IMPACT OF MACROECONOMICS FACTORS IN SAUDI RIYAL EXCHANGE RATES

Abstract

Factors influencing the exchange rate are so many and vary from one country to another. This study attempts to examine the influence of inflation, oil prices and GDP on the Saudi Riyal exchange rate. The study hypothesized that there would be a negative impact of inflation on the exchange rate. Oil prices and the gross domestic product growth rate would have a positive impact on the exchange rate. In finding whether to accept or reject the null hypothesis, three types of regression analysis were used. The data was used on a quarterly basis for the period ranging from 2002 to 2015. The scope of this investigation found a significance relationship between oil prices and GDP on the exchange rate while insignificance relationship between inflation on exchange rate. The findings of the study would intake a great value in forecasting the exchange rate regarding inflation, oil prices and GDP.