Section Article

An analysis of the impact of the devaluation of the Saudi Riyal on oil exports using the J-Curve framework.
Author(s): Bhajan Kaur

Abstract
This research investigates the influence of the depreciation of the Saudi Riyal on the countrys oil exports using the J-Curve phenomenon as a theoretical framework. The J-Curve hypothesis posits that an initial currency depreciation has a negative impact on a countrys trade balance before eventually leading to an improvement over time. This study examines the impact of a devaluation of the Riyal on export volumes and income in both the short and long term within the specific setting of Saudi Arabia a major oil exporting country. By utilizing econometric analysis and historical data the study concludes that the initial impact of devaluing the Riyal can result in a decrease in oil export earnings due to higher expenses and contractual commitments. However a subsequent period of adjustment generally leads to an enhancement in the trade balance. The reason for this adjustment may be linked to improved competitiveness and a rise in the demand for more affordable oil. The results enhance our comprehension of the impact of exchange rate swings on countries that heavily rely on oil and provide valuable guidance for policymakers and industry participants in effectively managing currency risks and maximizing export plans.