The Saudi Council, a committee which advises the Saudi King will recommend revaluing the Riyal, sparking speculation about the fate of the currency.

According to the Financial Times, “a committee in the shura council, which has an advisory role, will recommend to King Abdullah that the authorities revalue the Riyal by up to 30 percent, Waleed Arab Hachem, a shura council member, told news agencies yesterday. He said that the proposal would be put before the Saudi king as early as next week.”

Last summer, an onslaught of speculation that the Riyal peg to the dollar, first adopted in 1986, would be dropped, swept through financial market. But, the rumor has diminished substantially since then, after the central bank said “no” to any revaluation.

Brad Bourland, chief economist at Jadwa Investment Bank in Riyadh, believes that the council’s advice would unlikely lead to any adjustment.

As reported by FT, “this latest Saudi shura council committee recommendation follows a report from an advisory body in Abu Dhabi in the neighboring United Arab Emirates which last week floated the idea of abandoning a dollar peg for the Dirham for a basket. Both Saudi Arabia and Abu Dhabi are sizable holders of US Dollar assets. Any adjustment in their exchange rate policies is likely to impact severely on the value of the already battered US currency.

To read the entire article from the Financial Times, link here:

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