ECON101 Saudi Electronic University Saudi Arabia’s Currency and the US Dollar Paper

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noqhynmvmgunzre16

Economics

ECON101

Saudi electronic university

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While Saudi Arabia seeks to diversify its economy, the Saudi economy is dominated by the petroleum sector. In addition, the Saudi Arabian Riyal (SAR) is pegged to the U.S. Dollar.

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Critical Thinking: Saudi Arabia’s Currency and the U.S. Dollar While Saudi Arabia seeks to diversify its economy, the Saudi economy is dominated by the petroleum sector. In addition, the Saudi Arabian Riyal (SAR) is pegged to the U.S. Dollar. In a critical essay, indicate the main considerations Saudi Arabia faces from a currency perspective (e.g., currency values, interest rates, inflation, and trade issues) that ensue given two scenarios: • • The first scenario is a dramatically declining world oil price. The second scenario is a dramatically increasing world oil price. Analyze the results you expect from each scenario. Directions: • • • • • Your essay is required to be four to five pages in length, which does not include the title page and reference pages, which are never a part of the content minimum requirements. Support your submission with course material concepts, principles, and theories from the textbook and at least three scholarly, peer-reviewed journal articles. Use the Saudi Digital Library to find your resources. Use Saudi Electronic University academic writing standards and follow APA style guidelines. It is strongly encouraged that you submit all assignments into Turnitin prior to submitting them to your instructor for grading. If you are unsure how to submit an assignment into the Originality Check tool, review the Turnitin – Student Guide for step-by-step instructions. Review the grading rubric to see how you will be graded for this assignment.
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Attached.

Running head: WORLD OIL PRICE FLUCTUATIONS

World Oil Price Fluctuations

Name of student
Name of Instructor
Name of course
Name of institution
Date

1

WORLD OIL PRICE FLUCTUATIONS

2

World Oil Price Fluctuations
The world oil price is of critical importance both to the exporters’ economy and importers'
economy, considering that the oil is the most extensive traded product internationally. Changes in
oil prices affect all other energy-intensive goods and services. To some extent, the prices are also
linked to fuel costs. Therefore dramatic changes in oil prices have a wide range of consequences
for both oil-consuming countries and oil-producing countries. This critical essay is meant to
analyze the primary considerations Saudi Arabia faces from a currency perspective due to a
dramatic increase and decrease in world oil prices. The objective of the analysis is to assess the
expected outcomes that come as a result of the attention that KSA faces under changes in oil
products and to shed light on how the Saudi economy can get diversified.
Saudi Arabia's primary attention in the face of changes in oil prices is to save its economy. Oil is
the main export in the Kingdom of Saudi Arabia (KSA), and therefore, the country should be
vigilant with any strategy that can optimize the economy through product export. Among the
considerations that the Kingdom faces lies in its currency values. Its currency is more valuable
compared to other oil-producing countries hence a competitive advantage in times of oil price
changes. A decline in world oil prices tends to lower profit to most producing countries. However,
being the largest producer of oil, oil price declines are advantageous to Saudi Arabia as they
increase their supplies. Its favorable currency value enables the country to supply the product at
lower prices even in times of declined oil prices hence advantageous to its economy (Rees &
Althakhri, 2008).
Another consideration lies in the count...


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