Saudi Arabia Breaks Gulf Silence on Dollar Peg Seen Here to Stay - Bloomberg Business

Saudi Arabia Breaks Gulf Silence on Dollar Peg Seen Here to Stay - Bloomberg Business:



"Saudi Arabia’s pledge to maintain its dollar currency peg, amid oil’s slump to a seven-year low, is likely to be followed by its smaller Gulf neighbors.



Ahmed Alkholifey, the Saudi central bank’s deputy governor for research and international affairs, told Al Arabiya television Tuesday that authorities will maintain the peg at 3.75 riyals per dollar. One-year forward contracts for the riyal, which have surged this month on speculation it may be devalued, fell after his remarks.



Investors have increased bets that the six Gulf Cooperation Council countries will be next to abandon their pegs after China devalued the yuan and Kazakhstan allowed its currency to float. The trade’s premise? The region has about 30 percent of the world’s proven crude reserves and its governments depend on oil revenue to fund much of their spending."



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