Saudi riyal

Saudi riyal

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The Riyal is the currency of Saudi Arabia
Saudi Arabia
The Kingdom of Saudi Arabia , commonly known in British English as Saudi Arabia and in Arabic as as-Sa‘ūdiyyah , is the largest state in Western Asia by land area, constituting the bulk of the Arabian Peninsula, and the second-largest in the Arab World...

. It is abbreviated as ر.س or SR (Saudi Riyal). It is subdivided into 100 Halalas (Arabic: هللة). The Saudi Ghirsh is 5 Halalas.

History


The riyal has been the currency of Saudi Arabia since the country came in to being and was the currency of Hejaz
Hejaz
al-Hejaz, also Hijaz is a region in the west of present-day Saudi Arabia. Defined primarily by its western border on the Red Sea, it extends from Haql on the Gulf of Aqaba to Jizan. Its main city is Jeddah, but it is probably better known for the Islamic holy cities of Mecca and Medina...

 before Saudi Arabia was created. The Hejaz riyal
Hejaz riyal
The riyal was the currency of Hejaz between 1916 and 1925. It was subdivided into 20 ghirsh . The riyal was a silver coin the same weight as the Ottoman 20 kuruş coin but was minted in .917 fineness rather than .830 fineness...

 was based on (though not equivalent to) the Ottoman 20 kuruş
Turkish lira
The Turkish lira is the currency of Turkey and the de facto independent state of the Turkish Republic of Northern Cyprus. The lira is subdivided into 100 kuruş...

 coin and was consequently divided into 20 ghirsh. However, although the Hejaz riyal was the same weight as the Ottoman 20 kuruş, it was minted in .917 fineness
Fineness
The fineness of a precious metal refers to the ratio of the primary metal to any additives or impurities.A piece of alloy metal containing a precious metal may have the weight of its precious component referred to as its fine weight. For example, 1 troy ounce of 18 karat gold may be said to have a...

, compared to .830 fineness for the Ottoman coin. Thus, because the first Saudi riyal had the same specifications as the Hejaz riyal and circulated alongside Ottoman coins, it came to be worth 22 Ottoman kuruş and was consequently subdivided into 22 ghirsh when coins denominated in ghirsh were issued from 1925. This remained the system of currency even though the riyal was subsequently debased to a coin equivalent in silver content to the Indian rupee
Indian rupee
The Indian rupee is the official currency of the Republic of India. The issuance of the currency is controlled by the Reserve Bank of India....

 in 1935.

Note that the Latin alphabet spelling "ghirsh" rather than "qirsh" reflects the pronunciation in Saudi Arabia, while in the Arabic script the spelling was the same as used elsewhere, قرش.

In 1960, the system was changed to 20 ghirsh = 1 riyal and this was followed in 1963 by the introduction of the halala, worth one hundredth of a riyal. Some Saudi coins still bear denominations in ghirsh but this denomination is no longer commonly used.

For a wider history surrounding currency in the region, see The History of British Currency in the Middle East.

Coins


In 1925, transitional copper coins for ¼ and ½ ghirsh were minted in Mecca
Mecca
Mecca is a city in the Hijaz and the capital of Makkah province in Saudi Arabia. The city is located inland from Jeddah in a narrow valley at a height of above sea level...

 by `Abd al-`Azīz Āl Sa`ūd
Ibn Saud of Saudi Arabia
King Abdul-Aziz of Saudi Arabia was the first monarch of the Third Saudi State known as Saudi Arabia. He was commonly referred to as Ibn Saud....

. These were followed, in 1926, by ¼, ½ and 1 ghirsh pieces minted in cupro-nickel, carrying the title "King of Hejaz and Sultan of Nejd".

In 1927, the royal title was changed to "King of Hejaz and Nejd and Dependencies" and coins were issued in denominations of ¼, ½ and 1 ghirsh in cupro-nickel and ¼, ½ and 1 riyal in silver.

In 1935, the first coins were issued in the name of Saudi Arabia. These were silver ¼, ½ and 1 riyal coins which were nearly 50% lighter than the previous issue. Cupro-nickel ¼, ½ and 1 ghirsh were also issued from 1937. In 1946 (AH 1365), many of the cupro-nickel coins were countermarked with the Arabic numerals 65 (٦٥) in what Krause and Mishler describe as "a move to break money changers' monopoly on small coins". Cupro-nickel 2 and 4 ghirsh were introduced in 1957.

In 1963, the halala was introduced and bronze 1 halala coins were issued. This was the only year these coins were struck. Cupro-nickel 5, 10, 25 and 50 halala followed in 1972. These coins are also inscribed with their denomination in ghirsh or riyal (1, 2 ghirsh, ¼, ½ riyal). In 1976, cupro-nickel 1 riyal coins were introduced, which are also inscribed with the denomination 100 halala. Bimetallic 1 riyal coins, also marked 100 halala, were issued in 1999.

Banknotes



In 1953, the Saudi Arabian Monetary Agency
Saudi Arabian Monetary Agency
The Saudi Arabian Monetary Agency , established in 1952, is the central bank of the Kingdom of Saudi Arabia.- History :Prior to the establishment of the Saudi Monetary Agency, the Saudi Hollandi Bank, a branch of the Netherlands Trading Society acted as a de-facto central bank, keeping the...

 (SAMA) began issuing Haj
Háj
Háj may refer to:* Háj in Turčianske Teplice District, Slovakia* Háj in Košice-okolie District, Slovakia...

 Pilgrim Receipts for 10 riyals, with 1 and 5 riyals following in 1954 and 1956, respectively. These resembled banknotes and were initially intended for use by pilgrims who exchanged foreign currency for them. However, they became widely accepted in Saudi Arabia and largely replaced silver riyal coins in major financial transactions. Consequently, the Monetary Agency began issuing regular banknotes for 1, 5, 10, 50 and 100 riyal in 1961, with the Pilgrim Receipts being demonetized in 1964.

500 Riyal notes were introduced in 1983. 20 and 200 riyal banknotes were issued in 2000 to commemorate the centenary of the founding of what became the Kingdom of Saudi Arabia.

SAMA
Saudi Arabian Monetary Agency
The Saudi Arabian Monetary Agency , established in 1952, is the central bank of the Kingdom of Saudi Arabia.- History :Prior to the establishment of the Saudi Monetary Agency, the Saudi Hollandi Bank, a branch of the Netherlands Trading Society acted as a de-facto central bank, keeping the...

 has announced that a new series of banknotes bearing the face of King Abdullah
Abdullah of Saudi Arabia
Abdullah bin Abdul-Aziz Al Saud, Custodian of the Two Holy Mosques, is the King of Saudi Arabia. He succeeded to the throne on 1 August 2005 upon the death of his half-brother, King Fahd. When Crown Prince, he governed Saudi Arabia as regent from 1998 to 2005...

 will be issued starting in April, 2007.

Fifth issue


On May 20, 2007, "the Saudi Arabian Monetary Agency, pursuant to article (4) of the Saudi Currency Law, issued under the Royal Decree No. (6) and dated 1/7/1379H." announced the fifth domination of the Saudi Riyal that features King Abdullah Bin Abdulaziz's picture on all notes except the 500 riyal, which features the late King Abdulaziz Al Saud. The 100 and 50 riyal notes were released on May 21, 2007. The 10 and 5 riyal notes followed on June 2007, then the 500 riyal followed on September 2007, and finally the 1 riyal note completed the series on December 2007. It is expected by the SAMA that the fourth (current) series will take approximately two years to phase out, although a complete removal of the current series require more than two years since the fourth series has been in circulation for well over 20 years. The fourth series which feature late King Fahad's picture will remain legal tender under the Saudi Arabian monetary law. The new series will have the latest and most advanced security system to prevent from counterfeiting and other similar activities.

Fixed exchange rate


In June 1986, the riyal was officially pegged
Fixed exchange rate
A fixed exchange rate, sometimes called a pegged exchange rate, is a type of exchange rate regime wherein a currency's value is matched to the value of another single currency or to a basket of other currencies, or to another measure of value, such as gold.A fixed exchange rate is usually used to...

 to the IMF
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...

's Special Drawing Rights
Special Drawing Rights
Special Drawing Rights are supplementary foreign exchange reserve assets defined and maintained by the International Monetary Fund . Not a currency, SDRs instead represent a claim to currency held by IMF member countries for which they may be exchanged...

 (SDRs). In practice, it is fixed at 1 U.S. dollar
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....

 = 3.75 riyals, which translates to approximately 1 riyal = 0.266667 dollar. This rate was made official on January 1, 2003.

The riyal briefly rose to a 20-year high after the Federal Reserve cut interest rate
Interest rate
An interest rate is the rate at which interest is paid by a borrower for the use of money that they borrow from a lender. For example, a small company borrows capital from a bank to buy new assets for their business, and in return the lender receives interest at a predetermined interest rate for...

s on September 18, 2007 and the Saudi Arabian Monetary Agency
Saudi Arabian Monetary Agency
The Saudi Arabian Monetary Agency , established in 1952, is the central bank of the Kingdom of Saudi Arabia.- History :Prior to the establishment of the Saudi Monetary Agency, the Saudi Hollandi Bank, a branch of the Netherlands Trading Society acted as a de-facto central bank, keeping the...

 chose not to follow suit, partially due to concerns about the inflationary effects low interest rates and a lower value for the riyal. The riyal returned to its peg against the U.S. dollar in early December of 2007.

Monetary Union


Saudi Arabia is a member of the Cooperation Council for the Arab States of the Gulf
Cooperation Council for the Arab States of the Gulf
The Cooperation Council for the Arab States of the Gulf , also known as the Gulf Cooperation Council , is a political and economic union of the Arab states bordering the Persian Gulf and constituting the Arabian Peninsula, namely Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates...

, which plans a monetary union with a single currency by 2010. However, as 2010 has come and passed, it seems highly unlikely for this to be true, as of the middle of 2011.

See also


  • Cooperation Council for the Arab States of the Gulf
    Cooperation Council for the Arab States of the Gulf
    The Cooperation Council for the Arab States of the Gulf , also known as the Gulf Cooperation Council , is a political and economic union of the Arab states bordering the Persian Gulf and constituting the Arabian Peninsula, namely Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates...

  • Economy of Saudi Arabia
    Economy of Saudi Arabia
    Saudi Arabia has an oil-based economy with strong government control over major economic activities. Saudi Arabia possesses 18% of the world's proven petroleum reserves, ranks as the largest exporter of petroleum, and plays a leading role in OPEC, although its influence has waned in recent...



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