Aqid ERPWhy most Gulf exchange rates do not move
Five of the six Gulf currencies are fixed to the US dollar by their central banks: the Saudi riyal at 3.75, the UAE dirham at 3.6725, the Qatari riyal at 3.64, the Bahraini dinar at 0.376 and the Omani rial at 0.3845 to the dollar. Between any two of them the rate is fixed as well — the cross of the two pegs — so a riyal buys the same number of dirhams today as last year.
The Kuwaiti dinar is the exception: it is pegged to a basket of currencies whose weights are not published, so its rate moves a little every day. For it, the converter asks for the day's rate.
A worked example
SAR 1,000 in dirhams, and an Omani supplier's invoice in riyals.
| SAR 1,000 in USD: 1,000 ÷ 3.75 | 266.67 |
|---|---|
| SAR 1,000 in AED: 1,000 ÷ 3.75 × 3.6725 | 979.33 |
| OMR 1 in SAR: 3.75 ÷ 0.3845 | 9.75 |
| BHD 100 in OMR: 100 ÷ 0.376 × 0.3845 | 102.261 |
In the books
An invoice in another currency is recorded at the rate on its date, and the payment at the rate on the day it is paid; between pegged currencies the two are the same, so no exchange difference arises. With the Kuwaiti dinar or any floating currency the difference is a gain or a loss. Banks and exchange houses buy and sell around these rates, and their spread is a cost of its own.