Category Archives: Foreign Exchange

GCC – Hello Negative Operating Leverage – Can/Should GCC Pegs Persist?

The last few times GCC pegged currencies like the Saudi Arabian Riyal (SAR) were this dislocated, they were ‘saved’ by a reversal in oil prices or the US$ (or both). Time will tell if history repeats itself. One thing is for sure though – the current environment is not a great cocktail for the SAR/$ pegContinue reading “GCC – Hello Negative Operating Leverage – Can/Should GCC Pegs Persist?”

Aid, Rents, Remittances and Pegs – A Toxic Brew

Here is a dangerous cocktail: a) chronic dependency on either foreign aid, inbound remittances or resource rents (or all of the above) and b) a dangerously overvalued exchange rate that is (in most cases) artificially pegged to the all-mighty, yet inflated US dollar. One of the not-so-obvious consequences of this toxic brew is an accelerationContinue reading “Aid, Rents, Remittances and Pegs – A Toxic Brew”