The Middle East is home to some of the strongest and richest economies in the world. Thanks to abundant natural oil, countries such as Iran, Saudi Arabia, the UAE, and numerous others have made their mark on the world economy.
When trading forex using Middle-Eastern currencies, there are some important factors to remember and consider that can influence your buying decisions.
Regulation
One of the most important aspects of FX trading is regulation. While many countries and regions have struggled to find a good balance within regulation, countries such as the UA, Bahrain, and Jordan have managed to do it.
These countries pride themselves on offering consumers the protections they need while promoting innovative practices. This has improved FX trading over the years and made it more appealing to all parties involved.
What is MENA?
When it comes to economies in the Middle East, the first thing you need to understand is MENA. It stands for the Middle East and North African region and encompasses several countries with similar values and resources.
The MENA region holds more than half of the world’s oil reserves and about two-fifths of the world’s natural gas reserves. This makes the region incredibly wealthy, as well as exceptionally appealing to foreign investment.
MENA Members
MENA membership isn’t set in stone; membership is roughly based on the idea that countries North of Sudan, East of Morroco to Iran and then includes most, if not all, Muslim countries within that area.
The following countries are almost always included in every MENA membership list; they are, Algeria, Bahrain, Djibouti, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Libya, Malta, Morocco, Oman, Qatar, Saudi Arabia, Syria, Tunisia, UAE, Palestine, and Yemen.
Key Middle-Eastern Economies
While many people know about the countries that are rich in oil, a few key economies within MENA have helped it become one of the, if not the wealthiest and most powerful, regions in the world.
Saudi Arabia
The Kingdom of Saudi Arabia is the strongest economy in the region by a mile. The country has seemingly endless oil and gas reserves, which account for nearly 90% of its economy.
While they have stated that they want to begin moving away from dependence on these natural resources, oil and gas have made Saudi Arabia incredibly rich, with the Saudi Riyal being one of the most popular currencies for FX traders to buy and sell.
Iran
Iran is a bit of a mixed bag when it comes to power and wealth. While it is the fifth biggest economy in MENA and relies on oil exports, it is far more diversified than other nations with oil as their main export.
However, Iran is also subject to numerous sanctions due to actions by both its government and citizens. Therefore, while it should be wealthy like Saudi Arabia and Qatar, its currency has weakened over the years.
Israel
Israel has the second-largest economy in the MENA region, but oil exports aren’t its main attraction, unlike its neighbors. Israel relies on industry, diamond cutting, and high-tech innovation and is often ranked in the top 15 for technology.
While it is a wealthy country that continues to advance, geopolitical problems have plagued the area for centuries, particularly its conflict with Palestine and tensions with the West.
Egypt
Egypt has the third-largest economy in the MENA region and is one of the strongest in Africa. Thanks to economic and industrial reform, the country has seen tremendous growth over the past decade.
Conflict in MENA
It is always important to remember that while the Middle East and MENA regions have strong economies, the area has its fair share of conflicts and troubles. This has led to doubt over the strength of the currencies in the area too.
Conflict and political unrest often lead to dips in the economy and the value of currencies; therefore, it is essential to stay on top of what is happening in the region if you choose to invest in one of the currencies, as changes can happen at almost any point.