{"id":16163,"date":"2016-01-07T13:01:39","date_gmt":"2016-01-07T18:01:39","guid":{"rendered":"http:\/\/olduvai.ca\/?p=16163"},"modified":"2016-01-07T13:01:39","modified_gmt":"2016-01-07T18:01:39","slug":"saudi-devaluation-odds-highest-in-20-years-kingdom-now-more-likely-to-default-than-portugal","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=16163","title":{"rendered":"Saudi Devaluation Odds Highest In 20 Years, Kingdom Now More Likely To Default Than Portugal"},"content":{"rendered":"

Saudi Devaluation Odds Highest In 20 Years, Kingdom Now More Likely To Default Than Portugal<\/a><\/h3>\n
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On Monday, we brought you \u201cSaudi Default, Devaluation Odds Spike As Mid-East Careens Into Chaos<\/a>,\u201d in which we outlined the jump in riyal forwards and widening of CDS spreads that Riyadh witnessed in the aftermath of the kingdom\u2019s move to cut diplomatic ties with Iran.<\/p>\n

In short: the market is getting worried that Riyadh is about to careen into crisis.<\/strong>\u00a0In the face of slumping crude, the Saudis are staring down double digit budget deficits and the prospect of having to once again tap debt markets in order to offset the SAMA burn and keep the kingdom from having to implement further subsidy cuts.<\/p>\n

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The open hostilities with Iran all but guarantee the war in Yemen will escalate<\/strong>\u00a0(just today for instance, Tehran\u00a0accused the Saudis<\/a>\u00a0of bombing the Iranian embassy in Sana\u2019a) and that entails a further drain on the kingdom\u2019s finances as the monarchy will be forced to fund a prolonged and intractable struggle with the Houthis.<\/p>\n

Additionally, the more tension there is between Riyadh and Tehran, the more fractious OPEC will become and with Iranian supply set to rise in the new year as international sanctions are lifted, this may well be one Mid-East conflict that drives oil prices lower rather than higher – especially if the SAR peg falls.<\/p>\n

On Thursday, in the wake of a veritable meltdown in markets across the globe,\u00a0riyal forwards hit their highest level in almost two decades as oil plummeted.<\/strong>\u00a0As Bloomberg notes, \u201ctwelve-month forward contracts for the riyal climbed 260 points to 950 as of 3:49 p.m. in Riyadh, set for the steepest close since December 1996 [reflecting] growing speculation the world\u2019s biggest oil exporter may allow its currency to slide against the dollar for the first time since 1986.\u201d<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Saudi Devaluation Odds Highest In 20 Years, Kingdom Now More Likely To Default Than Portugal On Monday, we brought you \u201cSaudi Default, Devaluation Odds Spike As Mid-East Careens Into Chaos,\u201d in which we outlined the jump in riyal forwards and widening of CDS spreads that Riyadh witnessed in the aftermath of the kingdom\u2019s move to […]<\/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":[1626,4333,200,441,6910,600,4696,1246,701,2662,901,4318],"class_list":["post-16163","post","type-post","status-publish","format-standard","hentry","category-economics","category-energy-2","category-geopolitics","tag-cds","tag-crude","tag-default","tag-iran","tag-meltdown","tag-opec","tag-portugal","tag-riyadh","tag-saudi-arabia","tag-tehran","tag-yemen","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16163","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=16163"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16163\/revisions"}],"predecessor-version":[{"id":16164,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16163\/revisions\/16164"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=16163"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=16163"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=16163"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}