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Something Just Snapped In Saudi Money Markets
8
April, 2016
Away
from the headlines about The Panama Papers, global financial markets
turmoiled quietly this week with a surge in equity and FX volatility
and banks suffering more death blows. However, something happened in
Saudi Arabia's banking system that was largely uncovered by anyone in
the mainstream... overnight
deposit rates exploded to their highest since the financial crisis in
2009...
It
is clear that that the stress in Saudi markets has spread from the
forward derivatives markets to actual funding problems.
This
suggests one of the two main things: either Saudi banks are
desperatly short of liquidity or Saudi banks do not trust one another
and are charging considerably more to account for the suspected
credit risk.
Either
way, not good. So
what is going on behind the scenes in Saudi Arabia?
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