Debt insurance costs also climb across the world's top oil producing region in recent weeks
Saudi currency markets on Monday were back near their weakest levels in two years, hit when protests began in Egypt last month, as investors hedged their exposure to the country after unrest spread to Oman.
Revolts against autocratic governments in the Arab world, which have toppled entrenched leaders in Tunisia and Egypt, now challenge regimes in Libya and Bahrain. Clashes with police have also erupted in previously-placid Oman.
"It is all driven by what is happening in Libya and what is going on in the region. Across the curve, the whole region is at the moment higher," said Lyndon Loos, head of MENA forex trading at Standard Chartered in Dubai.
"We have not seen it really go crazy. We have just seen some option buying and we have seen some people taking some protection and that has driven the forwards higher," he said.
One-year Saudi riyal forwards traded as high as 50 points on Monday, up from Friday's close of plus 30/40 but still below 70 points, the highest traded level since January 2009 seen during protests in Egypt at the end of last month.
A rise in that number of points priced in to the forward rate implies a relatively weaker of the riyal over the period.
Monday's level, up from -83 points bid before the Egyptian unrest, pointed to a 0.1 percent weakening in the Saudi currency over the next year. The riyal is pegged at 3.75 to the dollar.
Saudi Arabia saw two small protests over the past month in its Eastern province, which holds much of the oil wealth of the world's top crude exporter. Its stability is of a global concern.
"The main thing affecting (the market) is news from Oman now," said a Dubai-based trader.
In Saudi neighbour Oman, protesters demanding political reforms blocked roads to a main export port and refinery, while Libyan rebels awaited a counter-attack by Muammar Gaddafi's forces on Monday.
Omani rial forwards traded at around -10 points on Monday, traders said, up from -70 before the unrest started, which still points to a slightly stronger currency over the next twelve months.
Gulf stocks also suffered, with the Saudi market slipping to a new nine-month low on Monday. Debt insurance costs have also climbed across the world's top oil producing region in recent weeks.
Traders, though, said Gulf currency forwards were unlikely to go much higher in the short-term with resistance felt around current levels unless the regional political situation gets more dense.