What if Pakistan purchase oil in riyal currency from Saudi Arabia

[nahtanbob]

Niaz,

I understand the idea behind Saudi Vision 2030; the Saudis want to diversify and export finished products, such that 50% of exports are non-oil based. While the plan is good (and they should do this to some extent), it doesn't take into account the more economical method of investing in other countries so that you can maximize profits. Many smaller projects throughout the world rather than one big city like NEOM, where a lot of the work will be infrastructure building.

I would say, they should look at the Japanese model of investing abroad, such as in the textile industry in Bangladesh. Japanese investors bring capital, know-how, and contracts to sell to other countries, and sell around the world. The Japanese workers are the top talent managers and middle management supply chain experts.

Hundreds of Saudi SEZ throughout the world, would earn them more than one big city where they will have to bring in labor and ship in raw materials. It would be more profitable to bring their investments to these countries, and in turn modernize these countries through trade, increasing the demand for Saudi oil, and creating a virtuous cycle where Saudi has more customers for their oil.

These nations would then have the development and funds to protect Saudi Arabia, not only because of their dependence on Saudi Oil, but because of their trade ties.

(p.s. you linked to your computer)

the saudi strategy is sound. it has two drawbacks - 1. it does not employ saudi labor
2. no one has managed investments in perpetuity making money. sooner or later you make mistakes and money is lost

 

[blueazure]

wont happen

IMF will kill the deal

we are in too much knee deep mud with IMF now to make such decisions

 

[My-Analogous]

libya , iraq had nuclear reactor

First. what is the difference between Nuclear reactor and Bonb?
Second, Both don't any reactor at all

 

[Zhukov]

Afreen hai yaar sab par.

If you have enough Products that you can export to Saudi Arabia and Saudi Markets can accept those products. And the Volume of those Products is so much that it can cover the value of Oil Imported from Saudi Arabia then what difference it makes to take Ryals and then pay Saudis in ryals or Take Dollars from the Saudis and pay back Dollars to them? Is it so difficult to understand?
Only those currencies are accepted in international market whose issuing authorities have great export Industries i.e Euro of European Union, Dollar of USA, Yen of Japan, and Yuan of China.
And Trust me all of you will instantly reject Ryals if your Export to Saudi Arabia exceed Imports from Saudi Arabia as Ryals will only be use able for trade with Saudis while Dollar/Euro can be used to Purchase anything from anywhere.
Why are we so Desperate to cook Conspiracy Theories in everything? Look at China, Malaysia, Singapore, Indonesia, Vietnam etc. They are doing pretty well by Developing their industries and Selling their goods to Developed Countries.

 

[Mav3rick]

As a member of OPEC I don't think Saudia can trade Oil for any other currency.

Besides, all those who attempted to trade their Oil for some other currency were made examples of........except maybe Putin.

 

[Mr ambassador]

Afreen hai yaar sab par.

If you have enough Products that you can export to Saudi Arabia and Saudi Markets can accept those products. And the Volume of those Products is so much that it can cover the value of Oil Imported from Saudi Arabia then what difference it makes to take Ryals and then pay Saudis in ryals or Take Dollars from the Saudis and pay back Dollars to them? Is it so difficult to understand?
Only those currencies are accepted in international market whose issuing authorities have great export Industries i.e Euro of European Union, Dollar of USA, Yen of Japan, and Yuan of China.
And Trust me all of you will instantly reject Ryals if your Export to Saudi Arabia exceed Imports from Saudi Arabia as Ryals will only be use able for trade with Saudis while Dollar/Euro can be used to Purchase anything from anywhere.
Why are we so Desperate to cook Conspiracy Theories in everything? Look at China, Malaysia, Singapore, Indonesia, Vietnam etc. They are doing pretty well by Developing their industries and Selling their goods to Developed Countries.

Oil trading in riyal currency may be a bandage for our economy in this crises . Less burden on dollar reserves mean less trade deficit , less currency devaluation and less inflation .
IMF often dictates this to dollar starved third world countries .

this is not conspiracy theory . Putin many time suggested and IK in recent ECO summit said this. There is a logic why class people are insisting .

 

[Zhukov]

Oil trading in riyal currency may be a bandage for our economy in this crises . Less burden on dollar reserves mean less trade deficit , less currency devaluation and less inflation .
IMF often dictates this to dollar starved third world countries .

this is not conspiracy theory . Putin many time suggested and IK in recent ECO summit said this. There is a logic why class people are insisting .

My Dear Friend that is where the problem lies with this Idea.
Where will you get those Ryals from?
Obviously if you want to buy oil from KSA you need Ryals to pay them as per your proposal. Who will give you those Ryals?
Will you print them yourself? No You cannot that is Illegal, only KSA can Print Ryals
Will you ask KSA to Give those Ryals to you? What will you give them in return of those Ryals?
You will offer them Pakistani Rupee in return of Ryal? Why will they take your currency, It have no demand internationally as your Exports are down to nothing compared to international trade.
So tell me how will you get Ryals to Pay back for Oil my friend.

 

[Mr ambassador]

My Dear Friend that is where the problem lies with this Idea.
Where will you get those Ryals from?
Obviously if you want to buy oil from KSA you need Ryals to pay them as per your proposal. Who will give you those Ryals?
Will you print them yourself? No You cannot that is Illegal, only KSA can Print Ryals
Will you ask KSA to Give those Ryals to you? What will you give them in return of those Ryals?
You will offer them Pakistani Rupee in return of Ryal? Why will they take your currency, It have no demand internationally as your Exports are down to nothing compared to international trade.
So tell me how will you get Ryals to Pay back for Oil my friend.

We will get riyals by our exports to gulf States and remittances of Pakistani. expats living in KSA and gulf States .

 

[Abdussamad]

Somebody hasn't heard of the petrodollar!

 

[Zhukov]

We will get riyals by our exports to gulf States and remittances of Pakistani expats.

Ok But only Saudi Arabia have ryals. Rest of Gulf states have their own Currencies. Dirham, Dinar ETC.
But lets assume So you will get Ryals from Saudi Arabia by Exporting them your Goods and Labour Right.
But the problem is Your total Exports to Saudi Arabia are less then 400 Million Dollars Per Year meaning you can receive less then 400 million Dollars from Saudi Arabia While Your Imports from Saudi Arabia Exceed 2500 Million dollars Per Year the money you have to Pay back to Saudi Arabia is 2500 Million Dollars per year, while what you receive is less then 400 Million Dollars.
Just Convert the Dollars to Ryals, How do you think this 6 times difference in receipts and payments will be covered from?

 

[Mr ambassador]

Ok But only Saudi Arabia have ryals. Rest of Gulf states have their own Currencies. Dirham, Dinar ETC.
But lets assume So you will get Ryals from Saudi Arabia by Exporting them your Goods and Labour Right.
But the problem is Your total Exports to Saudi Arabia are less then 400 Million Dollars Per Year meaning you can receive less then 400 million Dollars from Saudi Arabia While Your Imports from Saudi Arabia Exceed 2500 Million dollars Per Year the money you have to Pay back to Saudi Arabia is 2500 Million Dollars per year, while what you receive is less then 400 Million Dollars.
Just Convert the Dollars to Ryals, How do you think this 6 times difference in receipts and payments will be covered from?

Agree with you

 

[ali_raza]

soo naive of people even commenting on the subject
first saudia and other gcc currencies r pegged to UsD
second its all same u have to give something in return
service or commodities
at the end u will emd up paying exactly the same amount

 

[niaz]

Niaz,

I understand the idea behind Saudi Vision 2030; the Saudis want to diversify and export finished products, such that 50% of exports are non-oil based. While the plan is good (and they should do this to some extent), it doesn't take into account the more economical method of investing in other countries so that you can maximize profits. Many smaller projects throughout the world rather than one big city like NEOM, where a lot of the work will be infrastructure building.

I would say, they should look at the Japanese model of investing abroad, such as in the textile industry in Bangladesh. Japanese investors bring capital, know-how, and contracts to sell to other countries, and sell around the world. The Japanese workers are the top talent managers and middle management supply chain experts.

Hundreds of Saudi SEZ throughout the world, would earn them more than one big city where they will have to bring in labor and ship in raw materials. It would be more profitable to bring their investments to these countries, and in turn modernize these countries through trade, increasing the demand for Saudi oil, and creating a virtuous cycle where Saudi has more customers for their oil.

These nations would then have the development and funds to protect Saudi Arabia, not only because of their dependence on Saudi Oil, but because of their trade ties.

(p.s. you linked to your computer)

Sorry. The link is

https://vision2030.gov.sa/en/programs/NTP

You need to download different programs to read all of it.

My reason to ask you to kindly read it was because you were suggesting what Saudis should do; such as investing in Pakistani Agriculture & in Pakistani Dams etc.

My point is that Saudis already have the 'blueprint' of a long term development strategy in place whereby they are investing heavily in the Quality of life programs, Financial sector development, Housing programs, National transformation program, Public investment fund program, Fiscal balance program, Privatization program, National companies promotion program, National industrial development program, Strategic partnership program, Hajj & Omra program, Human capital development program and National character enrichment program.

This is such a comprehensive project that IMHO there would not be any genuine interest on their part to invest in any other program which falls beyond the scope of their 'Strategic Partnership Program' as included in their 'Vision 2030'. We must remember that Saudi Arabia is our friend but only as far as their national interest demands.

 

[denel]

The demand for dollars for imports is causing troubles in external balance of payment .For that we devalue our currency , impose heavy taxes , increase inflation and what not to fight with Dollar.

Of top ten imports of Pakistan, Oil is number one in our import list & is major import from Saudi Arabia.

What if we purchase oil in Saudi riyal currency from Saudi Arabia.?

Right now 26,000,00 Pakistanis are working in Saudi Arabia. They send their hard earned money in riyal currency to our banks.

In return , we will also get Saudi riyal for our exported products in this trade .

If need comes , then IK can request to MBS to accommodate more Pakistani expats in Saudi Arabia. Moreover there lots of Pakistanis working in gulf States so it will not be problematic to increase our riyal reserve.

There are lots of advantages trading in riyal currency with Saudi Arabia.
Will it create breathing room for Pakistani economy ?

It wont matter as the Riyal is tied to the dollar always.

 

[fitpOsitive]

The demand for dollars for imports is causing troubles in external balance of payment .For that we devalue our currency , impose heavy taxes , increase inflation and what not to fight with Dollar.

Of top ten imports of Pakistan, Oil is number one in our import list & is major import from Saudi Arabia.

What if we purchase oil in Saudi riyal currency from Saudi Arabia.?

Right now 26,000,00 Pakistanis are working in Saudi Arabia. They send their hard earned money in riyal currency to our banks.

In return , we will also get Saudi riyal for our exported products in this trade .

If need comes , then IK can request to MBS to accommodate more Pakistani expats in Saudi Arabia. Moreover there lots of Pakistanis working in gulf States so it will not be problematic to increase our riyal reserve.

There are lots of advantages trading in riyal currency with Saudi Arabia.
Will it create breathing room for Pakistani economy ?

Saudia will never dare to do this. Even, Russia and China can't do this. Hence the term "petro dollar".