JEDDAH — The increase in demand for currency exchange shops throughout the Kingdom has ignited a debate between economists and money exchangers with the latter claiming that banks are incapable of carrying out the functions of currency exchangers. Economists on the other hand, say increasing the number of shops is infeasible and cite several recent mergers between banks and currency exchangers that they say are well-equipped to satisfy demand.
Essam Khalifa, a member of the Saudi Economics Society, said it is infeasible to open additional currency exchange shops amid the spread of banks and credit cards through which travelers can withdraw money from their bank accounts in whatever currency they want without having to search for a money exchanger. However, Khalifa admitted that certain currencies such as the Euro cannot be made available all the time in banks.
“Unlike the dollar, which has a stable and fixed rate, the price of the Euro fluctuates and it is only natural for banks to not deal with currencies that are not profitable.”
Khalifa called on residents planning to travel abroad to exchange Saudi riyals to the currency of the country they are traveling to before they leave. Due to the low rate of the Saudi riyal overseas, Khalifa said it is better to exchange currency within the Kingdom as the rate is SR3.75 per U.S. dollar compared to the SR3.72 rate abroad. Khalifa also advised tourists to withdraw cash from the Kingdom’s Automated Teller Machines (ATMs) due to overseas withdrawal charges that can reach up to SR30 per withdrawal.
Ibrahim Bin Ya’la of the Bin Ya’la currency exchange shops, said there are only three companies working in the field and said many of the Kingdom’s cities such as Riyadh do not have money exchange shops, which leads to tremendous pressure and long lines at banks during peak seasons.
“The work of money exchange shops is seasonal as there is more pressure during holidays and the summer, Haj and Umrah seasons. These days money exchange shops are witnessing a big rush, especially since we are at the beginning of the summer holidays. During the rest of the year, we see considerably less activity.”
Bin Ya’la dismissed the idea of doing away with currency exchange shops. “The marginal profit from money exchange operations is very little compared to the efforts being exerted and this precisely why banks are uninterested — meager profit margins dissuade banks from stocking all currencies. In most cases, major currencies such as the euro and U.S. dollar are available, but at considerably higher rates,” he said.