The Saudi Arabia’s central bank which is aiming at a sustainable economic growth during the coronavirus pandemic asserted its commitment to the Riyal-US dollar peg on Monday. The currency peg is the fixing of one’s currency value to another’s leading to the central bank artificially controlling the value of its currency.
Business Insider describes it this way: It’s like they’ve been tied together with a rope. Where one goes, the other follows. This stabilizes the value of a currency and the dangers of fluctuation are minimized.
The Saudi Arabian Monetary Authority (SAMA) fixed it at the official rate of SR 3.75 to the dollar to continue to promote trade, boost incomes and trade, adding that this strategy has contributed to immense growth of the economy in the past thirty years.
It also quoted that the reserves were adequate to meet the demands of the national economy for foreign exchange reserves covering about 43 months of imports and 88% of M3 money.
Thus, this can be seen as a drive towards sustainable growth, stability, and boom in the nation’s trading in the long run.