The Canadian Dollar is trading against the Saudi Riyal at 2.94 today, up 0.29% with a YTD return of 1.83%. The pair’s open rate was at 2.9366 compared to a previous close of 2.9333. The daily range is expected to stay between 2.94 and 2.95, the 52-week range is forecasted to sit between 2.55 and 2.95.
After dropping to the 2.50 support level in March due to the pandemic, CAD exchange rate has recovered well against SAR spiking to the 2.70 level in June and has been gradually increasing ever since. Now passing the 2.90 level, CAD/SAR is experiencing the highest exchange rate in favor of CAD since April 2018 which is likely to drive investors towards more bullish trading tendencies moving into 2021.
Canada has seen market improvements due to its success in securing COVID-19 vaccinations and growing employment rates while Saudi Arabia, one of the world’s largest oil exporters has been struggling to stabilize its economy due to low barrel prices. On Tuesday the Middle-Eastern nation announced a 990 billion riyal ($263.91) budget for 2021 which is “around 7% less than estimated spending for this year” according to the Economic Times.
Saudi anticipates a deficit of “298 billion riyals this year, or 12% of gross domestic product (GDP), as crude revenues are slated to drop by over 30%.” 4.9% of the country’s GDP will also decline in 2021 according to a budget statement. The kingdom’s economy is expected to shrink by 3.7% this year but there are hopes that it will swing back to 3.2% growth by 2022.
Saudi’s public debt is currently at 937 billion riyals, 32.7% of the total GDP which is a leading force behind SAR market performance. Traders of CAD/SAR should continue to see strength in the loonie moving into the new year until the Saudi Arabian economy has stabilized.
By Surina Nath