Saudi Arabia has recently increased its degree of openness, engaging in higher international (financial & non-financial) activities. Briefly discuss the following along with providing one example:

  • How would this affect our economy?
  • How would this affect our BoP? Current account & financial account. 
  • How would this affect our exchange rate? Since it is a pegged exchange rate regime, increasing international trade will affect the exchange rate, so how would the Saudi Central Bank react to this?