Saudi Devaluation Bets Show Foreign Banks More Wary Than Locals
- Onshore, offshore divide for riyal options widest in 4 months
- Plan to pay contractors with IOUs stokes investor caution
Riyal Dollar Peg Is Under Review
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Contracts used to bet on a devaluation of Saudi Arabia’s currency are diverging between local and international banks, as global lenders become less willing to trade with those in the kingdom.
The gap between one-year forward contracts on the Saudi riyal at domestic and international institutions grew to the widest since January on Tuesday, according to data compiled by Bloomberg. Forwards quoted outside Saudi Arabia jumped 155 basis points this month as people familiar with the matter said the government is mulling paying contractors with credit notes. At local lenders they have dropped 15 basis points.