Riyal rises to 21-year high against dollar



Saudi Arabia said last week it would not cut interest rates.


The riyal moved to 3.7300 against the dollar yesterday, according to Reuters data, its strongest since December 1986, the year the kingdom pegged its currency to the dollar at 3.74.
"There has been foreign money coming in because the central bank explicitly said it would not follow the Fed cut," Caroline Grady, an economist at Deustche Bank, said of the riyal’s rise.
Like the majority of Gulf countries, Saudi Arabia has repeatedly ruled out revaluation, saying inflation was mostly due to domestic factors such as rents rather than higher import costs.
John Sfakianakis, chief economist at SABB Bank, said Saudi Arabia does not need to revalue its currency.
"The country’s most valuable commodity trades in dollars, their assets are at a historic high and there are no guarantees the trickle-down effect will reach consumers and help cut inflation," he said.

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