RIYADH (Reuters) – A Saudi Arabian council that advises the king will discuss revaluing the riyal against the dollar at a meeting on Sunday with the finance minister and central bank governor, a newspaper reported on Saturday.
Reviewing the exchange rate of the riyal versus the U.S. dollar is a “necessity”, daily al-Eqtisadiah quoted Osama Abu-Gherara, deputy chairman of the Shura Council’s finance committee, as saying.
Abu-Gherara was reported as saying the kingdom, which has not changed the riyal’s rate in 22 years, had yet to take any “concrete steps” to combat inflation, which surged to a 16-year high of 6.5 percent in December.
Inflation is partly driven by a rise in global commodity prices and the weak U.S. currency.
The Shura Council, whose members are appointed by King Abdullah, will meet Finance Minister Ibrahim al-Assaf and Hamad Saud al-Sayyari — governor of the Saudi Arabian Monetary Agency — on Sunday, Abu-Gherara said.
Mohammad al-Zulfa, a member of the council, said last month the meeting would take place on February 10. Such meetings are usually held behind closed doors.
The 120-member Shura can review draft legislation and make recommendations, but these are not binding on the government.
It would take a precipitous decline in the dollar for Saudi Arabia to revalue, Mohammed al-Jasser, vice governor of Saudi Arabia’s central bank, said last month.
Saudi Arabia has been trying offset the impact of price rises on its 25 million people through measures including a plan announced last month to raise wages, welfare payments and subsidies.
Like most of its neighbors in the world’s biggest oil-exporting region, Saudi Arabia’s dollar peg means it is forced to track U.S. monetary policy at a time when the Federal Reserve is cutting interest rates to help ward off recession.
Inflation has overtaken official borrowing costs in the largest Arab economy, where the central bank raised bank reserve requirements twice in two months to force lenders to keep more money in their vaults in a bid to slow down credit growth.
The Saudi riyal hit a two-month high of 3.73 against the dollar last week.