Saudi Riyal – Currency Overview

• ISO Code: SAR
• Symbol: ر.س (Arabic), SR (Latin)
• Subunit: 1/100 halala
• Inflation: 1.9%
• Nickname: -----

Historical Overview

Throughout the larger part of its history, Saudi Arabia imported coins from neighboring countries, with the exception of some local imitation coins that were minted infrequently. Before the Hejaz period, the interior of Arabia used Silver Maria Theresa Thalers (XMTT) and British Gold Sovereigns (GBP) with 1 Gold Sovereign (Pound) equal to 5 Maria Theresa Thalers. Both Nejd and Hejaz had also minted coins of lower denomination with a Maria Theresa Thaler divisible into 100 Piastres.

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The riyal then became the currency of Hejaz and went on to become the currency of Saudi Arabia when the country was established. The silver Saudi Arabian Riyal (SAA) was equal in weight to Maria Theresa Thalers until 1936, however the Hejaz and Saudi riyals' value was based on the Ottoman 20 kuruş coin, subdivided into 20 ghirsh and had the same weight. Because of its greater fineness, when the Saudi riyal was first minted it was worth 22 Ottoman kuruş and was subdivided into 22 ghirsh when ghirsh were introduced into circulation in 1925. This system of currency lasted until 1935. In 1960, the monetary system changed to 1 riyal = 20 ghirsh, which was soon discarded in 1963 when the riyal became subdivided into 100 halalas.

Current Global Status

In 1986, the riyal was pegged to the IMF's Special Drawing Rights (SDRs). In actuality, the riyal is fixed at 1 U.S. dollar = 3.75 riyals, a rate that was made official on January 1, 2003. Although a consistently strong and stable currency, the riyal is not a free floating currency, which perhaps accounts for its stead performance but also for the lack of speculation in this particular foreign currency in the foreign exchange market.

Against the USD

In September 2007, the riyal rose to a 20-year high due to an interest rates cut implemented by the Federal Reserve. However, the Saudi Arabian Monetary Agency chose not to follow suit, mainly due to concerns about low interest rates causing inflationary effects and lowering the value of the riyal. Therefore, in December of 2007, the riyal dutifully returned to its fixed peg against the USD.

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