World Economy

Saudi Riyal Feels the Heat

Saudi Riyal Feels the HeatSaudi Riyal Feels the Heat

The Saudi Arabian central bank has warned commercial banks against betting on depreciation of the riyal as tumbling oil prices put pressure on the Saudi currency, several bankers operating in the market said, Reuters reported. The riyal, pegged in the spot market at 3.75 to the US dollar since 1986, hit a record low against the dollar in the one-year forwards market last week as some banks and funds hedged against the risk that low oil prices might eventually prompt Riyadh to scrap the peg. But some bankers said the Saudi Arabian Monetary Authority had now contacted them privately and urged them not to conduct derivatives trades that would pressure the riyal.