{"id":12738,"date":"2015-09-28T07:43:16","date_gmt":"2015-09-28T12:43:16","guid":{"rendered":"http:\/\/olduvai.ca\/?p=12738"},"modified":"2015-09-28T07:43:16","modified_gmt":"2015-09-28T12:43:16","slug":"dying-petrodollar-ripples-through-markets-as-asset-managers-bemoan-loss-of-saudi-bid","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=12738","title":{"rendered":"Dying Petrodollar Ripples Through Markets As Asset Managers Bemoan Loss Of Saudi Bid"},"content":{"rendered":"

Dying Petrodollar Ripples Through Markets As Asset Managers Bemoan Loss Of Saudi Bid<\/a><\/h3>\n

One of the key things to understand about China\u2019s liquidation of hundreds of billions in US paper is that far from being a country-specific phenomenon, it actually marks the continuation of something that\u2019s been taking place in other emerging markets for some time.<\/p>\n

As we outlined in \u201cWhy It Really All Comes Down To The Death Of The Petrodollar<\/a>,\u201d the forced sale of Beijing\u2019s UST reserves is simply the most dramatic example of what Deutsche Bank has called \u201cquantitative tightening.\u201d For years, reserve managers in the world\u2019s emerging economies worked to accumulate war chests of USD-denominated paper in an effort to ensure that in a crisis, they would have sufficient firepower to guard against speculative attacks on their currencies and\/or accelerating capital outflows. Slumping commodity prices and the threat of a supposedly imminent Fed hike have conspired to put pressure on these reserves and outside of China, nowhere is this dynamic more apparent than in Saudi Arabia.\u00a0Indeed it was the Saudis who dealt the deathblow to the great EM reserve accumulation.<\/p>\n

By intentionally killing the petrodollar, Riyadh effectively ensured that the pressure on commodity currencies would continue unabated, but as we\u2019ve documented exhaustively, that was and still is considered an acceptable outcome if it means bankrupting the US shale complex and securing market share. But for Saudi Arabia, this is all complicated by three things: 1) the necessity of preserving the lifestyle of everyday citizens, 2) spending associated with the proxy war in Yemen, and 3) defense of the riyal\u2019s dollar peg. All of those factors have served to weigh heavily on the county\u2019s already depleted petrodollar reserves, and if the \u201clower for longer\u201d crude thesis plays out, Riyadh may see further pressure on its current and fiscal accounts which are now both squarely in the red.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Dying Petrodollar Ripples Through Markets As Asset Managers Bemoan Loss Of Saudi Bid One of the key things to understand about China\u2019s liquidation of hundreds of billions in US paper is that far from being a country-specific phenomenon, it actually marks the continuation of something that\u2019s been taking place in other emerging markets for some […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,3,5],"tags":[39,2045,2386,1732,626,8625,1246,701,2721,862,4318],"class_list":["post-12738","post","type-post","status-publish","format-standard","hentry","category-economics","category-energy-2","category-geopolitics","tag-assets","tag-beijing","tag-currency-reserves","tag-emerging-markets","tag-petrodollar","tag-quantitative-tightening","tag-riyadh","tag-saudi-arabia","tag-us-treasuries","tag-war","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12738","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=12738"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12738\/revisions"}],"predecessor-version":[{"id":12739,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12738\/revisions\/12739"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=12738"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=12738"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=12738"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}