Turkey appoints a new finance minister amid plunge in currency

Turkey appoints a new finance minister amid plunge in currency
On Nov. 30, the lira plunged as low as 14 to the US dollar, and hit 15 to the euro, rendering it the worst performing currency of all emerging markets. (AFP)
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Updated 03 December 2021

Turkey appoints a new finance minister amid plunge in currency

Turkey appoints a new finance minister amid plunge in currency
  • Plummeting to record lows against foreign exchanges, Turkey’s beleaguered lira has lost about 45% of its value so far this year, toppling household savings

ANKARA: In an overnight decision on Dec. 2, Turkish President Recep Tayyip Erdogan appointed Nureddin Nebati as the country’s new minister of treasury and finance in place of Lutfi Elvan, adopting orthodox policy rather than monetary easing.

Elvan, having disagreed with Erdogan over the decrease of interest rates, reportedly stepped down from the post voluntarily. He was a figure acclaimed by market players despite fluctuations in the country’s economic management.

How the new minister, known as a loyalist, will be received by investors remains to be seen.

Plummeting to record lows against foreign exchanges, Turkey’s beleaguered lira has lost about 45 percent of its value so far this year, toppling household savings.

On Nov. 30, the lira plunged as low as 14 to the US dollar, and hit 15 to the euro, rendering it the worst performing currency of all emerging markets. The Central Bank of Turkey quickly intervened by selling substantial amounts of foreign exchange reserves to prop up the lira, Bloomberg reported.

Nebati, who served three years as a deputy finance minister before taking on this role, became the country’s third finance minister in just over a year.

He is known as a bureaucrat and a former businessman close to Erdogan, and he ardently supports keeping rates low in the face of soaring inflation, as they both believe that high interest rates result in high inflation.

However, according to Wolfango Piccoli, co-president of Teneo Intelligence in London, the appointment is expected to pave the way toward considerable spending in the months ahead to boost the government’s ratings ahead of the 2023 elections.

“Fiscal discipline, which has traditionally differentiated Turkey from most emerging markets, is soon likely to become history,” he told Arab News.

Experts anticipate that the economy could be accelerated through cheap credits.

Piccoli believes that the government will announce two support programs to prop up exports and the job market, along with additional initiatives to be disclosed in the months ahead in order to consolidate the government’s position.

“It is likely that the government can use its funds to provide loans to businesses as well,” he added.

The new minister, coming from a political science background in academia, took part in the youth organizations affiliated with Erdogan’s Justice and Development Party, or AKP.

“My God, make it easy, do not make it difficult. My God, make its outcome useful. Give us truth in our work, make us successful,” Nebati tweeted upon his appointment.

Before becoming a AKP lawmaker between 2011-2018, he was also an active figure on the board of the pro-government Islamist business association, MUSIAD. He is also known as a figure very close to Erdogan’s son-in-law, Berat Albayrak.

“In the recent past, former minister Lutfi Elvan had hinted that improvements in the current account balance should be handled with structural changes in the production structure rather than with rate cuts,” said Selva Demiralp, a professor of economics at Koc University in Istanbul, and a former economist at the Federal Reserve.

“Meanwhile, the government insists on the argument that rate cuts will be used as a way to stimulate exports and reduce imports. With the appointment of the new minister, it looks like there will be better coordination between monetary and fiscal policy in keeping interest rates low,” she told Arab News.

In a recent interview wtih state-run broadcaster TRT, Erdogan said that more interest rate changes should be expected in the coming period and Turkey would turn a surplus in 2022, while he warned that there is no “turning back” from the new policy path.

“In this way, there will be an improvement in exchange rates ahead of the elections,” he said.

According to the latest official data on Tuesday, the Turkish economy grew by 7.4 percent year-on-year in the third quarter, thanks to exports, manufacturing and retail demand.

In another speech to Parliament last month, Erdogan hinted at a forthcoming change of finance minister, saying “I’m sorry to our friends who defend (high) interests but I cannot and will not walk the same path as them.”

Elvan was the only one who did not join the crowd in applauding these remarks.

According to economist Demiralp, more rate cuts will push deposit rates further into negative territory, which may bring another wave of dollarization and increase the pressures on the lira.

“Thus, it would limit the banks’ ability to transmit further rate cuts into their borrowing and lending rates. When the monetary transmission mechanism comes to a halt, the government may reconsider its easing cycle,” she said.

On Thursday, the central bank governor met with domestic and international investors and economists via videoconference.

Since September, the central bank has cut rates by 400 basis points to 15 percent against inflation that reached about 20 percent.

The recent steps taken by Ankara to mend ties with its previous regional competitors are also seen as part of a larger attempt to reap economic gains and attract investments from such overtures.


Saudi Arabia discovers 3,000 industrial minerals in the Arabian shield : Director of SGS

Saudi Arabia discovers 3,000 industrial minerals in the Arabian shield : Director of SGS
Updated 15 sec ago

Saudi Arabia discovers 3,000 industrial minerals in the Arabian shield : Director of SGS

Saudi Arabia discovers 3,000 industrial minerals in the Arabian shield : Director of SGS

RIYADH: Saudi Arabia’s search of mineral resources is continuing in the Arabian shield in the west part of the Kingdom, where 3000 mineral occurrences have already been discovered.

The Arabian shield covers an area of 600,000 km2, which the Saudi Geological Survey, aims to survey for mineral occurrences, according to the senior director of the Survey and Exploration Centre at SGS.

Among the 2,361 metallic minerals discovered in the Arabian shield are copper and zinc, with more set to follow as per the SGS strategy.

“The total of minerals is about 5,535 mineral occurrences in Saudi Arabia,” Abdullah Nabhan told Arab News on the sidewalk of the Future Mineral Forum, FMF.


Mine costing $200m to be built in Saudi Arabia after gold and copper discovery: mining chief

Mine costing $200m to be built in Saudi Arabia after gold and copper discovery: mining chief
Updated 7 min 49 sec ago

Mine costing $200m to be built in Saudi Arabia after gold and copper discovery: mining chief

Mine costing $200m to be built in Saudi Arabia after gold and copper discovery: mining chief

RIYADH: Gold, copper, zinc and silver has been discovered among 25 million tons of rock near Taif, western Saudi Arabia, by Gold and Mineral Co, a joint venture between global and local partners.

The unearthing of the metals has prompted the company to set out plans for a mine, according to the CEO of Gold and Mineral Co.

“To build a mine, it will cost us and my shareholders $200 million, creating jobs for around 700 people,” Brian Hosking told Arab News on the sideline of the Future Mineral Forum in Riyadh. 

The company expects to start producing in 2025, but will first have to complete the design of the mine that avoids environmental damages and assures local community engagement in the project.

Hosking expects higher demands on copper in the future thanks to its ability to conduct electricity compared to other minerals.

“The lucky thing is that Saudi Arabia has actually got many projects which are possibly for copper,” he said.

He also said he supports measures by the Saudi government to ensure mining is carried out in an environmentally responsible way.

“This is not about zero carbon, this is about that my children and your children have a future on this earth,” he added.

Gold and Mineral Co is a joint venture between the London-listed company KEFI Minerals and Abdul Rahman Al-Rashid and Sons Co., which has a 69 percent stake in the company.


South Korea, GCC expect free trade deal within 6 months as negotiations resume

South Korea, GCC expect free trade deal within 6 months as negotiations resume
Updated 19 min 39 sec ago

South Korea, GCC expect free trade deal within 6 months as negotiations resume

South Korea, GCC expect free trade deal within 6 months as negotiations resume
  • The free trade agreement between the two sides is expected to “contribute to strengthening the solid economic relations and strengthening the strategic partnership”

DUBAI: South Korea and the Gulf Cooperation Council agreed on Wednesday to resume free trade, with an agreement expected to be reached within six months from the date of the first round of negotiations.

During a meeting between South Korean Minister of Trade, Industry and Energy Moon Sung-wook and GCC Secretary-General Nayef Al Hajraf, both parties stressed the importance of “opening wide prospects for trade and industrial cooperation.” 

Both men discussed the challenges facing GCC countries, which prompted them to reduce dependence on oil incomes, enhance non-oil revenues and focus on renewable and clean energy, according to a statement issued by the council. 
The free trade agreement between the two sides is expected to “contribute to strengthening the solid economic relations and strengthening the strategic partnership between us,” the statement added.


TASI edges down amid rising oil prices, lingering omicron worries: Opening bell

TASI edges down amid rising oil prices, lingering omicron worries: Opening bell
Updated 30 min 1 sec ago

TASI edges down amid rising oil prices, lingering omicron worries: Opening bell

TASI edges down amid rising oil prices, lingering omicron worries: Opening bell

RIYADH: Saudi Arabia’s main stock index, TASI, started the day in the red territory amid lingering omicron-driven fears and higher oil prices, which hit a seven-year high on Tuesday.

As of 10:15 a.m. Saudi time, TASI edged 0.2 percent lower to reach 12,177 points, and the parallel market Nomu was flat at 26,056 points.

Early morning losses were propelled by an adverse performance in Saudi Arabia's financial sector.

The Kingdom’s largest bank by market value, Al Rajhi Bank, fell 0.3 percent.

Shares in the Saudi British Bank, or SABB, Bank Aljazira, and Riyad Bank were down 1.4, 0.5, and 0.3 percent, respectively.

Saudi Aramco opened 0.14 percent lower.

The oil giant signed one agreement and nine MoUs with leading South Korean entities to advance its downstream strategy and support development of low-carbon energy solutions, while creating new financing options for the company.

Tadawul group, owner of the Saudi Exchange, went up to its highest value since listing of SR170 ($45.3), with over SR90 million worth of shares changing hands during early trading.

Shares in Saudi real estate developer Red Sea International Co. gained 1.5 percent, after it signed a SR60.5 million deal with The Red Sea Development Co., TRSDC, to develop three complexes in the Saudi Western region.

Riyadh-based consumer durables and apparel company Thob Al Aseel Co. led the gainers, up 3 percent.

In energy trading, Brent crude reached $87.9, and US WTI crude oil traded at $86 per barrel as of 10:30 a.m. Saudi time.


UK inflation accelerates to near 30-year peak

UK inflation accelerates to near 30-year peak
Getty Images
Updated 40 min 52 sec ago

UK inflation accelerates to near 30-year peak

UK inflation accelerates to near 30-year peak
  • Economies worldwide are battling against decades-high inflation that is forcing central banks to hike interest rates

British annual inflation accelerated in December to its highest level for almost three decades, official data showed Wednesday, fuelled by price gains for clothing, food and furniture.


The rate hit 5.4 percent last month after striking a decade-high in November on jumping fuel costs, the Office for National Statistics said in a statement.


Inflation was last higher in March 1992 when it had stood at 7.1 percent.


Economies worldwide are battling against decades-high inflation that is forcing central banks to hike interest rates, including the Bank of England which last month raised its key borrowing cost.


"The inflation rate rose again at the end of the year and has not been higher for almost 30 years," said ONS chief economist Grant Fitzner.


"Food prices again grew strongly while increases in furniture and clothing also pushed up annual inflation.


"These large rises were slightly offset by petrol prices, which despite being at record levels were stable this month, but rose this time last year."


Fitzner added that last year's Covid lockdowns had impacted some items but the overall impact on headline inflation rate was "negligible".