Stronger euro holds no threat to euro zone growth: Bundesbank

Bundesbank head Jens Weidmann said Europe’s policymakers must monitor currency developments closely as they seek to reduce inflation in the euro zone. (Reuters)
Updated 08 February 2018
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Stronger euro holds no threat to euro zone growth: Bundesbank

FRANKFURT: The increasing strength of the euro against other currencies such as the dollar does not threaten to slow mounting growth in the euro area, Germany’s central bank chief said.
“The recent appreciation in the euro seems unlikely to jeopardize the expansion,” Bundesbank head Jens Weidmann said in a speech.
“It is, at least in part, rather a reaction to the brighter growth prospects of the euro area,” he said.
Weidmann’s response to the stronger single currency is more relaxed than the common position of the European Central Bank, where he sits on the governing council.
“Downside risks” to growth in the euro zone “relate primarily to global factors, including developments in foreign exchange markets,” ECB President Mario Draghi said last month.
Since mid-December, the euro has gained around 4 percent against the dollar and 1 percent against the yen.
Looking back further over the past year, the single currency’s gains amount to 15 percent against the greenback and 10 percent against the Japanese unit.
As in the ECB’s common position, Weidmann acknowledges that policymakers must “monitor closely” developments on currency markets for their potential impact on the central bank’s efforts to push inflation toward just under 2 percent.
A stronger euro directly saps inflation by making imports cheaper.
By also making euro area products more expensive abroad it can indirectly slow price growth by limiting economic expansion.
But “recent research suggests the impact of exchange rate movements on inflation has declined,” Weidmann noted.
The Bundesbank chief also took the opportunity to burnish his credentials as a so-called “hawk” in favor of reducing ECB support to the economy — in the shape of mass bond purchases and low interest rates — as it strengthens.
Frankfurt policymakers have waved through more than €2.3 trillion ($2.8 trillion) of government and corporate bond purchases since March 2015, with the program currently slated to end in September once it hits around €2.5 trillion.
“If the expansion progresses as currently expected, substantial net purchases beyond the announced amount do not seem to be required,” Weidmann said.
In a question-and-answer session on Twitter, ECB chief economist Peter Praet downplayed differences on the governing council about the bond-buying scheme, saying members agree on their objectives and “discussions are more on tactics.”


DP World first-half profit dips 2.1%

Updated 16 August 2018
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DP World first-half profit dips 2.1%

  • ‘The near-term trade outlook remains uncertain with recent changes in trade policies and geopolitical headwinds in some regions continuing to pose uncertainty to the container market’
  • DP World recently won a 30-year concession for the management and development of a port project at Banana in the Democratic Republic of the Congo

DUBAI: DP World, one of the world’s biggest port operators, posted a 2.1 percent drop in first-half net profit on Thursday, and cautioned about geopolitical risks and recent changes to trade policies.
US President Donald Trump is taking a more aggressive, protectionist posture on trade than his recent predecessors, sparking retaliatory measures from other countries such as China.
“The near-term trade outlook remains uncertain with recent changes in trade policies and geopolitical headwinds in some regions continuing to pose uncertainty to the container market,” said the company’s chairman and chief executive, Sultan Ahmed bin Sulayem.
“However, the robust financial performance of the first six months also leaves us well placed for 2018 and we expect to see increased contributions from our recent investments in the second half of the year,” he said in a statement.
Lower export orders and car sales are likely to slow world trade growth in the third quarter, the World Trade Organization said recently, as a global tariff crusade by Trump to protect American jobs begins to bite.
DP World said it posted a net profit attributable to owners of the company of $593 million in the first half of the year, compared to $606 million during the same period a year earlier.
Cash from operating activities was recorded at $979 million in the first half, slightly lower than $1.0 billion a year earlier.
The port operator said capital expenditure guidance for 2018 remains unchanged at up to $1.4 billion with investments planned in the United Arab Emirates, Posorja (Ecuador), Berbera (Somaliland), Sokhna (Egypt) and London Gateway.
DP World recently won a 30-year concession for the management and development of a port project at Banana in the Democratic Republic of the Congo, which currently has no direct deep-sea port despite being Africa’s third-most populous country.