ML-Implode News - Speculators test Saudi currency as oil crisis deepens

Saudi Arabia's currency regime is at risk of blowing up if oil prices fall further and the US dollar spikes higher, Bank of America has warned. The Saudi strategy of flooding the world with oil in a bid to drive out rivals may be hard to square with the country's fixed dollar-peg, which is increasingly under scrutiny by currency traders as the US Federal Reserve prepares to raise interest rates.
... Mr Blanch said a devaluation by China would leave the Saudis badly exposed and might ultimately force their hand. "A de-peg of the Saudi riyal is our number one â€˜black-swan' event for oil in 2016," he said.
The 30-year old dollar peg is the weak link in Saudi strategy. It matters more than dissent within OPEC as the cartel prepares for a stormy meeting in Vienna on December 4. To varying degrees, Algeria, Venezuela, Nigeria, Iraq, and Iran all want production cuts to stabilize the market.

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Speculators test Saudi currency as oil crisis deepens