- Sputnik International
Get the latest news from around the world, live coverage, off-beat stories, features and analysis.

On the Brink of Crisis? Speculators Expect Devaluation of Saudi Currency

© AFP 2023 / HASSAN AMMARSaudi Arabia riyals
Saudi Arabia riyals - Sputnik International
Traders expect a devaluation of the Saudi currency. The country should speed up its oil exports to compensate the lost revenue, otherwise it may face serious financial and economic crisis, German newspaper Deutsche Wirtschafts Nachtichten (DWN) wrote.

Khaled al Otaiby, an official of the Saudi oil company Aramco watches progress at a rig at the al-Howta oil field. - Sputnik International
Saudi Arabia Paves Way for Oil Market Competition With Russia
Due to the falling oil prices traders bet against the Saudi currency. A key currency indicator in Saudi Arabia — riyal forward points — increased by almost 30 percent to a record high of 1,020 points, the newspaper reported.

On Monday, US West Texas Intermediate crude and Brent crude futures tumbled to a 12-year low amid global overproduction and new concerns over China's stock market.

The fall in oil prices combined with declining government reserves are among major factors that may lead to the devaluation of the Saudi riyal.

Investors speculate that Saudi Arabia will soon have to change the exchange rate between the riyal and the dollar, a currency trader of a large bank in the Gulf region said.

At the same time, Jean-Michel Saliba, an economist from Bank of America Merrill Lynch said that such a scenario is unlikely if the oil price stabilizes at the current level. Another analyst Jason Tuvey also argued that Saudi Arabia would rather cut spending than devalue its currency.

The exchange rate between the dollar and the riyal has remained unchanged at 3.75 since June 1986. A fixed rate to the US dollar helps the country to control inflation and simplify trading.

To participate in the discussion
log in or register
Заголовок открываемого материала