Hedge-fund manager Zach Schreiber, chief executive officer of PointState Capital LP, says Saudia Arabia’s currency is massively overvalued given the precipitous fall in the price of crude. Speaking at the Ira Sohn Investment Conference on Wednesday in New York, Schreiber recommended that investors buy the U.S. dollar and bet against the dollar-pegged riyal , which he argues hasn’t adjusted for an oil-dependent Saudi economy that needs crude at $90 a barrel. Brent crude oil, the international benchmark, has climbed about 50% since hitting a low around February but is still 60% lower since its June 2014 highs. Similarly, West Texas Intermediate crude oil , the U.S. benchmark, has gained nearly 70% since its February lows, but is down 60% since those 2014 peaks. Saudi Arabia is the world’s largest exporter of crude oil and a heavy-hitter within the Organization of the Petroleum Exporting Countries. Schreiber said he’s skeptical of recent moves by the Saudis to shore up their balance sheet, including Deputy Crown Prince Mohammed bin Salman’s multiyear initiative to wean the country from oil dependence. The Stanley Druckenmiler protege also argued that the Saudi’s plans to publicly list Saudi Aramco, the country’s behemoth energy company, won’t be enough to address what he describes as $7 trillion in liabilities. “The Saudis are taking their money out and hedging their bets, maybe you should do the same,” Schreiber said. About two years ago at Ira Sohn, Schreiber made the accurate prediction that oil was poised to tumble. That called made his firm $1 billion, according to Bloomberg.
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