Yuan Shock Sends Saudi Riyal Devaluation Wagers to Six-Year High - Bloomberg Business:
"A key currency indicator in Saudi Arabia rose to the highest level since 2008, indicating increased bets for a weakening of the riyal after almost 30 years fixed to the dollar.
While few expect the biggest Arab economy to abandon its peg, a backdrop of falling oil prices, declining government reserves and a devaluation in China has prompted speculation Saudi Arabia could be reconsidering the level of its exchange rate. One-year forward contracts for the riyal had the largest single-day surge since 2011 on Wednesday, after China devalued the yuan for a second day.
The jump underscores concern that oil’s 52 percent decline in the past 12 months will make it harder for the world’s largest crude exporter to sustain its exchange-rate regime as reserves drop for a fifth consecutive month and the government faces its second annual deficit. Any slowdown in Chinese demand for commodities threatens to hinder Saudi Arabia’s exports to the country, its largest trading partner."
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