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Old December 29th, 2015, 08:56 AM   #1
RNG
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A Little Karma for Saudi?

I was tempted to put this in the humor forum because it is, in its own ironic way, very funny.

Saudi is starting to enjoy the fruits of its labors. And I hope they really enjoy it.

Quote:
Saudi Arabia stocks fall sharply on tax rises

Saudi Arabia's stock market has fallen sharply after it announced public spending cuts and rises in tax, fuel and energy prices in 2016.

The country's main stock index fell 3% in the opening 15 minutes of trade with petrochemical firms worst hit.

Saudi Basic Industries, the biggest petrochemical producer, tumbled 8.3% while Saudi Kayan lost 4.8%.

Saudi Arabia's budget deficit soared to $98bn (£65.7bn) this year on the back of falling crude prices.

In the first budget under King Salman, the kingdom said revenues reached 608bn riyals (£108.7bn; $162bn), down 15% on official expectations.
Spending for the year hit 975bn riyals, some 13% more than forecast.

To help make up the shortfall, the country's finance ministry said it would cut subsidies for fuel.

Petrol prices could in some cases increase by as much as 50%, authorities said, although they will remain low by international standards.

Diesel, electricity and water prices will also increase.

-~-

Oil prices have plunged from a five-year high of $125 a barrel in March 2012 to just $37.18 now.

Saudi Arabia said that oil revenues, which make up 77% of the total revenue figure for 2015, are down 23% compared to last year.

It is the largest member of the Opec oil-producing cartel and has refused to cut output in order to raise prices in an attempt to put other producers - mainly US shale oil companies - out of business.
Just the thing to further ferment social unrest.

Saudi Arabia stocks fall sharply on tax rises - BBC News
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Old December 29th, 2015, 09:24 AM   #2
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And then....

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Will Saudi Arabia now abandon its dollar peg?

Amid a continued oil slump and record state budget deficit, analysts are contemplating whether Saudi Arabia could decide to abandon its currency peg against the dollar....

... Saudi Arabia's currency has been pegged to the dollar since 1986 and it had afforded the country credibility and stability.

However, the dramatic fall in oil prices (in no small part brought about by Saudi's own decision, as the de facto leader of OPEC, not to cut in production in a bit to support prices) and a strengthening dollar have made the peg less attractive and Saudi is having to use its foreign exchange reserves to prop up its budget and support the peg.

...While abandoning a peg and effectively devaluing a currency can help exports by making them more attractive versus competitors—which could help major oil exporter Saudi Arabia—such a move could be dangerous. Saudi is also a large importer of equipment, cereals and consumer goods and a weaker currency means these would be more expensive.
So basically, SA is caught between the same rock and hard place as Russia.

Will Saudi Arabia now abandon its dollar peg?
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Old December 29th, 2015, 09:35 AM   #3
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Originally Posted by imaginethat View Post
And then....



So basically, SA is caught between the same rock and hard place as Russia.

Will Saudi Arabia now abandon its dollar peg?
Can't help but believe if they dump the dollar, we're next to fall. Is that right?
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Old December 29th, 2015, 01:14 PM   #4
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Can't help but believe if they dump the dollar, we're next to fall. Is that right?
I don't know. Replace it with what? The yuan?

And what would happen in the US if the world demand for dollars was reduced? RNG?
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Old December 29th, 2015, 01:36 PM   #5
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I don't think Saudi is enough of a factor to seriously hurt the USD, unless this is a trend towards a shift from the USD as the world's reserve currency.

But even so, that has been happening to small extents and slowly over the past few years. And as long as the whole world doesn't suddenly drop the USD, it won't really be a problem - other than losing a bragging point.
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