SPECULATION RIFE THAT SAUDI ARABIA'S RIYAL COULD DEPEG FROM US$

Speculation is rife that Saudi Arabia (SA) will depeg the Riyal from the US$ as oil price continues it freefall. This is a chart from the zerohedge.com  which projected the amount of debt SA needs to borrow to buffer its budget shortfall:



SA is presently confronted with crises on several fronts:

1) The price of oil which has fallen to less than US34 per barrel. With so much reliance on oil, this has put a strain on its budget
2) Proxy war in the Middle East. This too is putting a stress on SA's finances. The war is expected to last longer as special interest groups take sides
3) SA posted a US$98B budget deficit in 2015 and projected another US$87B budget deficit in 2016. SA needs to cut down its social programmes in order to rein in the budget deficit but that would mean raising discontent among its citizens. Therefore, this subject is often threaded with caution.

One idea mooted by economists is to depeg the Riyal from the US$, and so allowing SA the much needed breathing space.

But what would be the impact globally? A depeg of the Riyal from the US$ could threaten the Petrodollar, and thus the world could see a potential collapse of the hegemony of the Petrodollar.

The above are just my opinion.