Saudi Riyal to Dollar Exchange Rate: Historical Stability and Analysis

The history of pegging the Saudi Riyal to the US Dollar dates back to the mid-1980s when the Saudi economy faced challenges related to oil price volatility and fluctuations in global currencies. Until 1986, the Saudi Riyal moved within wider ranges against the Dollar, reaching a record high of about 3.97 Riyals per Dollar in April of that year. This coincided with a global decline in oil prices and hyperinflation experienced by some neighboring countries. To avoid the effects of these fluctuations, the Saudi Arabian Monetary Authority decided to adopt a policy of pegging the Riyal to the US Dollar at a fixed rate of approximately 3.75 Riyals per Dollar, a policy that has continued to this day.

This decision had a significant impact on enhancing internal economic stability, allowing companies and investors to accurately anticipate import and export costs, thereby reducing risks associated with currency fluctuations. This peg also led to stability in local prices of goods, especially those imported in Dollars, thus preserving the purchasing power of citizens against rising or falling foreign currency prices. On the monetary policy front, this peg allowed the Monetary Authority greater flexibility in managing foreign currency reserves, focusing on bolstering its Dollar stock to support the Riyal's value.

Over the decades, the importance of this peg has increased, especially given the heavy reliance on Dollar-priced oil exports. The Dollar has become the focal point for trade and financial exchanges, with the majority of government and private transactions conducted in Dollars or directly linked to it. Conversely, the monetary stability afforded by this peg has enabled Saudi Arabia to engage in massive developmental projects without worrying about currency fluctuations, positively reflecting on economic growth rates and foreign direct investment. Even during global financial crises such as the 2008 crisis or the COVID-19 pandemic, the Saudi Riyal has maintained its stability, reinforcing confidence in the peg policy and proving its viability as a long-term strategic choice.

The policy of stabilizing the Riyal's exchange rate against the Dollar is based on a set of solid economic foundations, most notably the nature of the Saudi economy, which relies on oil exports priced globally in US Dollars. Oil constitutes the primary source of state revenue and is sold in global markets in Dollars, meaning that any significant fluctuation in the Riyal's exchange rate could directly impact government revenues and their efficient distribution. Hence, the logic behind pegging the Riyal to the Dollar arises, as the Dollar enjoys the status of the world's primary reserve currency, characterized by high liquidity and relative stability compared to other currencies.

Additionally, the Saudi Central Bank possesses substantial foreign currency reserves, particularly in US Dollars, granting it the ability to intervene promptly in the exchange market to maintain the Riyal's stability. These reserves, which exceeded $432.8 billion in August 2025, represent a robust safety net that enables the Central Bank to withstand any potential pressures on the local currency, whether stemming from oil price fluctuations or sudden shifts in global financial markets.

Moreover, the Saudi economic environment is characterized by relative stability in inflation and growth rates, contributing to the currency's steadiness. Inflation rates have remained moderate in recent years, ranging between 1% and 3%, while the economy has recorded positive growth driven by national transformation programs and Vision 2030 projects. This economic stability, in turn, supports the peg policy and reduces the need to adjust the exchange rate.

Institutionally, the Kingdom operates a strong financial system under strict supervision by the Monetary Authority, limiting speculation and manipulation in the exchange market. The regulatory controls imposed by SAMA on banks and financial institutions further ensure the stability of the Riyal's exchange rate, as all entities are required to adhere to official pricing and avoid significant deviations in daily trading. Thus, economic and institutional factors integrate to form a robust monetary system that maintains the stability of the Saudi Riyal against the Dollar.

Oil prices play a crucial role in the Saudi economy, given that the government's budget heavily relies on revenues from oil exports priced in US Dollars. Any significant change in global oil prices immediately reflects on foreign currency inflows to the Kingdom and, consequently, on the Central Bank's ability to maintain strong Dollar reserves. When oil prices rise, government revenues increase, and foreign reserves strengthen, enhancing market confidence in SAMA's ability to maintain the fixed exchange rate.

For instance, in 2024, global oil prices witnessed a notable increase, resulting in a rise in the net foreign assets of the Saudi Arabian Monetary Authority by approximately $12.27 billion in just one month, bringing the total to $432.8 billion in August 2025. This increase enabled the Central Bank to continue its peg policy without requiring any exceptional interventions in the currency market. Conversely, when oil prices decline, as seen in previous periods, financial surpluses may decrease, increasing pressure on reserves. However, the magnitude of these reserves often absorbs shocks and keeps the Riyal stable.

On the other hand, oil prices affect domestic demand for Dollars, as the need for the US currency increases with rising imports of goods and services or the execution of large government projects. Nevertheless, Saudi fiscal policy is often characterized by caution, relying on distributing public spending in line with oil revenue levels, thereby reducing the risks of sudden deficits or sharp fluctuations in the balance of payments.

It is noteworthy that the stability of the Riyal against the Dollar amid oil price fluctuations reflects the strength of Saudi financial and monetary policies and their success in managing surpluses and deficits in a balanced manner. Additionally, this monetary stability is one of the key factors attracting foreign investments, as it instills confidence in investors regarding the business environment and shields them from currency risks. Thus, the Riyal's peg to the Dollar remains an effective tool in countering the impacts of oil fluctuations on the Saudi economy.

In recent years, the stability of the Saudi Riyal against the Dollar has continued within the limits set by the Saudi Arabian Monetary Authority (SAMA). Recent data from sources like Trading Economics indicate that the official exchange rate has remained fixed at 3.7500 Riyals per US Dollar until the end of November 2025, with no significant changes compared to previous periods. Monthly records show that the annual rate of change in the exchange rate did not exceed 0.16%, while monthly fluctuations did not surpass 0.01%, figures that reflect a genuine stability uncommon in emerging currency markets.

This stability in the exchange rate has been particularly evident during major global economic events, such as fluctuations in US interest rates or changes in oil prices. Despite these shifts, no significant deviation from the benchmark rate has been recorded. Furthermore, the daily trading range in Saudi banks has remained extremely limited, with spreads confined to fractions or parts of a halala due to banking transaction differences and commissions, without any impact on the officially adopted rate.

Economic forecasts from international and local institutions have confirmed that this stability is expected to continue in the near to medium term, with estimates suggesting that the Riyal will remain at the 3.75 level against the Dollar until at least the end of 2026. This expectation is attributed to the strength of foreign reserves, the presence of strict fiscal and monetary policies, and the ongoing global demand for Saudi oil.

Moreover, this stability has contributed to reducing risks associated with imports and exports for Saudi companies, facilitating hedging and liquidity management for financial institutions. As a result of this stability, import costs have remained predictable, enabling companies to engage in precise financial planning without the need for costly hedges against exchange rate changes. Overall, this data has bolstered market confidence in Saudi monetary policy and underscored the robustness of the national economy.

The Saudi Arabian Monetary Authority (SAMA) is responsible for implementing and managing monetary policy in the Kingdom, including maintaining the stability of the Riyal against the Dollar. SAMA plays a pivotal role in monitoring the foreign exchange market and conducting necessary interventions to ensure the national currency is fixed at the designated level. SAMA relies on substantial foreign currency reserves, which exceeded $432.8 billion in mid-2025, providing it with a significant safety margin to address any potential pressures on the Riyal.

SAMA determines the official exchange rate of the Riyal against the Dollar and mandates banks and financial institutions operating in the Kingdom to adhere to it. It also imposes strict controls to prevent speculation or manipulation in the local exchange market and monitors capital flows to ensure that large amounts do not exit in a manner that affects liquidity or reserves. Should any signs of increased demand for Dollars or weakness in the Riyal emerge, SAMA intervenes by buying or selling foreign currency to support the targeted rate.

Additionally, SAMA utilizes various monetary tools such as interest rates, open market instruments, and reserve requirements for commercial banks to adjust liquidity in the economy, preventing imbalances that could affect the exchange rate. The institution also manages macroprudential policies to protect the financial system from external shocks.

It is noteworthy that SAMA's independence and its ability to make swift and effective decisions have contributed to enhancing confidence among local and international investors in the Saudi currency. Even during global financial crises, SAMA has demonstrated significant resilience in managing reserves and directing monetary policies to protect the Riyal's value. Thus, SAMA remains a fundamental pillar in the stability of the Saudi monetary system and ensures the continued fixed peg between the Riyal and the Dollar.

The stability of the Riyal against the Dollar is one of the fundamental pillars of the Saudi macro economy, directly contributing to enhancing the investment environment, facilitating financial planning, and ensuring sustainable economic growth. Thanks to the fixed peg, local companies can import raw materials and equipment in Dollars without worrying about sudden cost changes, which is crucial in industrial and commercial sectors that heavily rely on imports.

Moreover, currency stability reflects on inflation rates, as it leads to stable prices for imported goods and prevents the transmission of global inflation waves to the local market. Inflation rates in the Kingdom have remained relatively low in recent years compared to other countries with volatile currencies, contributing to the stability of citizens' purchasing power and reducing living pressures.

In the investment realm, exchange rate stability provides additional confidence to foreign investors, as it reduces financial transfer risks and offers an attractive competitive environment. This stability has been a decisive factor in attracting foreign capital to Vision 2030 projects, which require substantial investment flows from abroad. Additionally, multinational companies operating in the Kingdom find the stability of the Riyal helpful in managing their financial operations and avoiding profit fluctuations due to exchange rate changes.

On the public finance level, the stability of the Riyal allows the Saudi government to plan its budget accurately, especially given the linkage of oil revenues to the Dollar. This enables the government to control public spending and distribute it efficiently without resorting to austerity measures due to currency fluctuations. Furthermore, monetary stability positively reflects on the Kingdom's credit ratings, reducing sovereign borrowing costs and supporting long-term financial sustainability.

The policy of stabilizing the Riyal against the Dollar plays a pivotal role in determining the performance of Saudi companies, especially those reliant on imports or exports in their operations. Hail Cement Company serves as a clear example of how industrial companies benefit from exchange rate stability, as it relies on importing equipment and raw materials in US Dollars. Thanks to the fixed peg, the company can accurately estimate its costs, contributing to stable profit margins and avoiding profit fluctuations resulting from currency changes.

During 2024 and 2025, Hail Cement continued to achieve good financial results, as the stability of the exchange rate helped maintain stable production costs, especially with stable energy prices and imported raw materials. This monetary stability also facilitated the company's financial hedging operations, as it did not need to take costly measures to protect its profits from currency risks, freeing up additional resources for investment in expansions and operational efficiency improvements.

Moreover, the stability of the exchange rate has enhanced investor confidence in Hail Cement's stock, as the share maintained its relative stability on the Saudi Tadawul exchange, and the company continued to distribute attractive periodic dividends. This stability was reflected in analysts' reports indicating that the company enjoys a competitive advantage in the local market due to the stability of the monetary business environment.

Additionally, the stability of the Riyal allowed the company to enter into long-term contracts with suppliers and customers without the need for continuous repricing or facing currency change risks. Thus, it is evident that exchange rate stability is a key supporting factor for the performance of Saudi industrial companies, enhancing their competitiveness and ability to expand in both local and international markets.

Hail Cement Company's stock (Tadawul symbol: 3001) is one of the prominent stocks in the Saudi construction sector, and investors pay special attention to its performance due to its close association with the volume of construction projects in the Kingdom. During 2024 and 2025, the stock maintained a moderate trading range without sharp fluctuations, benefiting from the stability of the exchange rate between the Riyal and the Dollar, which directly reflected on the stability of production costs and profits.

Announced financial data indicates that the company recorded slight sales growth, supported by increased domestic demand for cement due to significant government projects under Vision 2030. Hail Cement also maintained an average price-to-earnings (P/E) ratio exceeding 10 times, which is considered within the acceptable range in the cement sector. Additionally, the company continued its policy of distributing periodic dividends, with annual distributions ranging between 3% to 6% of the stock price, providing investors with a respectable and stable return.

On the other hand, monetary stability contributed to reducing financial costs related to hedging against currency risks, allowing the company to direct more resources toward investing in improving production lines and future expansions. Furthermore, the stability of the Riyal enabled the company to enter into long-term supply contracts without the need for frequent price reviews, which enhanced its relationships with contractors and suppliers.

Regarding challenges, the stock faced slight pressures during certain periods due to declining market demand or fluctuations in energy prices. However, currency stability helped mitigate the impact of these factors on the company's overall financial performance. Overall, it can be said that Hail Cement's stock significantly benefits from the stability of the Riyal against the Dollar, enhancing its profit sustainability and attractiveness to investors.

The Saudi cement sector is one of the largest industrial sectors in the region, characterized by a diversity of companies and intense competition for market share. The sector includes several major companies such as Saudi Cement Company (3000), Yamama Cement (1010), Eastern Cement (1300), in addition to major regional companies like Qassim Cement, Najran, Al-Jouf, Medina, and Hail. These companies cover various regions of the Kingdom, creating a highly competitive environment that drives innovation and operational efficiency.

In recent years, the sector has witnessed significant growth driven by massive infrastructure projects launched by the Saudi government under Vision 2030, such as NEOM, the Red Sea Project, and housing initiatives. This growth has led to increased domestic demand for cement, prompting companies to boost production and expand their operational lines. At the same time, companies face challenges related to excess production capacity during certain periods, pushing them to seek new export markets or improve efficiency to reduce costs.

In terms of competition, major companies like Saudi Cement, Yamama, and Eastern Cement excel in production volume and cost reduction capabilities due to economies of scale. Conversely, companies like Hail Cement distinguish themselves through their regional focus and quick responsiveness to local market needs, especially in the northern and western regions of the Kingdom. Competition also relies on product quality and supply continuity, particularly in light of new housing and road projects that require large quantities of cement within specific timeframes.

The sector faces other challenges such as fluctuations in energy prices and increasing environmental demands, as the government seeks to encourage the use of alternative fuels and reduce carbon emissions. Some companies have begun investing in more environmentally friendly technologies to meet global and local requirements. Overall, the Saudi cement sector remains active and full of opportunities and challenges, with sustained high local demand and a stable monetary business environment.

The stability of the Riyal against the Dollar plays a pivotal role in supporting the Saudi import and export sector, providing a stable financial environment that helps companies plan and contract with confidence. For importers, the fixed peg means that the cost of purchasing goods and services from abroad, which are mostly priced in Dollars, remains predictable without surprises related to currency changes. This encourages companies to expand their imports of necessary equipment and raw materials for production, positively reflecting on the growth of industrial and commercial sectors.

On the export front, exchange rate stability grants Saudi exporters the ability to clearly set their product prices for international customers, especially in markets that rely on the Dollar as the primary currency for trade. Stability reduces the risks of declining export revenues due to fluctuations in the local currency, enhancing the competitiveness of Saudi products in global markets. However, the fixed peg may limit exporters' ability to benefit from a decline in the local currency's value to boost export volumes during certain periods, although this effect remains limited for an economy primarily reliant on Dollar-priced oil exports.

Recent data indicates that the Saudi import sector has benefited in recent years from exchange rate stability in reducing import costs, especially with stable energy and food prices in the international market. Additionally, international companies operating in the Kingdom have found the stability of the Riyal an additional attraction for investment, as they can transfer their profits abroad without significant currency change risks.

Overall, the stability of the Riyal against the Dollar is one of the fundamental factors that has enhanced the performance of the import and export sector and contributed to making the Saudi market an attractive environment for business and foreign investment.

Foreign currency reserves are considered the backbone of the stability of the Riyal against the Dollar, granting the Saudi Arabian Monetary Authority (SAMA) the ability to intervene promptly in the exchange market when necessary. Recent data indicates that SAMA's net foreign assets exceeded $432.8 billion in August 2025, equivalent to more than 1.6 trillion Saudi Riyals. This high level of reserves is among the highest globally and reflects the strength and robustness of the Kingdom's financial position.

SAMA uses these reserves in buying and selling foreign currencies to support the Riyal at the designated level, especially during times of pressure on the currency due to fluctuations in global markets or changes in oil prices. If demand for Dollars in the local market increases, the authority sells part of its reserves to meet this demand and prevent the Dollar's price from rising against the Riyal. Conversely, during periods of foreign currency inflows due to rising oil prices or increased foreign investments, SAMA buys foreign currencies to increase its reserves and maintain market balance.

These substantial reserves provide Saudi Arabia with significant flexibility in facing economic shocks, whether stemming from falling oil prices or global financial crises. They also enhance investor confidence in the Central Bank's ability to defend the local currency's value and prevent speculation or organized attacks on the Riyal. Additionally, reserves help maintain the Kingdom's high credit rating, reducing borrowing costs and supporting long-term public financial sustainability.

Practically, SAMA is committed to managing these reserves according to the best international standards, distributing them among high-quality liquid assets such as US government bonds and short-term debt instruments, ensuring liquidity availability when needed. Thus, foreign currency reserves remain the first line of defense in protecting the Riyal's value and ensuring its long-term stability.

The impact of the stability of the Riyal against the Dollar extends to the Saudi financial market (Tadawul), where it plays a pivotal role in enhancing confidence among local and international investors. When the local currency is stable, the investment risks associated with currency fluctuations decrease, encouraging increased trading volumes and attracting foreign capital to the market. Investors find in a stable currency environment an opportunity to assess listed companies more accurately, without the need for complex currency hedges or concerns about unexpected impacts on profits.

For companies listed in the Saudi market, especially those reliant on imports or exports, exchange rate stability allows for long-term financial planning without the need to frequently adjust their strategies. For example, cement sector companies like Hail Cement benefit from the stability of costs associated with raw materials imported in Dollars, positively reflecting on profit margins and distributions to shareholders. Additionally, foreign companies operating in the Kingdom can freely convert their profits without significant losses due to currency changes.

Furthermore, monetary stability reflects on key performance indicators of the financial market, such as liquidity, trading volume, and growth rates in the market capitalization of listed companies. The Saudi Tadawul has witnessed increasing investment flows from international funds in recent years, especially after the market was included in global emerging market indices like MSCI and FTSE. A significant part of this interest is attributed to the stability of the Riyal against the Dollar, which gives foreign investors confidence in the ability to exit the market without substantial losses due to currency fluctuations.

Overall, the stability of the Riyal contributes to making the Saudi financial market more attractive and competitive at the regional and international levels, enhancing its ability to attract long-term investments.

Saudi monetary policy, as confirmed by data and official statements, is oriented towards maintaining the fixed peg between the Riyal and the Dollar in the foreseeable future. Economic forecasts, supported by models from institutions like Trading Economics, indicate that the exchange rate will continue at 3.7500 Riyals per Dollar until at least the end of 2026. This direction is based on several fundamental factors, most notably the continued strength of foreign reserves, the stability of oil prices at levels supporting the balance of payments, and the success of economic diversification programs under Vision 2030.

Despite discussions among some analysts about the possibility of shifting to a basket currency peg or partial exchange rate liberalization in the long term, any change in Saudi monetary policy is expected to be gradual and highly calculated, considering macroeconomic stability and avoiding exposing the market to sudden risks. The Monetary Authority has repeatedly confirmed that the fixed peg serves the national economy at this stage and that there are no immediate plans to change it.

On the other hand, SAMA continues to work on enhancing its regulatory and operational tools to ensure the stability of the financial system, focusing on developing the banking sector and monitoring capital flows. The Kingdom also aims to develop non-oil income sources, reducing the reliance on oil and supporting currency stability in the long term.

Under these policies, the Saudi Riyal is expected to maintain its fixed value against the Dollar, with the Kingdom continuing to bolster its foreign reserves and diversify its economy. However, it remains essential to monitor global developments, especially regarding oil prices and international financial markets, as future structural changes may necessitate a gradual review of monetary policy while ensuring economic stability.

The years 2024 and 2025 witnessed continuity in positive news regarding the Saudi Riyal to Dollar exchange rate, with the Saudi Arabian Monetary Authority (SAMA) repeatedly affirming its commitment to the fixed exchange rate at 3.75 Riyals per Dollar. Financial markets did not record any unexpected events affecting this peg, despite some changes in global oil prices or international fiscal policies. Market reports indicated that increased government revenues from rising oil prices in 2024 bolstered SAMA's foreign reserves, supporting the stability of the local currency without the need for exceptional interventions.

In the cement sector, market activity continued, driven by major government projects under Vision 2030. Major companies like Hail Cement announced expansion plans to increase production capacity, targeting the growing regional demand, especially in northern and western Saudi Arabia. The company's quarterly financial results for 2024 showed growth in sales and improvement in net profits, despite some pressures resulting from fluctuations in energy prices.

On the governmental level, the Kingdom continued to announce new housing tenders and projects, indicating strong ongoing demand for cement in the coming years. Government reports confirmed that the stability of the Riyal against the Dollar was a crucial factor enabling companies to engage in long-term financial planning and execute major contracts without currency fluctuation risks. Overall, recent news highlights the continued state of monetary stability and balanced sectoral growth in the Saudi market.