Devaluation Odds Spike To Record Highs As Market Bets Saudi Dollar Peg Will Fall

Devaluation Odds Spike To Record Highs As Market Bets Saudi Dollar Peg Will Fall:

Apparently, the market isn’t buying the notion that a Saudi Aramco IPO will be enough to shore up Riyadh’s fiscal fiasco because riyal forwards are hitting fresh highs.

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As a reminder, the Saudis are staring down a budget deficit that should amount to some 13% of GDP in 2016 and between low oil prices, expensive subsidies, and two proxy wars, the red ink isn’t likely to disappear any time soon.

Throw in the fact that the war of words with Tehran may well turn into a shooting war before it’s all said and done and the pressure may ultimately force the kingdom to drop the SAR peg, ending a three decade FX regime.

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