt or countries dealing in pounds, a declining pound may lower the cost of these imports in Saudi riyals. However, most of Hail Cement's purchases are made in US dollars or Saudi riyals, given the riyal's stability against the dollar, which reduces the risks of exchange rate fluctuations. Regarding remittances, a weak pound enhances the purchasing power of Egyptians working in Saudi Arabia, which may increase local demand for building materials in Egypt in the long term and open up export opportunities. Overall, the impact of the pound to riyal exchange rate on Hail Cement remains limited, but it may become more pronounced if the company expands its exports to markets dealing in pounds or if significant changes occur in Egyptian monetary policy. The company's financial management remains keen to mitigate the impact of currency fluctuations through hedging policies and regular assessments of external markets.

The performance of Hail Cement's stock and its financial indicators are influenced by several factors and risks that investors and sector watchers must closely monitor. Firstly, the demand for the company's products largely depends on the level of government spending on infrastructure and housing projects, which is directly linked to oil prices and state revenues. Any decline in oil prices may lead to reduced spending and, consequently, a decrease in demand for cement. Secondly, internal competition among Saudi cement companies poses a challenge, especially if production capacity increases without sufficient demand, leading to pressure on prices and profit margins. Thirdly, rising energy and raw material costs affect production costs, especially with trends to gradually lift energy subsidies. Additionally, the company faces regulatory risks such as the imposition of additional export fees or new environmental requirements that necessitate additional investments. On the other hand, exchange rates remain a secondary factor, but they gain importance when expanding into exports or importing equipment from abroad. Finally, geopolitical conditions and regional stability affect the overall business environment and may lead to sudden changes in demand or investment flows. Therefore, the company's success in managing these risks depends on its flexibility in cost control, improving operational efficiency, and anticipating changes in the local and regional market.

The Saudi cement sector, particularly Hail Cement Company, has witnessed a series of significant developments during the period from 2023 to 2025. Hail Cement announced relatively positive financial results in 2024, with moderate growth in revenues and net profits compared to the previous year. In mid-2024, a quarterly report showed a 10-15% increase in profits compared to the same period in 2023, reflecting improved demand for cement supported by government projects. The company did not announce any substantial expansions in production lines, indicating a cautious operational policy focused on stability and efficiency. Regarding distributions, the board of directors decided to distribute cash dividends of approximately 0.60 riyals per share for 2023, continuing the moderate policy of distributing nearly half of the profits. On the competitive front, no significant changes were observed in the competitive structure or market shares, but announcements from competing companies about future expansions prompted investors to monitor the sector closely. At the regulatory level, cement companies benefited from continued government support for energy prices and limited export facilitation, contributing to improved profit margins. Additionally, the Saudi government continues to inject massive investments into housing and infrastructure projects, keeping demand for cement at good levels. Overall, the outlook remains moderate to positive, with expectations of continued sector stability and solid financial performance from major companies in the coming years.

Remittances from Egyptians working in Saudi Arabia occupy a central position in the equation of the pound to riyal exchange rate, constituting one of the most important sources of foreign currency in Egypt. Annual remittances from Egyptian workers abroad exceed 30 billion dollars, with Saudi Arabia accounting for the largest share of these remittances due to the large Egyptian community in the Kingdom. When the pound is weak, the local value of remittances in riyals increases, enhancing the purchasing power of Egyptian families and supporting the local economy through increased consumption and investment. Conversely, any changes in Saudi labor policies, labor market conditions, or employment requirements may affect the volume of these remittances, reflecting negatively or positively on Egypt's foreign currency reserves. Additionally, a rising riyal against the pound makes Egyptian labor more keen to work in Saudi Arabia, increasing the flow of funds from the Kingdom to Egypt, alleviating the pressure on Egypt's balance of payments deficit. Therefore, the Egyptian government closely monitors these remittances and seeks to encourage them through banking facilities and supportive policies. In the event of significant changes in the exchange rate, such as the flotation of the pound or sudden inflationary pressures, the impact of remittances becomes more apparent, both at the macroeconomic level and on the living standards of Egyptian families. Overall, the flow of remittances remains a supportive factor for the relative stability of the Egyptian pound against the Saudi riyal.

When comparing Hail Cement's performance with its competitors in the Saudi cement sector, several differences emerge regarding geographic distribution, scale of operations, financial policies, and sensitivity to macroeconomic factors such as exchange rates. Hail Cement focuses on the northern market and benefits from local demand, while companies like Saudi Cement and Yamama have larger production capacities and broader distribution markets covering the eastern and central regions. Amid exchange rate fluctuations, companies with export activities or imports of raw materials from abroad may see their profits increase or decrease depending on changes in the value of the riyal or the pound. For Hail Cement, the impact remains limited due to its primary reliance on the local market, but if it turns to export to Egypt or other countries affected by the pound's value, it may face challenges related to profit margins and price competitiveness. Larger companies may be better positioned to absorb exchange rate fluctuations due to diversified income sources and markets. Additionally, larger companies have financial and investment capabilities that allow them to update production lines and expand into foreign markets when necessary. Thus, the importance of strategic flexibility in dealing with currency fluctuations emerges, whether through financial hedging or market diversification, contributing to financial stability and reducing risks associated with changes in the economic environment.

The future of the pound to Saudi riyal exchange rate remains contingent on several local, regional, and international economic variables. In Egypt, the pound's performance depends on the government's ability to enhance foreign reserves, control inflation levels, and improve export, tourism, and foreign direct investment performance. Continued inflationary pressures or a decline in foreign currency sources may lead to further depreciation of the pound against the riyal. Conversely, the Saudi riyal maintains its stability due to its peg to the US dollar and the cautious policies of the Saudi central bank. Regarding bilateral trade and investments, the continuation of major government projects in Saudi Arabia enhances demand for Egyptian products and services, supporting remittances, which provides some stability for the pound. Furthermore, any geopolitical shifts or changes in global oil prices may affect capital flows between the two countries, reflecting on the exchange rate. On the other hand, resorting to financial instruments such as currency hedging and effective management of reserves represents a necessary strategy to maintain price stability. Overall, it is expected that the pound to riyal exchange rate will remain in a controlled fluctuation state dictated by economic developments in Egypt and Saudi investment and labor policies, with a possibility of relative stability if Egypt succeeds in enhancing foreign currency sources and controlling inflation in the medium term.

Monitoring economic indicators, such as the pound to riyal exchange rate, gains increasing importance for investors and companies in both countries due to their direct implications on commercial and investment decisions. For Saudi investors in Egyptian stocks or real estate, the exchange rate affects the real return on investment, as a rising pound may increase asset values and returns when converted back to riyals. For Saudi companies, especially those involved in exports or imports or having investments in Egypt, currency fluctuations represent a risk factor that must be managed carefully. In the cement sector, for example, any change in the cost of imports or exports due to fluctuations in the pound to riyal exchange rate may affect profit margins. Hence, major companies resort to financial hedging strategies and closely monitor developments in monetary policies, interest rates, and inflation in both countries. Individuals, especially Egyptian workers in Saudi Arabia, also rely on monitoring the exchange rate to determine the timing of money transfers to achieve the best possible value. Overall, understanding economic indicators and exchange rates is a fundamental step for any financial or commercial decision, and this should always be coupled with consulting a licensed financial advisor to ensure informed and well-considered decisions in a changing economic environment.