Oil currencies are getting squeezed this week, as OPEC members meet with countries from outside the organisation after inviting nations to talks at its Vienna headquarters. Although such meetings are unusual, little action is expected to be taken to stem the fall in oil prices.
Crude prices have taken another hit over the last few days, as data from China showed the Asian economy is growing at its slowest rate since the financial crisis, while data from the US showed a jump in oil inventories as refineries shut down for seasonal maintenance work, writes Joel Lewin.
Brent crude-- the international benchmark-- is still languishing below the $50 mark, down 10.5 per cent since the start of September and 28.5 per cent since its April peak for the year.
Today, Brent has dropped 0.5 per cent to $48.48. Meanwhile, its US counterpart, West Texas Intermediate, has shed 1.1 per cent to $45.77.
With Iranian exports likely to hit an already oversupplied market before long, the OPEC and non-OPEC members have a lot to fret about.
And after a few weeks of respite as oil prices firmed and the US dollar retreated amid receding rate hike expectations, currencies exposed to oil are back under pressure.
Today the US dollar has climbed 1.4 per cent against the rouble to Rbs62.70 and 0.3 per cent against the Canadian dollar to C$1.3. The greenback has risen more than 10 per cent against the Russian currency since the end of August.
Meanwhile the euro has climbed 0.4 per cent against the Norwegian krone to NKr8.16.
And as the IMF warns that Saudi Arabia and other Gulf states could burn through their fiscal buffers within five years, pressure on the riyal has ticked up in the FX options market. The dollar-riyal peg is still holding tight, but the heat has been cranked up on the Saudi currency in options markets since August.
12 month forward-contracts hit a four year high of 3.7935 riyals at the start of October, and have ticked up again in the last few days as interest in the riyal, which has been pegged to the dollar since 1986, grows.
