Saudi riyal in danger as oil war escalates

Jon Banking, Economy, Market Commentary

Saudi Arabia is burning through foreign reserves at an unsustainable rate and may be forced to give up its prized dollar exchange peg as the oil slump drags on, the country’s former reserve chief has warned.
‘If anything happens to the riyal exchange peg, the consequences will be dramatic. There will be a serious loss of confidence,’ said Khalid Alsweilem, the former head of asset management at the Saudi central bank (SAMA).
‘But if the reserves keep going down as they are now, they will not be able to keep the peg,’ he told The Telegraph.
His warning came as the Saudi finance ministry revealed that the country’s deficit leapt to 367bn riyals (66bn) this year, up from 54bn riyals the previous year. The International Monetary Fund has suggested Saudia Arabia could be running a deficit of around $140bn (94bn).

This post was published at The Telegraph