Saudi Arabia's riyal exchange rate weakened sharply against the rupiah in Thursday trade (4/29/2021) to touch its lowest level in 1 month. The announcement of monetary policy of the Central Bank of the United States (U.S.) early this morning triggered the strengthening of the rupiah.

As described in refinitiv data, riyal today was made drops up to 0.69% to Rp 3,839/SAR. The riyal position improved, at the end of trading at Rp 3,852/SAR, weakening 0.34% in the spot market. The level was the lowest since March 30. 

The sharp weakening of the riyal was triggered by the US dollar. Saudi Arabia has implemented a fixed exchange rate policy against the United States dollar (U.S.) since 1986. US$ 1 is set to be equivalent to 3.75 riyals.

With this policy, the ups and downs of the riyals against the rupiah are exactly the same as the US dollar against the rupiah, albeit with different percentages. Regardless of the economic condition of Saudi Arabia, the movement of its currency will always copy paste from the US dollar.

The US dollar this morning weakened 0.66%, before ending trading by weakening 0.34% to Rp 14,445/US$.

The U.S. dollar was depressed after the Fed earlier in the day confirmed it would not change its monetary policy any time soon. The 0.25% interest rate will remain at least until 2023, although the U.S. economy is expected to grow higher than predicted.

In a press conference, Fed Chairman Jerome Powell stated that now is not the right time to talk of a halt to bond purchases in the market. The Fed is currently buying bonds known as quantitative easing (QE) worth US$ 120 billion per month, meaning it will continue, and there will be no reduction in the value of purchases or tapering. The announcement sent the U.S. dollar index down 0.33% in Thursday trading, and this morning it fell 0.2% to 90.424.