Turkey holds key rate at 19% for third month to bolster lira

Turkey holds key rate at 19% for third month to bolster lira
The Turkish President appointed his latest central bank governor in March, spurring concern over the direction of interest rates. (Reuters)
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Updated 17 June 2021

Turkey holds key rate at 19% for third month to bolster lira

Turkey holds key rate at 19% for third month to bolster lira
  • Central bank governor cited high inflation and inflation expectations

ANKARA: Turkey’s central bank Thursday held its interest rate at 19 percent for the third month, balancing President Recep Tayyip Erdogan’s call for lower borrowing costs with the need to support the depreciating currency.
“Taking into account the high levels of inflation and inflation expectations, the current tight monetary policy stance will be maintained decisively until the significant fall in the.... forecast path is achieved,” the bank said.

Still, the lira weakened 0.5 percent to 8.6355 per dollar as of 1:38 p.m. in London.
Erdogan created a new wave of market jitters by repeating on June 1 that he was “determined” to see rates come down in the coming months.
He fired a central bank governor in March who won market plaudits by hiking the benchmark borrowing cost from 10.25 percent to 19 percent over his four-month term to fight inflation and support the lira.
The interest-rate decision comes the day after IHS Markit warned that Turkey current-account gap is likely to rewiden after narrowing in April, putting pressure on the lira amid persistent demand for imports and continued portfolio outflows.
Trying to calm the market, new central bank governor Sahap Kavcioglu said on June 2 that expectations of an imminent rate cut “need to disappear.”
The lira’s depreciation from around three to the dollar in 2016 to roughly 8.6 this week has been one of the factors behind a steady decline in Erdogan’s approval numbers.
An annual inflation rate of 16.6 percent has contributed to a sharp drop in Turks’ purchasing power and price rises for basic goods.
Erdogan subscribes to the unconventional belief that higher interest rates cause inflation by forcing businesses to raise their prices to compensate for higher borrowing costs.
Most central banks around the world believe that higher rates temper spending and this helps bring prices down.
But Erdogan’s push for cheap money has helped Turkey’s economy grow by 1.8 percent in 2020, a year when production was crimped by coronavirus lockdowns.
The International Monetary Fund expects Turkey’s economy to expand by 5.8 percent this year.
“Although policy uncertainty and vulnerabilities have increased, Turkey’s challenges are not insurmountable,” the IMF said this month.
This required “strongly committing to, and delivering, a firm monetary stance — with no premature easing and with further timely and well-calibrated tightening if inflation expectations rise further,” it said.


SDAIA aims to put Saudi in global top 10 for data and AI

SDAIA aims to put Saudi in global top 10 for data and AI
Updated 24 September 2021

SDAIA aims to put Saudi in global top 10 for data and AI

SDAIA aims to put Saudi in global top 10 for data and AI
  • Digitization is not a luxury, minister says
  • Kingdom is training 25,000 Saudis youth in digital skills

RIYADH: The Saudi Data and Artificial Intelligence Authority (SDAIA) plans to position Saudi Arabia as one of the top 10 countries in data and AI, and is training 25,000 data and AI specialists, according to Mishari Almishari, the head of the authority’s strategy office.

Speaking at the Saudi Arabia CIO summit held earlier this month in partnership with International Data Corporation (IDC), the aim is to attract SR20 billion ($5.3 billion) of investments into data and artificial intelligence, said Almishari.

“Our role is enabling digitalization. I don’t think it’s a luxury; it’s a key and an answer to many challenges,” he said.

The future will be challenging and “the key element is readiness, readiness and readiness,” he said.

SDAIA contributed to containing the pandemic with the launch of Tawakkalna, a smartphone application that allows the government to trace people infected with COVID-19, Almishari said.

It took only three weeks to develop as the groundwork in digital transformation had already been laid before the pandemic. Today the application has more than 22 million users and more than 75 services, said Almishari.

The CIO summit follows a number of initiatives taken by SDAIA, including the global AI summit held last year and August’s LAUNCH event, where it was agreed with 10 global technology companies to establish academies to train the Saudi youth.

Other speakers at the event included Richard Heitmann, vice president automation at IBM, who said those organizations which started earlier with AI technology did not suffer as much during the pandemic.

Fawaz Al-Harbi, deputy chairman of the Saudi Cloud Computing Association, highlighted the importance of cloud technology in terms of flexibility, innovation support and cost reduction.

“We were able to witness how important the cloud is, as many organizations would have suffered in dealing with the changes brought about by the pandemic” if it were not for the cloud, he said.

Business leaders are making fundamental changes in terms of operations, among these is to connect systems across the complex hybrid cloud environment, IBM’s Heitmann said.

Khasim Anwar, from Samba Financial Group, pointed out that this approach is not always possible in Saudi Arabia. For example, the financial sector is one of many that are not permitted to use hybrid clouds.

SDAIA is hoping to host the second global AI summit before the end of 2021, said SAAIA strategy consultant Areej Alamri. Final arrangements are being made and, unlike last year which was a virtual event, “this year it will be hybrid where some people will attend in person, and others will attend online,” she said.


Saudi Arabia sets brokerage rules for off-plan property sales

Saudi Arabia sets brokerage rules for off-plan property sales
Updated 24 September 2021

Saudi Arabia sets brokerage rules for off-plan property sales

Saudi Arabia sets brokerage rules for off-plan property sales
  • Brokers must have written permission from project owner to market property

RIYADH: Saudi Arabia’s off-plan sale or rent program, known as Wafi, has announced the rules governing the licenses of real estate brokers marketing small and medium-sized projects as it seeks to increase transparency and reliability in the sector, SPA reported.

Wafi requires that real estate brokers have an electronic deed of ownership of the project to be marketed, said head of Wafi Abdulaziz Al-Muhaimid.

Real estate brokers must also obtain prior written approval of the owner or its beneficiary to market off-plan projects, as well as the statutory licenses, engineering plans and architectural designs approved by the relevant authorities, he said.


Saudi budget discipline saved $133bn in 4 years: finance minister

Saudi budget discipline saved $133bn in 4 years: finance minister
Updated 24 September 2021

Saudi budget discipline saved $133bn in 4 years: finance minister

Saudi budget discipline saved $133bn in 4 years: finance minister
  • Budget overspending narrowed from 16 percent to 4 percent in recent years

RIYADH: Saudi Arabia saved SR500 billion ($133.3 billion) over the past four years through increased efficiency and budgetary discipline, according to Finance Minister Mohammed Al-Jadaan.

The difference between planned government spending and actual budget outlays decreased from an average 16 percent between 2014 and 2016 to an average of 4 percent between 2017 and 2019, he said, Argaam reported.

The government has made a great leap in the field of digital transformation, he said. Digital payment options were available for 36 percent of transactions with the Kingdom in 2019, exceeding the 2020 target of 28 percent, he said.

The government’s indirect lending initiative for small and medium enterprises (SMEs) helped provide SR642 million of financing to 611 SMEs, he said.


Camera maker Canon reveals 30% Saudi women employees target by 2023

Camera maker Canon reveals 30% Saudi women employees target by 2023
Updated 23 September 2021

Camera maker Canon reveals 30% Saudi women employees target by 2023

Camera maker Canon reveals 30% Saudi women employees target by 2023
  • It has launched a “Women in Sales” internship program to further support the 2023 target

DUBAI: The Saudi Arabia unit of global camera maker Canon wants 30 percent of its employees to be Saudi women by the end of 2023. 

The move is in line with national efforts to integrate more women into the Kingdom’s workforce.

Canon said it has been working towards this target since 2018, when it first opened offices in Riyadh, Jeddah, and Al-Khobar, but has now made the goal public.

It has previously teamed up with King Abdul Aziz University in Jeddah to develop technology-enabled training, which the camera maker said was proof of its “commitment to support young talent” in the Kingdom. 

The company partnered with Mohammed Al-Mana College for Medical Sciences to fund one female student’s school expenses, including tuition and housing.

It has also launched a “Women in Sales” internship program to further support the 2023 target. 


China preparing for Evergrande's downfall: WSJ

China preparing for Evergrande's downfall: WSJ
Image: Shutterstock
Updated 23 September 2021

China preparing for Evergrande's downfall: WSJ

China preparing for Evergrande's downfall: WSJ
  • Local governments have been ordered to assemble groups of accountants and legal experts to examine the finances around Evergrande's operations in their respective regions
  • Both bonds would default if Evergrande fails to settle the interest within 30 days of the scheduled payment dates

Chinese authorities are asking local governments to prepare for the potential downfall of debt-ridden China Evergrande Group, the Wall Street Journal reported on Thursday, citing officials familiar with the discussion.

The move has been characterised as "getting ready for the possible storm" by the officials, according to the report.


The officials said local-level government agencies and state-owned enterprises have been instructed to step in only at the last minute should Evergrande fail to manage its affairs in an orderly fashion, the WSJ reported.


Local governments have been tasked with preventing unrest and mitigating the ripple effect on home buyers and the broader economy, the officials said, according to the report.


Evergrande, China's second-biggest property developer, has $83.5 million in dollar-bond interest payments due on Thursday on a $2 billion offshore bond and a $47.5 million dollar-bond interest payment due next week.


Both bonds would default if Evergrande fails to settle the interest within 30 days of the scheduled payment dates.


The company, which epitomised the borrow-to-build business model, ran into trouble over the past few months as Beijing tightened rules in its property sector to rein back debt levels and speculation.


Investors are worried that a downfall could spread to creditors including banks in China and abroad.