SAR - Saudi Riyal

Overview of the Saudi Riyal

The Saudi Riyal (symbol: SR, code: SAR) is the official currency of Saudi Arabia. Introduced as the nation's currency in its modern form in 1935, the Riyal has become a symbol of the kingdom's economic strength and stability.

The Riyal is issued by the Saudi Central Bank (SAMA) and is divided into 100 halalas. It is available in various denominations of coins and banknotes, featuring designs that celebrate the country’s cultural heritage, national achievements, and modernization. 

Pegged to the US Dollar since 1986, the Saudi Riyal provides a stable foundation for international trade and investment, particularly in the global oil market, where Saudi Arabia plays a central role.

Beyond its economic significance, the Riyal reflects Saudi Arabia's rich history and its ongoing transformation under Vision 2030, which aims to diversify the economy and reduce dependence on oil. It serves as both a practical medium of exchange and a symbol of the nation's aspirations for growth and progress.

The History of the Saudi Riyal

Saudi Arabia is one of the world's leading countries in oil reserves, accounting for approximately 25% of the global total. With this advantage, the nation is often referred to as a "giant" in the oil and gas industry, where petroleum has become the backbone of its economy. Currently, the oil sector contributes about 42% of the GDP and represents up to 90% of export revenues, solidifying Saudi Arabia's pivotal role in the global energy market.

However, the oil market is often volatile, posing significant economic challenges. To mitigate risks from these fluctuations, the Saudi government adopted a fixed peg policy for the Riyal against the US Dollar in 2003, setting the exchange rate at 1 USD = 3.75 SAR. This policy has helped maintain the Riyal’s stability and provided substantial benefits for international trade, bolstering confidence in the currency on global financial markets.

Recognizing the dangers of over-reliance on oil, the Saudi government has been implementing strategies to diversify its economy. Sectors such as telecommunications, renewable energy, service industries, and foreign investment have been given special attention. 

These efforts are part of the Saudi Vision 2030, a blueprint for building a modern, sustainable economy less dependent on oil, while creating opportunities for emerging industries to thrive.

The Development of Coins and Banknotes in Saudi Arabia

The evolution of coins and banknotes in Saudi Arabia reflects the nation's rich history and economic progress.

Saudi Riyal Coins

In 1925, the first copper coins were minted in Mecca. Later, cupro-nickel (copper-nickel alloy) coin versions were introduced, reflecting various stages of the country's development and changes in the royal titles. 

Notably, in 1963, cupro-nickel coins with halala denominations were introduced, marking a significant shift in the monetary system. Today, modern coins, including the 2 Riyal coin, have been issued since 2016, featuring intricate designs and durable materials.

The Saudi Riyal coins come in with the following denominations

• 1 halala

• 5 halalas

• 10 halalas

• 25 halalas

• 50 halalas

• 1 Riyal

• 2 Riyals

Saudi Riyal Banknotes

Initially, paper money in Saudi Arabia appeared in the form of Hajj Pilgrim Receipts, which were used by pilgrims for foreign exchange transactions. In 1961, the Saudi Central Bank (SAMA) officially began issuing regular paper currency in denominations ranging from 1 to 100 Riyals. 

In 2020, the 5 Riyal polymer note was released, marking a new advancement with an eco-friendly material and superior durability. This innovation reflects not only technological progress but also the nation’s commitment to sustainability.

The Saudi Riyal banknotes come in with the following denominations

• 1 Riyal

• 5 Riyals

• 10 Riyals

• 50 Riyals

• 100 Riyals

• 500 Riyals

The Exchange Rate of the Saudi Riyal and Dependence on Oil

With approximately 25% of the world’s oil reserves, Saudi Arabia has long been considered a "giant" in the oil and gas industry. The oil sector contributes about 42% of the country’s GDP and accounts for 90% of its export revenue, making "black gold" the cornerstone of the economy.

To maintain stability amid the fluctuations in the oil market, since 2003, the Saudi Riyal has been pegged to the US Dollar at an exchange rate of 1 USD = 3.75 SAR. This policy not only ensures stability for the national currency but also facilitates international transactions, helping the Riyal maintain a strong position in global financial markets.

However, recognizing the risks associated with heavy dependence on oil, the Saudi government is intensifying its economic diversification strategy. Sectors such as telecommunications, renewable energy, and foreign investment are increasingly being encouraged to develop, aiming to create a more balanced and sustainable economy in the future.

In addition to maintaining the Riyal, Saudi Arabia also owns Tadawul – the largest stock exchange in the Middle East and North Africa. Tadawul is not only a regional financial hub but also reflects the economic strength of the nation.

From the first coins minted in Mecca to modern banknotes featuring advanced technology, the Saudi Riyal is not just a medium of payment but also a symbol of history, culture, and sustainable development.

With its value stability and crucial role in the global economy, the Riyal continues to be a source of pride for the Saudi people and stands as a testament to the blend of tradition and modernity.

In an ever-changing world, the Riyal is not just a currency but also reflects Saudi Arabia’s sustainable strategy to reduce dependence on oil and expand its economic potential.