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Makkah moneychangers wary as currencies sink

Published: Updated:

JEDDAH — Makkah currency exchanges are not accepting the Libyan dinar due to the country’s unstable political circumstances, Al-Eqtisadiah reported.

The last few months of 2014 witnessed drops and fluctuations in some Middle Eastern and Asian currencies due to the recent drop in oil prices and unstable political conditions.

The Libyan dinar has been one of the most affected currencies and Libyan pilgrims were obliged to change their currency into U.S. dollars prior to their entry into the Kingdom.

The owner of a currency exchange, Ali Sayes, said he stopped accepting the Libyan dinar because it is no longer guaranteed and people do not trust it anymore.

He said: “A few years ago, the European economic crisis was the biggest economic crisis in the world.

“Nowadays, the Arab world is struggling to maintain its economy after the political mayhem starting with the Arab Spring.”

He also added that the Yemeni riyal, Sudanese pound and Syrian pound dropped in value by 70 percent compared to the beginning of 2014.

The Iraqi dinar has been fluctuating in value since the first Gulf War and has recently dropped after IS invaded the country, he said.

The most active Middle Eastern currency in the market is the Egyptian pound as it is used by Egyptian pilgrims and residents in the Kingdom.

Another source from the banking sector in Makkah said the Iranian riyal has dropped by 17 percent.

Its exchange rate used to be SR3 for every 1 million riyal but this has now dropped to only SR2.5.

The source said: “Iranian pilgrims would use the U.S. dollar as well and exchange it for Saudi riyals.

“They would then exchange the Saudi riyals back to U.S. dollars upon their return to their countries.”

The rate of exchange for the Indonesian rupiah has also dropped from SR400 for every 1 million rupiahs to SR307.

The Turkish lira is the most stable of the Middle Eastern currencies and still exchangeable in the market, said the source. The Russian ruble has also dropped in value.

Banker Sharif Barakati added the U.S. dollar is the most exchanged currency in Makkah.

Even though there is not much profit in exchanging dollars, its exchange fee is stable and is widely available.

Another source in the banking sector said the Makkah exchanges are very much aware of the international currency markets.

He said: “The dollar is the lead currency in the international and local stock market. Following the dollar are the euro, pound sterling and Canadian dollar.”

A number of bankers reported that their profits for 2014 were 50 percent less than previous years due to the decreased number of pilgrims and increase in rent prices as a result of the Grand Mosque expansion project.

The Makkah currency exchanges are among the most active worldwide due to the number of pilgrims who come from all over the world to perform Haj or Umrah, according to a source from the banking sector.

They have an annual profit of SR400 million at a rate of SR15 million-SR20 million a day.

There are 11 licensed exchanges in Makkah and they are obliged to have a financial capital of SR1 million, said the source.

This article was first published in the Saudi Gazette on Jan. 15, 2015.