The Saudi riyal has a close relationship with the US dollar through the fixed exchange rate system pursued by the monetary authority in the Kingdom. The Saudi riyal is fixed at a fixed value with the US dollar. Therefore, the monetary policy in this case is not independent and is affected by the monetary policy pursued by the US Federal Reserve. If the dollar is affected by the currency war, the riyal will be affected accordingly. Because of this relationship, the value of the riyal against other currencies is determined by the value of the dollar against these currencies, assuming that the monetary authority in the Kingdom has not changed this relationship and revalued the riyal against the dollar or broken this link. To know the direction of the future value of the riyal against other currencies, we must know the direction of the dollar against major currencies. The equilibrium value of global currency prices in the long run is determined by fundamental changes in local economies and the global economy. Fundamental changes in the global economy reflect fundamental changes in the equilibrium prices of currencies against each other. One of the most important of these changes at the international level is the launch of the euro. The launch of the euro in early 2001 marked a new era in the international currency exchange market and an important historical turning point, competing with the dollar for leadership of the global economy and influencing the role of the dollar as an international benchmark currency. Despite the weakness of the institutional structure of financial policy in the eurozone, which European countries tried to avoid after the Greek crisis, and even managed to gain the relative confidence of the markets, the euro is an international currency that has its weight in the global economy. Europe forms an economic bloc with a single currency that is the largest in trade exchange worldwide. Relative changes and contributions to the total income of the global economy also represent a fundamental variable in the composition of the global economy. The relative contribution of the US economy to the growth of the global economy is decreasing in favor of emerging countries (such as China, Brazil, India, Russia). A study published in 2005 by the Organization for Economic Cooperation and Development predicted that the US economy would decline from 20.6 percent of the global economy to 17 percent by 2030, while the Chinese economy would increase to represent at least 23 percent of the global economy, and the Indian economy would increase to represent at least 10 percent. This study did not take into account the impact of the global crisis in 2007, which would accelerate the change predicted by the study before the expected time. The global crisis in 2007 led to an increase in the problems suffered by the US economy and a rise in debt to national income, which reached 69 percent, and is expected to reach 100 percent in 2011. The rise in debt to national income is one of the most important threats to economic growth and the value of the currency in the future, which prompted the US government to pump dollars through a policy of quantitative easing, which will undoubtedly affect the value of the dollar in the short term. As a result of the 2007 global crisis, countries including China called for finding an alternative to the dollar as a global reserve currency. China also signed bilateral agreements with some countries to trade in their national currencies instead of using the dollar, in addition to reducing its dollar reserves and moving towards acquiring real assets.Another important change in the structure of the international economy is the growth of intra-trade between developing countries, reflecting the weakness of the vertical relationship that previously prevailed between developing countries and industrialized countries, which was in favor of the latter. The 2007 financial crisis also affected investors’ orientations and their measurement of risks towards their investments in developing countries. Due to economic openness, the investment environment in developing countries and the systems and laws related to foreign investment are converging with industrialized countries to compete with industrialized countries in attracting investment. The share of the financial market in America decreased from 53 percent in 2000 to 41 percent in 2009, while in Asia it increased from 16 percent in 2000 to 31 percent in 2009. The growth expectations that will prevail in emerging developing countries and the pessimistic outlook towards the growth of the economies of industrialized countries also led to the flow of investments to emerging developing countries. The United Nations Foreign Direct Investment (FDI) report showed that global companies are planning to invest in developing countries over the next three years compared to industrialized countries, as industrialized countries have been negatively affected by the change in global companies’ preferences towards direct investment in countries.
These variables reflect a change in the structure of the global economy, economic relations and power centers, which is reflected in the values ​​of currencies because they ultimately reflect the fundamental variables in the economies of countries and the global economy. Therefore, the decline of the dollar against major currencies reflects the long-term structural changes in the global economy, which are inevitable for the dollar, and the short-term impact of US monetary and fiscal policy. The important issue is whether this change will take longer or whether the changes will be so rapid that it will be difficult for the global economy to absorb them, which will affect the growth of the global economy and may lead the world into a major economic recession. Because the riyal is fixed to the dollar, what happens to the dollar will happen to the riyal. Structural changes in the global economy raise the importance of reconsidering the Kingdom’s monetary policy, and the importance of studying the separation of the riyal from the dollar, and what is the appropriate monetary system for the Kingdom that takes into account the relative importance of oil to the Saudi economy and structural changes in the global economy to achieve the greatest benefit for the citizen? And the impact of monetary policy on the wealth of individuals and maximizing the economic well-being of the citizen.