Turkey’s central bank chief says policy is tight enough; lira slides

Turkey’s central bank chief says policy is tight enough; lira slides
Despite high inflation, which has been in double digits for most of the last four years, the Turkish’s central bank is expected to begin cutting rates in coming months. Reuters/File
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Updated 08 September 2021

Turkey’s central bank chief says policy is tight enough; lira slides

Turkey’s central bank chief says policy is tight enough; lira slides
  • Annual inflation jumped more than expected to 19.25 percent in August

ISTANBUL: Turkish Central Bank Gov. Sahap Kavcioglu said on Wednesday the current 19 percent policy rate is tight enough to bring inflation down in the fourth quarter, suggesting monetary easing is on the way and setting off a plunge in the lira.

Speaking at a German-Turkish Chamber of Trade and Industry meeting, he stressed that the core inflation measures — which are lower than headline inflation — are increasingly important as the bank sets policy amid fallout from the pandemic.

“I can say that Turkey’s monetary policy stance is tight enough to decrease inflation despite rising global inflation,” Kavcioglu said.

Annual inflation jumped more than expected to 19.25 percent in August, above the central bank's policy rate and its highest level in more than two years, maintaining pressure for tight monetary policy.

Despite high inflation, which has been in double digits for most of the last four years, the bank is expected to begin cutting rates in coming months due in part to pressure from President Tayyip Erdogan for stimulus.

The next policy meeting is set for Sept. 23.

“We think inflation will enter a falling trend in the final quarter,” Kavcioglu said. He added that while food inflation jumped above historic trends in the summer, nonfood measures should remain below headline inflation through year end.

The lira weakened as much as 1.5 percent to 8.48 against the dollar after the rare public speech from the bank governor, whom Erdogan appointed in March. It was its biggest intra-day fall since May.

“The governor’s statements created volatility in the exchange rate as a rate cut as soon as Sept. 23 might be on the agenda if the bank takes a slight deceleration in core inflation as permanent,” said Spinn Consulting founding partner Ozlem Derici Sengul.

The central bank has kept its policy rate at 19 percent since March and repeatedly promised in recent months to keep it above the inflation rate.

However, on conference calls with investors last week, investors told Reuters that Kavcioglu did not repeat that hawkish pledge, and said they interpreted that as a shift that could pave the way to earlier rate cuts.

Again on Wednesday he did not repeat that pledge, while stressing the significance of core inflation.

“The extraordinary conditions brought on by the (COVID-19) outbreak increase the importance of core inflation indicators, that allow the main trend of inflation to be measured adjusted for short-term volatilities,” he said.

Annual core “C” inflation stood at 16.76 percent in August, down from 17.22 percent in July.

Kavcioglu also said that high interest rates on loans limit Turks’ access to credit.

He said that while there was room to improve on inflation and foreign currency reserves, data shows that exports and services are boosting economic growth.


Commodities Update — Gold falls; Silver down; Grains ease

Commodities Update — Gold falls; Silver down; Grains ease
Updated 14 sec ago

Commodities Update — Gold falls; Silver down; Grains ease

Commodities Update — Gold falls; Silver down; Grains ease

RIYADH: Gold prices slipped on Wednesday, pressured by a firmer dollar as investors look to minutes from the US Federal Reserve’s May policy meeting due later in the day for cues on its policy tightening path.

Spot gold fell 0.6 percent to $1,855.03 per ounce by 1134 GMT, on track to snap a five-day winning streak. US gold futures dropped 0.6 percent to $1,853.40.

Silver down

Spot silver fell 1.5 percent to $21.76 per ounce, while platinum shed 1.4 percent to $940.89. 

Palladium was 0.7 percent lower at $1,992.37. 

Wheat heads lower

US wheat futures fell on Wednesday following reports that Russia was ready to provide humanitarian corridors for food shipments, while corn hovered near a six-week low as US planting picked up and China allowed Brazilian corn imports.

The most-active wheat contract on the Chicago Board of Trade was down 2.8 percent at $11.22 a bushel by 1023 GMT.

Corn eased 1.2 percent to $7.62-1/4 a bushel after falling 1.8 percent on Tuesday while soybeans edged 0.4 percent lower to $16.86-1/4 a bushel.

(With input from Reuters) 


TASI ends higher as investor worries recede: Closing bell

TASI ends higher as investor worries recede: Closing bell
Updated 29 sec ago

TASI ends higher as investor worries recede: Closing bell

TASI ends higher as investor worries recede: Closing bell

RIYADH: Saudi Arabia’s main index closed higher today, boosted by optimism from investors as earnings season concluded on a positive note, after listed companies reported 73 percent profit growth in the first quarter.

As of Wednesday’s closing bell, TASI gained 2.34 percent to reach 12,588, while the parallel market, Nomu, slipped 1.04 percent to 22,020.

In the financial sector, Riyad Bank rose 8.25 percent to lead the gainers, while Rajhi and Alinma Bank climbed 3.18 percent and 5.40 percent, respectively.

Saudi Industrial Export Co. fell 5.48 percent to lead the laggards, despite leading the market in early trade.

Among the gainers on the list, Saudi Electricity Co. rose 6.22 percent, and Almarai Co. increased 6.01 percent.

Telecom giants stc and Zain KSA were both up by 0.77 percent and 0.93 percent respectively.

In the pharma sector, Aldawaa Medical Services Co. increased 1.04 percent, while Nahdi Medical Co. added 0.39 percent.

Saudi Aramco, the largest player on the Saudi oil market, opened today’s trading up 2.12 percent.

On the energy market, Brent crude traded at $114.70 per barrel and West Texas Intermediate crude traded at $111.07 per barrel, as of 3:39 p.m. Saudi time.


National Bank of Kuwait stops operations in Jordan

National Bank of Kuwait stops operations in Jordan
Updated 30 min 20 sec ago

National Bank of Kuwait stops operations in Jordan

National Bank of Kuwait stops operations in Jordan

RIYADH: Following the sale of its banking business to the Arab Jordan Investment Bank, the National Bank of Kuwait has halted its operations in Jordan.

The bank said in a statement that all assets and liabilities will be transferred to the Arab Jordan Investment Bank, as of May 25, including accounts balances, deposits and loans.

Meanwhile, the Central Bank of Jordan terminated the license of the National Bank of Kuwait as of Wednesday.


Saudi TDF signs financing deal for $63m luxury hotel project in Eastern Province 

Saudi TDF signs financing deal for $63m luxury hotel project in Eastern Province 
Updated 25 May 2022

Saudi TDF signs financing deal for $63m luxury hotel project in Eastern Province 

Saudi TDF signs financing deal for $63m luxury hotel project in Eastern Province 

RIYADH: Saudi Arabia’s Tourism Development Fund has inked a financing deal with Rimal AlKhobar Real Estate Co. to develop a five-star hotel with a project cost of SR238 million ($63 million) in the Eastern Province of the Kingdom. 

Announced during the second edition of the Future of Hospitality Summit in Riyadh, the partnership aims to enhance tourism and entertainment services for the Eastern Region, Saudi Press Agency reported.

The new project will include over 100 hotel rooms and suites, 62 housing units and restaurants, Wahdan Al-Kadi, chief business officer at TDF, said. 

The property will have all the other amenities including swimming pools, a health center, a gym and spaces for meetings and events.

He stressed the TDF’s commitment to attract more investors and provide them with the necessary support to develop quality tourism projects that keep pace with Saudi Arabia’s tourism boom.

TDF was established in 2020 with $4 billion in capital to facilitate local and international investors’ access to high-potential tourism investments across key destinations in the Kingdom, its website stated.


Diriyah Gate Project has 36% Saudi female staff, says CEO

Diriyah Gate Project has 36% Saudi female staff, says CEO
Updated 25 May 2022

Diriyah Gate Project has 36% Saudi female staff, says CEO

Diriyah Gate Project has 36% Saudi female staff, says CEO

RIYADH: The majority of Diriyah Gate Project staff, 83 percent, are Saudi nationals, out of which 36 percent are women, said Jerry Inzerillo, group CEO of the Diriyah Gate Development Authority.

Inzerillo, who was speaking at the Future Hospitality Summit, said that 16 percent of the project's women workforce are operating in the management sector.

“Just build a giga-project and leave your community behind it. It would be immoral,” said Inzerillo.

He added that 40 percent of the workforce in the Diriyah Gate Project are from the local community.

According to Inzerillo, the project will be an iconic initiative which will offer a future grounded in Saudi Arabia’s glorious past.

Inzerillo revealed that the project, upon completion, will have 20,000 residential units, and the contracts to build these settings are being awarded to Saudi builders.

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