SAR/EUR Outlook:
The SAR/EUR exchange rate is currently slightly weaker, sitting below its 90-day average and near recent lows. This situation is indicative of a likely sideways movement in the near term.
Key drivers:
- Rate gap: The Saudi Arabian Monetary Authority maintains a stable peg of the Riyal to the U.S. dollar, while the European Central Bank is navigating challenges related to inflation, affecting the euro's performance.
- Risk/commodities: Oil prices are currently high, trading well above their 3-month average, which typically supports the Saudi Riyal due to its dependence on oil exports.
- One macro factor: The Eurozone's recent consumer confidence figures showed improvement but still fell short of forecasts, creating headwinds for the euro's strength.
Range:
The SAR/EUR rate is likely to drift within its recent range, given the present market conditions.
What could change it:
- Upside risk: A significant rebound in consumer confidence in the Eurozone could boost the euro's value.
- Downside risk: A sustained dip in oil prices may weaken the Saudi Riyal, further pressure the exchange rate.