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Saudi Arabia: fears of riyal devaluation overdone

We think fears that the plunge in oil prices since the middle of last year will force Saudi Arabia to ditch its dollar peg and devalue the riyal are overdone. The Kingdom has plenty of resources to sustain domestic spending and defend the peg. And even if an economic adjustment is required further down the line, history suggests that fiscal policy, rather than the currency, will do most of the work. 

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