Turkish lira weakens after cenbank repos resume, FX purchase move

An exchange office worker counts Turkish lira banknotes in Istanbul. (File/AFP)
Updated 21 May 2019
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Turkish lira weakens after cenbank repos resume, FX purchase move

ANKARA/ISTANBUL: The Turkish lira weakened on Tuesday after the central bank lowered the swap market lira interest rate and held a repo auction for the first time in nearly two weeks, reversing a policy tightening step it had taken to support the currency.
A currency crisis last year wiped nearly 30% off the lira’s value against the dollar and it has fallen further in 2019.
The lira weakened as far as 6.0860 against the US currency after the central bank moves, compared with a close of 6.0315 on Monday. At 1012 GMT, it stood at 6.0500.
The central bank injected 17 billion lira ($2.8 billion) in the repo, the first since it suspended them on May 9. It lowered the lira interest rate in swap transactions to 24% from 25.5%. Bankers said this would gradually lower the average cost of funding by the same amount, to the bank’s policy rate of 24%.
The steps came as investors weighed up Turkey’s banking watchdog decision to impose a one-day settlement delay for FX purchases of more than $100,000 by individuals. Bankers said that move could raise concerns about capital controls.
“The administration seems to be increasingly desperate to keep the lira stable at all costs ahead of the re-run of the crucial vote in Istanbul,” said Rabobank emerging markets forex strategist Piotr Matys, commenting on the forex purchases move.
“Instead of providing investors with a much needed assurance, such measures will have the opposite effect, as the market will interpret it as rising interference in the banking sector.”
The decision by election authorities to re-run the Istanbul mayoral vote has fueled concerns about an erosion of democracy and unnerved financial markets, helping push the lira down another 13% this year. The ruling AK Party’s narrow defeat in the initial election in March was the first time in 25 years that President Tayyip Erdogan’s party or its Islamist predecessors had lost control of Turkey’s biggest city.
Matys said the repo move was a contradictory measure at a time when Turkey needs to restore confidence in the lira.
“Such conflicting policies make Turkey increasingly unpredictable and keep the upside bias in USD/TRY intact,” he added, saying initial resistance was around 6.2282, with a break higher exposing the 6.46-6.50 area as the next potential target.
HIGH-FREQUENCY TRADERS TARGETED
A BDDK watchdog letter sent to banks on Monday said the settlement date for those purchases of more than $100,000 — or equivalent in other currencies — will be the following day.
“This one-day delay on FX transaction for retail investors is curious, especially when they take away the increase in rates in the morning,” said Charles Robertson, global chief economist at Renaissance Capital. “It’s a hint of capital controls, and the threat of more is implicit.”
Beste Naz Sullu, of Gedik Investment, said the BDDK was trying to curb foreign exchange speculation, but added that the market “does not like measures such as this much.”
The BDDK said on Tuesday the forex purchases move, effective from Tuesday, aimed to prevent “unnecessary and unjust harm” to the market, particularly by high-frequency traders.
Authorities have recently taken unorthodox steps to protect the currency, including state banks selling dollars. Ankara also raised a tax on some foreign exchange sales to 0.1% from zero last week to discourage Turks converting savings to foreign currencies.
Turks have flocked to foreign currencies in the months since last year’s crisis hit its peak in August, when the lira fell as much as 42% against the dollar.
The lira woes helped tip the economy into recession last year and Turkish Statistical Institute data on Tuesday showed consumer confidence tumbled to 55.3 points in May, the lowest level since the data was first published in 2004.
The main share index fell 1.26 percent.


More than 100 Saudi groups at Dubai’s GITEX week

Updated 22 September 2019

More than 100 Saudi groups at Dubai’s GITEX week

  • GITEX is an international platform

DUBAI: More than 100 Saudi organizations, including government entities, private companies and startups, are participating at the upcoming GITEX Technology Week in Dubai, from Oct. 6 to 10, indicating an increase in Saudi participation from last year at the annual technology gathering.

Bringing in one of the biggest contingents at the event, at 114, Saudi Arabia is also an official partner of GITEX this year, which is expecting to host more than 100,000 visitors over four days at the Dubai World Trade Centre (DWTC).

“There’s a lot of collaboration and integration in this region — there’s a lot of learning and sharing. GITEX is an international platform. This is where the Saudi contingent comes — from the big enterprise sector to the startup ecosystem — to interact with hundreds and thousands of visitors from over 140 countries,” Trixie LohMirmand, senior vice president of events management at DWTC, told reporters on Sunday.

LohMirmand also noted a spike in Saudi participation at the GITEX Future Stars, a concurrent event that focuses on the region’s startup community.

“We have a big Saudi Innovation Day. In fact, Saudis are again bringing a big contingent of startups. It’s led by the deputy minister of communications from Saudi Arabia to explore partnerships and discuss the opportunities in the region, particularly for startups,” she said, referring to the three special sessions that will focus on the Kingdom’s technology drive.

This increase in participation, LohMirmand said, is a reflection of a bigger “impetus on innovation and the getting the startup community going” in the region.

“We see a lot of new tech coming out, so there’s a lot of interest to give these companies an opportunity to connect to the rest of the world. When you come to GITEX, we connect you to the rest of the world — we host over 500 investors from all around the world, including from Silicon Valley,” she added.

Firat Aktas, DWTC’s director of brand innovation and communication, stressed: “You can see what’s happening around the world — the Saudis are showing their ambition very clearly in various industries.”

Earlier this year, the Saudi Telecom Company signed a deal with Swedish telecommunications company Ericsson to launch commercial 5G services in the Kingdom. “The roll-out continues. It’s a huge deployment in different parts of Saudi Arabia,” Wojciech Bajda, head of Gulf Council countries and global customer unit zain, told Arab News. “The focus for our customers currently is to understand how to monetize 5G, how to make sure there’s an industrial application of 5G in Saudi Arabia.”

Bajda also said they are looking at introducing 5G to different sectors in the Kingdom such as mining, and oil and gas. “We have engagements with different industries in trying to prototype together, and see if there’s something relevant for Saudi Arabia, and for our customers like the Saudi Telecom Company to pick up and do a full implementation,” he added. 

What to expect at GITEX this year 

This year’s GITEX, which has the theme “Synergizing the Mind and Technology Economy,” will highlight the region’s 5G adoption, as well as other futuristic concepts such as artificial intelligence (AI), robotics, and immersive technology.

LohMirmand said the dwelling time for GITEX visitors has increased over the years, owing to the gathering’s massive content offering.

“We are measuring more in terms of dwelling time. You can have 100,000 people come one day and do, but now the trend for us is we’re seeing them staying longer. Because there’s so much content, there’s so much knowledge, and so many companies with new technology, dwelling time is much longer, averaging 3.5 to 4 days,” she explained.

“Visitors and exhibitors are having deeper and more meaningful interactions at the show.”

The halls of DWTC will be divided into six sectors: 5G, AI, Future mobility, GITEX lifestyle tech, and Smart cities. It opens Oct. 6.