Lira rallies late after Erdogan props up currency

Lira rallies late after Erdogan props up currency
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Updated 21 December 2021

Lira rallies late after Erdogan props up currency

Lira rallies late after Erdogan props up currency

ANKARA: Turkey’s lira ended the session up over 20 percent on Monday after President Tayyip Erdogan introduced a series of steps that he said will ease the burden of the weakened currency on Turks, while vowing to press on with a low-rates policy that led to the lira’s slide in the first place.
The lira, which was down more than 10 percent at 18.4 to the dollar earlier, strengthened sharply and ended up 25 percent on the day at 13.15 in reaction to Erdogan’s announcement, in its largest daily trading range on record. It remains down 45 percent so far this year.
Around $1 billion was sold in markets after Erdogan unveiled the measures, the head of the Turkish Banks Association said.
“I imagine the market was very short the lira and the measures announced by Erdogan to protect domestic investors’ savings from lira fluctuations provided some impetus to cover those shorts,” said Shaun Osborne, chief FX strategist at Scotiabank in Toronto.
Speaking after a Cabinet meeting, Erdogan said the measures would ensure citizens would not have to convert their lira into foreign currency over the lira crash, including a deposit guarantee promise.
“We are presenting a new financial alternative to citizens who want to alleviate their concerns stemming from the rise in exchange rates when they evaluate their savings,” Erdogan said.
“With the interest rate cuts, we will all see how inflation will start falling within months,” he said. “This country will no longer be a heaven for those adding to their money with high interest rates, it will not be an import haven.”
He also called on “everyone with money, access to finance” to contribute to investments and pledged steps to aid exporters and pensioners.
“Today’s move is solely based on the Turkish government’s announcement that it would protect against fluctuations in the currency,” said John Doyle, vice president of dealing and trading at FX payments firm Tempus Inc.
“The most important piece is that the government says that it will make up for losses in lira deposits if the lira declines exceed interest rates promised by banks. The government did not say how exactly they would execute this plan,” Doyle said.
Erdogan’s push for 500 basis points of interest rate cuts since September has set off Turkey’s worst currency crisis https://www.reuters.com/world/middle-east/yearender-turkeys-crisis-rattl... two decades, with the lira crashing near 40 percent in just the five weeks to last Friday.
“I think that if you continue to see rate cuts (...) you should continue to expect ample volatility going forward and that many investors will still target fresh record lows despite this historic reversal that we’ve seen,” said Edward Moya, senior market analyst for the Americas at Oanda in New York.
Economists have called Erdogan’s low-rates model reckless and said inflation would soar to beyond 30 percent next year.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said the current economic outlook was like “a truck with no brakes,” adding Erdogan’s newly announced measures diverged significantly from the usual market practices.
“Turkey is going into a complicated process, they are no longer playing the game by the rules,” Ozkardeskaya said.
Turkey’s five-year credit default swaps, the cost to insure against a sovereign default, jumped 39 basis points from Friday’s close to 622 bps according to IHS Markit.

ISLAMIC USURY
Erdogan defended his economic policy on Sunday and likened the currency volatility to attacks on the country’s economy that have roots in 2013 nationwide protests.
“We’re lowering interest rates. Don’t expect anything else from me. As a Muslim, whatever (Islamic teaching) requires I will continue to do that,” he said, referring to Islamic finance in which high interest, or usury, is typically avoided.
Despite widespread criticism and the rapid fallout for the economy — including Turks’ fast-eroding incomes and savings — Erdogan has forged ahead with his economic program which prioritizes exports and lending.
Under pressure from the president, the central bank cut rates again last week by 100 basis points, sending real rates deeper into negative territory, a red flag for investors and savers.
Inflation jumped to 21 percent last month and is expected to pass 30 percent next year.
Even after today’s sharp gains, the lira has lost about half its value to the dollar this year and is by far the worst performer among emerging market economies, due largely to damaged monetary credibility, analysts say.
In an attempt to slow the selling and address what it called “unhealthy” prices, the central bank has intervened five times this month, though there was no official indication of intervention on Monday. Bankers’ calculations show it has sold more than $6 billion from its already-depleted foreign reserves.
“If anything, (Erdogan’s announced) measures will bring an end to the uninterrupted breaks through record-lows, but in order for the lira to trade at levels seen last year, more action is needed from the central bank,” said Ima Sammani, FX Market Analyst at Monex Europe.


UAE producing near to its maximum oil production capacity: Energy minister

UAE producing near to its maximum oil production capacity: Energy minister
Updated 59 min 58 sec ago

UAE producing near to its maximum oil production capacity: Energy minister

UAE producing near to its maximum oil production capacity: Energy minister

ABU DHABI: The UAE is producing near to its maximum oil production capacity based on its current OPEC+ production baseline, Emirates News Agency (WAM) reported on Monday.

“In light of recent media reports, I would like to clarify that the UAE is producing near to our maximum production capacity based on its current OPEC+ production baseline (3,168 mbopd) which UAE is committed by until the end of the agreement,” Suhail bin Mohammed Al-Mazrouei, Emirati Minister of Energy and Infrastructure, said.

 


NEOM awards London-based Keller major piling contract for ‘The Line’

NEOM awards London-based Keller major piling contract for ‘The Line’
Updated 27 June 2022

NEOM awards London-based Keller major piling contract for ‘The Line’

NEOM awards London-based Keller major piling contract for ‘The Line’

RIYADH: Saudi Arabia’s $500-billion project NEOM has awarded UK’s Keller a major piling contract for “The Line,” a 170-km megacity being developed within the Kingdom’s flagship project. 

Starting in the west at the Gulf of Aqaba and terminating at the NEOM International Airport within the upper valley region, The Line is subdivided into around 135 modules, according to a statement. 

Each module contains eight buildings founded on large diameter bored piles. 

Keller had signed an umbrella framework agreement with respect to the project, and is mobilizing for an anticipated first works order on a portion of Module 40 which has an expected value to Keller of around £50 million ($61.5 million), with the work anticipated to be completed within the next 12 months.

Listed on the London Stock Exchange, Keller is an independent geotechnical solutions specialist.


NEOM, McLaren Racing partner to drive innovation in electric motorsport

NEOM, McLaren Racing partner to drive innovation in electric motorsport
Updated 27 June 2022

NEOM, McLaren Racing partner to drive innovation in electric motorsport

NEOM, McLaren Racing partner to drive innovation in electric motorsport

RIYADH: NEOM, one of Saudi Arabia’s flagship projects, has partnered with McLaren Racing to drive innovation and talent development in electric motorsport, according to a statement. 

With the partnership, NEOM becomes the title partner of the McLaren Formula E and Extreme E racing teams, which brings the two electric race series together under the banner of NEOM McLaren Electric Racing.

“Our partnership with McLaren Racing complements NEOM’s commitment to driving sustainable solutions and tackling some of society's most pressing challenges,” CEO Nadhmi Al-Nasr said. 

“The partnership will allow us to share our collective resources and experience to yield exciting results, not only for our own organizations, but also for the broader automotive and sports industries,” he added. 

McLaren will be located within OXAGON’s Research and Innovation Campus, which will provide cutting edge facilities and collaboration spaces. 

During 2023, McLaren and NEOM will create a bespoke program to nurture engineers and students, in line with the mega project’s commitment to develop Saudi talent. 


Thailand to seek fertilizer supply from Saudi producers

Thailand to seek fertilizer supply from Saudi producers
Updated 27 June 2022

Thailand to seek fertilizer supply from Saudi producers

Thailand to seek fertilizer supply from Saudi producers

RIYADH: Thailand is planning to negotiate with Saudi Arabia for the supply of fertilizers as the country is currently facing a shortage, especially due to the high cost of imports.

The Thai Chamber of Commerce will coordinate with Saudi suppliers and a business event is to be held between three major Saudi-based fertilizer suppliers and Thai importers on June 29, Thai local media reported citing Commerce Minister Jurin Laksanawisit.

Laksanawisit added that two Saudi suppliers were recently provided permission to sell fertilizers to Thailand.

Thailand heavily relies on imports for its fertilizers, with only 8 percent coming from domestic sources and a usage of about 5 million tons of fertilizer a year, according to the minister.

The country’s overall demand for fertilizer from Saudi Arabia is about 808,000 tons, the media report noted citing industry statistics.


US stocks — Wall Street sheds opening gains on losses in high-growth stocks

US stocks — Wall Street sheds opening gains on losses in high-growth stocks
Updated 27 June 2022

US stocks — Wall Street sheds opening gains on losses in high-growth stocks

US stocks — Wall Street sheds opening gains on losses in high-growth stocks
  • S&P 500 energy stocks among few gainers
  • Robinhood rises on Goldman Sachs upgrade
  • Indexes down: Dow 0.24 percent, S&P 0.36 percent, Nasdaq 0.68 percent

REUTERS: Wall Street’s main indexes fell after opening higher on Monday, as a rally last week on easing concerns over inflation lost steam, with high-growth stocks leading declines.

“We had a nice rally last week, so I think we’re seeing a little bit of profit taking this morning,” said Dennis Dick, a proprietary trader at Bright Trading LLC in Las Vegas.

“The stocks that were up the most last week are the ones getting hit the hardest here today.”

The tech-heavy Nasdaq Composite index, which gained 7.5 percent last week, fell 0.7 percent to lead declines among the three major indexes.

Investors were betting on the retreat in oil prices from the three-month highs hit in June to potentially ease inflationary pressures and likely push the Federal Reserve to moderate its aggressive policy tightening.

However, data on Monday showed new orders for US-made capital goods and shipments increased solidly in May, pointing to sustained strength in business spending on equipment in the second quarter.

Oil prices also moved back into positive territory, pushing up the S&P 500 energy index by 2.2 percent, reining in expectations for inflation falling on the back of lower energy prices.

The US central bank has rapidly raised interest rates to tame 40-year-high inflation, stoking fears its actions could tip the world’s largest economy into a recession.

After the benchmark S&P 500 index earlier this month recorded a 20 percent drop from its January closing peak to confirm a bear market, investors have been trying to gauge when the market might hit its bottom.

At 10:11 a.m. ET the Dow Jones Industrial Average was down 76.62 points, or 0.24 percent, at 31,424.06, the S&P 500 was down 13.94 points, or 0.36 percent, at 3,897.80 and the Nasdaq Composite was down 78.44 points, or 0.68 percent, at 11,529.19.

Shares of Robinhood Markets rose 0.6 percent after media reports said Goldman Sachs upgraded the retail broker’s stock to “neutral” from “sell.”

Goldman Sachs, however, cut rating on Coinbase Global Inc. to “sell” from “buy,” according to media reports, sending shares of the cryptocurrency exchange lower by 9.4 percent.

Declining issues outnumbered advancers for a 1.03-to-1 ratio on the NYSE and a 1.31-to-1 ratio on the Nasdaq.

The S&P index recorded one new 52-week high and 29 new lows, while the Nasdaq recorded 16 new highs and 41 new lows.