| A devaluation of Saudi Arabia's currency could cause such political instability that Riyadh has little choice but to stick to its promise to use vast foreign exchange reserves to defend the riyal's 30-year-old peg to the U.S. dollar.
Currency traders have been betting against the Saudi peg, and those of other regional oil producers, in the wake of oil's price collapse. Societe Generale said on Thursday it saw at least a 25 percent chance of a near-term devaluation or 40 percent if oil prices stay at current levels throughout 2016. But in Saudi Arabia's largely dollar-denominated economy breaking the peg would immediately raise the price of goods, hitting living standards...............................................Full Article: Source
|