Oil Recovery Hits Saudi Devaluation Bet

This article is about the losses experienced by investors who have bet that Saudi Arabia will abandon its currency peg. Due to oil rebounding to 40$ a barrel forward contracts betting that Saudi Arabia will devalue its riyal would have fallen about 1.8% since their peak in January. Many different U.S. hedge funds were expected to be betting against this currency in February. The Saudi riyal was pegged at the rate of 3.75 per U.S. dollar in 1986 and the kingdom has taken measures intended to deter speculating against the currency. Chief economist Simon Williams for HSBC Holdings Plc doesn’t see the recent losses in oil forcing policy makers to devalue the riyal. Currency forward contracts have also declined for other countries in the Gulf Cooperation Council including the United Arab Emirates and Oman. Saudi Arabia and other countries have sold debt from their reserves to counter recent lower oil revenues. 

http://www.bloomberg.com/news/articles/2016-03-27/traders-out-of-pocket-as-oil-recovery-hits-saudi-devaluation-bet