World’s largest crude oil exporter Saudi Arabia reiterated its stand to keep its currency peg to the US dollar as long as its economy is heavily reliant on oil. Speaking at a function here, Saudi Central Bank Governor Muhammad al-Jasser however said this may change eventually. Saudi Arabia pegs its riyal currency to the US dollar based on pure economic interests and government plans to build more housing should reduce inflationary pressures in the future, he added. The peg - at 3.75 to the dollar - limits the Saudi central bank's scope to combat inflation because it needs to keep interest rates closely aligned with US benchmarks to avoid excessive pressures on the riyal. The peg, introduced since 1986, with the aim of stabilizing the internal and external value of the currency. Oil accounts for around half of the output of the biggest Arab economy. The kingdom, a key US ally, depends on exports of crude, which is priced in dollars, for around 85 per cent of its government revenue. Dollar weakness tends to boost inflation in the world's top oil exporter, where some 70 per cent of imports are priced in dollars. Saudi inflation eased to a one-year low of 4.7 percent in March, although analysts say demand will be boosted by a package of government handouts worth around $130 billion prompted by political turmoil elsewhere in the Arab world.

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