Money is weird. Usually, exchange rates feel like a rollercoaster, bouncing up and down based on some central bank governor’s mood or a sudden spike in oil prices. But if you look at 1 USD to Saudi Riyal, you’ll notice something strange. It’s flat. Totally frozen. Since June 1986, the Saudi Riyal (SAR) has been locked to the US Dollar at a rate of exactly 3.75.
That’s forty years of consistency.
If you’re traveling to Riyadh or doing business in Jeddah, you don’t really have to check the charts every morning. You basically already know the answer. While the rest of the world deals with currency volatility that ruins profit margins, Saudi Arabia has opted for the ultimate financial "easy mode" by tethering their fate to the greenback.
The 3.75 Magic Number
Why 3.75? It wasn't just a random number pulled out of a hat. Back in the mid-80s, the Saudi Arabian Monetary Authority (SAMA)—which is basically their version of the Fed—decided that stability was worth more than flexibility. By pinning 1 USD to Saudi Riyal at this specific mark, they created a predictable environment for oil exports.
See, oil is priced in dollars. Everywhere. When Saudi Arabia sells a barrel of crude, they get paid in USD. If the Riyal fluctuated every day, the government’s budget would be a total nightmare to manage. One day they'd have enough for a new city in the desert, and the next, they'd be short on cash just because of a currency swing. By keeping the rate at 3.75, the math stays simple. Dollars in, predictable Riyals out.
It’s a "peg." And honestly, it’s one of the most successful ones in history.
💡 You might also like: US to India Rupee: What Most People Get Wrong About the 90 Level
How the Peg Actually Works
You might wonder how they keep it so still. It’s not magic. It’s massive amounts of cash. To keep 1 USD to Saudi Riyal at that 3.75 level, SAMA has to be ready to buy or sell whatever amount of currency the market demands. If everyone suddenly wanted to dump Riyals for Dollars, the Riyal’s value would naturally want to drop. To stop that, the Saudi government just dips into its massive foreign exchange reserves—which are often north of $400 billion—and buys up the excess Riyals.
They have enough "ammo" to win almost any fight against currency speculators.
The Trade-Offs Nobody Talks About
There is no such thing as a free lunch in economics. Because the Riyal is glued to the Dollar, Saudi Arabia basically gives up its own independent monetary policy. When the US Federal Reserve raises interest rates to fight inflation in Chicago or New York, Saudi Arabia usually has to follow suit, even if their own economy doesn't need higher rates.
If the Fed hikes, SAMA hikes.
If they didn't, money would flow out of Saudi banks and into US banks to chase the higher yield, putting pressure on that 3.75 peg. So, if you're a business owner in Dammam wondering why your loan interest just went up, don't just look at the Saudi economy. Look at what Jerome Powell said in Washington D.C. yesterday.
Why Does This Matter for You?
For the average person, this peg is a blessing. It makes life simple. If you have $100, you have 375 SAR. Period.
- For Travelers: You don't need a currency app. Just multiply by 3.75 (or roughly 4 if you're doing quick "mental math" and don't mind being a little off).
- For Expats: If you're working in the Kingdom and sending money home to the US, your "purchasing power" back home only changes if the US Dollar itself gains or loses value against other global currencies. The Riyal-to-Dollar part of the equation is a constant.
- For Investors: It removes "currency risk." If you buy stocks on the Tadawul (the Saudi exchange), you don't have to worry about the currency crashing and wiping out your gains.
However, there have been moments of drama. In 2016 and again during the 2020 oil price crash, speculators started betting that Saudi Arabia would finally break the peg. They thought the government would run out of money and let the Riyal devalue to save cash.
They were wrong.
The Saudis held the line. They've shown they are willing to burn through billions in reserves to keep that 1 USD to Saudi Riyal rate exactly where it is. It’s a matter of national credibility at this point.
Real World Conversion Examples
Let's look at what this actually looks like on the ground today. Since the rate is fixed, the "bid" and "ask" prices at banks are usually very tight. You might see 3.74 or 3.76 at a currency exchange booth at the airport because they need to make a profit on the spread, but the official mid-market rate is immovable.
- A $5 Starbucks coffee: Costs about 18.75 SAR.
- A $1,200 iPhone: Costs about 4,500 SAR.
- A $50,000 Luxury SUV: Costs about 187,500 SAR.
It's predictable.
The Future of the Riyal
Is the peg permanent? Most experts say yes, at least for the foreseeable future. Saudi Arabia’s "Vision 2030" plan is all about diversifying the economy away from oil, but until that transition is complete, the stability of the Dollar peg is the bedrock of their financial system.
Some people argue that if the world moves away from "Petrodollars"—the idea of pricing oil exclusively in USD—the peg might become a liability. There’s been talk of Saudi Arabia accepting Chinese Yuan for oil. If that becomes a major trend, they might eventually move to a "basket of currencies" rather than just the Dollar. But honestly? Don't hold your breath. Moving away from the Dollar peg would be a massive shock to the Saudi banking system that nobody really wants to deal with right now.
Actionable Steps for Handling Your Money
If you are dealing with 1 USD to Saudi Riyal transactions, stop stressing about the "best time" to convert. Since the rate doesn't move, you're not going to "win" by waiting until next week.
Instead, focus on the fees.
Since the exchange rate is fixed, banks and transfer services like Western Union, Wise, or STC Pay make their money on the service fees and the "hidden" spread.
- Check the Spread: Even though the rate is 3.75, an exchange house might offer you 3.68. That’s a bad deal. Look for providers that get you as close to 3.75 as possible.
- Use Local Digital Wallets: In Saudi Arabia, apps like STC Pay often have much better conversion rates for sending money out than traditional brick-and-mortar banks.
- Avoid Airport Booths: This is universal advice, but in Saudi, it’s even more relevant. They know you can’t shop around, so they’ll give you a rate far away from the 3.75 peg.
- Keep Cash in USD if Unsure: If you’re an expat and you think you might move back to the US or Europe soon, keeping a portion of your savings in USD is a safe bet since the Riyal is basically a proxy for the Dollar anyway.
The stability of the Saudi Riyal is a rare thing in a world where inflation and currency devaluations are making headlines every day. It's a boring topic because nothing changes, but in the world of finance, boring is usually good. It means you can plan for the future without worrying that your money will be worth half as much by the time you wake up tomorrow.