Saudi Riyal Falls Slightly After Congress Vote on 9/11 Bill
The Saudi riyal fell moderately against the U.S. dollar in the forwards market on Thursday after the U.S. Congress voted to allow relatives of victims of the Sept. 11 attacks to sue Saudi Arabia.
The Senate and House of Representatives voted overwhelmingly on Wednesday to override President Barack Obama’s veto of legislation permitting such lawsuits. The law grants an exception to the legal principle of sovereign immunity in cases of terrorism on U.S. soil, clearing the way for attempts to seek damages from the Saudi government.
One-year dollar/riyal forwards, which are trades scheduled to take place 12 months from now, were at 550 points in early trade, up from Wednesday’s close of 330 points. They rose as far as an eight-week high of 625 points.
The Saudi riyal is pegged at 3.75 to the dollar in the spot market, so banks often use the forwards market to hedge against risks.
Five-year Saudi credit default swaps, used to insure against the risk of a sovereign debt default, rose slightly to 157 points from 152. The price of state-controlled Saudi Electricity’s April 2023 dollar Islamic bond, one of the few outstanding international bonds from Saudi Arabia, did not move significantly.