Saudi Arabia Said to Probe Bank Currency Products on Peg Bet – Bloomberg

Banks in Saudi Arabia are coming under fresh pressure over products that allow speculators to bet against the kingdom’s currency peg, according to people with knowledge of the matter.The Saudi Arabia Monetary Agency has asked lenders to explain why they are offering dollar-riyal forward structured products to customers less than four months after the regulator banned options contracts that let speculators place wagers on a currency devaluation, the people said. The authority, known as SAMA, didn’t reply to requests for comment.Hedge funds such as PointState Capital and Pershing Square Capital Management have made bets that the country’s peg to the dollar will be broken as oil revenue plunges, even as the country maintains it has no plans to devalue and analysts including Capital Economics say such a move would be a last resort. Riyal forwards surged to 660 points, the highest since Feb. 15.“SAMA is likely getting concerned about the renewed volatility on the SAR forwards,” Apostolos Bantis, head of emerging market corporate research at Commerzbank AG, said by phone. “Considering its strong commitment to the peg and aim to keep volatility low, they may try to disincentivise local banks using other structured products.”

Source: Saudi Arabia Said to Probe Bank Currency Products on Peg Bet – Bloomberg

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