Saudi Arabia Quietly Halts Sale of Options Contracts On Riyal Forwards

Despite the fact that no official word was said in public, Saudi Arabian authorities are apparently already trying to take action against speculators who bet against its ability to maintain the riyal's USD peg in an environment of cheap energy prices.

In a meeting this Monday the Saudi Arabian Monetary Agency (SAMA) has issued a directive which applies both to Saudi banks and local branches of international banks, to stop the sale of options contracts on riyal forwards. This is according to five sources familiar with the matter who spoke with the financial news service Bloomberg.

SAMA's last official word on the matter was from last Monday when its governor acknowledged the speculations but stopped at saying they will maintain the peg and didn't go as far as banning any financial instruments. The SAMA Governor said: "Of late we have observed Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term in the USD/SAR forward market due to the mispricing linked to market operators' misperception about Saudi Arabia's overall economic backdrop. Factors affecting the forward market are largely speculative in nature.

Saudi Arabia's key economic and financial indicators are stable, as reflected by its net creditor position with a sound and resilient banking system. I would like to reiterate our official position that Saudi Arabian Monetary Agency (SAMA) will uphold its mandate of maintaining the peg at SAR 3.7500 per USD, backed up by the full range of monetary policy instruments including its foreign Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term reserves."