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.


NFTs losing luster as cryptocurrencies crash

NFTs losing luster as cryptocurrencies crash
Updated 23 May 2022

NFTs losing luster as cryptocurrencies crash

NFTs losing luster as cryptocurrencies crash
  • Fraud a major reason cited for the downturn, with amounts lost to scams described as "eye-watering"
  • At least 80 percent of NFTs on leading exchanges OpenSea and LooksRare found to be fake

PARIS: A slew of celebrity endorsements helped inflate a multi-billion dollar bubble around digital tokens over the past year, but cryptocurrencies are crashing and some fear NFTs could be next.
NFTs are tokens linked to digital images, “collectable” items, avatars in games or property and objects in the burgeoning virtual world of the metaverse.
The likes of Paris Hilton, Gwyneth Paltrow and Serena Williams have boasted about owning NFTs and many under-30s have been enticed to gamble for the chance of making a quick profit.
But the whole sector is suffering a rout at the moment with all the major cryptocurrencies slumping in value, and the signs for NFTs are mixed at best.
The number of NFTs traded in the first quarter of this year slumped by almost 50 percent compared to the previous quarter, according to analysis firm Non-Fungible.
They reckoned the market was digesting the vast amount of NFTs created last year, with the resale market just getting off the ground.
Monitoring firm CryptoSlam reported a dramatic tail-off in May, with just $31 million spent on art and collectibles in the week to May 15, the lowest figure all year.
A symbol of the struggle is the forlorn attempt to re-sell an NFT of Twitter founder Jack Dorsey’s first tweet.
Dorsey managed to sell the NFT for almost $3 million last year but the new owner cannot find anyone willing to pay more than $20,000.

Molly White, a prominent critic of the crypto sphere, told AFP there were many possible reasons for the downturn.
“It could be a general decrease in hype, it could be fear of scams after so many high-profile ones, or it could be people tightening their belts,” she said.
The reputation of the industry has been hammered for much of the year.
The main exchange, OpenSea, admitted in January that more than 80 percent of the NFTs created with its free tool were fraudulent — many of them copies of other NFTs or famous artworks reproduced without permission.
“There’s a bit of everything on OpenSea,” said Olivier Lerner, co-author of the book “NFT Mine d’Or” (NFT Gold Mine).
“It’s a huge site and it’s not curated, so you really have no idea what you’re buying.”
LooksRare, an NFT exchange that overtook OpenSea for volume of sales this year, got into similar problems as its rival.
As many as 95 percent of the transactions on its platform were found to be fake, according to CryptoSlam.
Users were selling NFTs to themselves because LooksRare was offering tokens with every transaction — no matter what you were buying.
And the amounts lost to scams this year have been eye-watering.
The owners of Axie Infinity, a game played by millions in the Philippines and elsewhere and a key driver of the NFT market, managed to lose more than $500 million in a single swindle.

“As soon as you have a new technology, you immediately have fraudsters circling,” lawyer Eric Barbry told AFP.
He pointed out that the NFT market had no dedicated regulation so law enforcement agencies are left to cobble together a response using existing frameworks.
Molly White said strong regulation could help eliminate the extreme speculation but that could, in turn, rob NFTs of their major appeal — that they can bring quick profits.
“I think less hype would be a good thing — in its current form, NFT trading is enormously risky and probably unwise for the average person,” she said.
NFTs are often likened to the traditional art market because they have no inherent utility and their prices fluctuated wildly depending on trends and hype.
But Olivier Lerner suggested a different comparison.
“It’s like the lottery,” he said of those seeking big profits from NFTs. “You play, but you never win.”


Riyadh hopes to ‘work out an agreement with OPEC+ which includes Russia,’ says energy minister

Riyadh hopes to ‘work out an agreement with OPEC+ which includes Russia,’ says energy minister
Updated 22 May 2022

Riyadh hopes to ‘work out an agreement with OPEC+ which includes Russia,’ says energy minister

Riyadh hopes to ‘work out an agreement with OPEC+ which includes Russia,’ says energy minister
  • Prince Abdulaziz says OPEC+ will be needed to bring about ‘orderly adjustments’ in the future

RIYADH: Saudi Energy Minister Prince Abdulaziz bin Salman has said Riyadh was “hoping to work out an agreement with OPEC+ which includes Russia.”

Talking to Financial Times, the minister said politics should be kept out of OPEC+ and insisted the “world should appreciate the value” the alliance of oil producers.

Oil prices have reached their highest levels in a decade, a set of OPEC+ production quotas put in place in April 2020 is set to expire in three months.

With the havoc you see now it’s too premature to try to pinpoint (an agreement).

Prince Abdulaziz bin Salman

Prince Abdulaziz said it was too early to say what a new agreement might look like given the uncertainties in the market, but added that OPEC+ would increase production “if the demand is there.” 

“With the havoc you see now it’s too premature to try to pinpoint (an agreement),” he said in the interview. “But what we know is what we have succeeded to deliver is sufficient for people to say so far there is a merit, there is a value of being there, working together.”

OPEC+ has stuck to its 2020 agreement, under which the alliance members raise total production each month by the modest amount of 430,000 barrels a day. But Russia’s output has dropped since the start of the Ukraine war, falling from about 11 million barrels per day in March to an average of 10 million bpd in April, according to data provider OilX.

Prince Abdulaziz blamed soaring prices on a lack of global refining capacity and taxes. “The determinant of the market is refinery capacity, and how do you unlock it,” he said. “At least for the last three years, the whole world lost around 4 million barrels of refining capacity, 2.7 million of them just from the beginning of COVID-19.” 

The Saudi energy minister said the OPEC+ alliance would be needed to bring about “orderly adjustments” in the future amid uncertainty about coronavirus lockdowns in China, global growth and supply chains.

He said to ease bottlenecks in production and refinery capacity governments have to encourage the industry to invest in hydrocarbons even as nations switch to cleaner energy sources. “This situation needs people to sit together, focus, take out the masquerade and the so-called political correctness … it’s about trying to relate to existing reality and find remedies to it.”

 

 


Uplift projects worth $247m inaugurated in Al-Qassim


Uplift projects worth $247m inaugurated in Al-Qassim

Updated 22 May 2022

Uplift projects worth $247m inaugurated in Al-Qassim


Uplift projects worth $247m inaugurated in Al-Qassim


RIYADH: Saudi Arabia’s Al-Qassim region on Sunday witnessed the inauguration of 27 development projects in the environment, water and agriculture sectors valued at SR927 million ($247 million). 

The newly launched projects are inclusive of everything related to the Ministry of Environment, Water and Agriculture, Saudi Press Agency reported citing Gov. Faisal bin Mishaal bin Saud. 


PIF-backed Lucid Motors delivers 300 EV units in April, to launch Air Pure later this year, CEO says

PIF-backed Lucid Motors delivers 300 EV units in April, to launch Air Pure later this year, CEO says
Updated 23 May 2022

PIF-backed Lucid Motors delivers 300 EV units in April, to launch Air Pure later this year, CEO says

PIF-backed Lucid Motors delivers 300 EV units in April, to launch Air Pure later this year, CEO says
  • By 2025, the company will accelerate its technology to reduce cost, energy consumption

JEDDAH: US-based electric vehicle manufacturer Lucid Motors delivered 360 cars to consumers during the first quarter of 2022. In contrast, the company sold 300 vehicles last month alone.
It is an encouraging sign considering that the EV manufacturer started its production last year and delivered its first car in October 2021.
“We are growing rapidly, and the Arizona factory can extend its production to 350,000 units a year by 2025,” Peter Rawlinson, CEO of Lucid Motors, told Arab News.
The prices of Lucid’s units range from $87,000 to $179,000, and it is planning to launch an edition later this year named Air Pure at the price of $87,000. Air Pure could cover over 400 miles on a single charge.

No one is even close to us. I think we are several years ahead of everyone else.

Peter Rawlinson

“We are defining a luxury brand with a high-end product, and when you look at what’s available in the market, that is a very good value,” he added.
By 2025, the company will accelerate its technology to reduce cost and energy consumption.
“The obstacle of EV is the prices of a vehicle. We can use our technological advantage to make cars that go further with fewer batteries, which means we can make the cars more affordable to buy and run because it consumes less energy,” said Rawlinson.
“When we move to the middle of the decade, our middle-size platform will become available, and that’s when we can drive the price down to closer to $50,000 in today’s prices,” he added.
 

Setting out on Arabian Safari
The company partnered with Saudi Arabia’s Public Investment Fund in 2018, which Rawlinson described as a turning point for Lucid Motors. The company was short on capital, and the PIF backed it up.
“We have got an alignment of mindset here with Saudi Arabia’s Vision 2030, and this could extend beyond just the cars. Certainly, it will extend into stimulating the economy with a supply chain and the infrastructure supporting manufacturing,” he said.
The EV startup went public in July last year. Its shares began trading on the Nasdaq stock exchange, where it raised $4.5 billion in fresh capital.
“In theory, we can break even in a few years. The question is do you want to do that?” said Rawlinson on the sidelines of Lucid’s factory signing ceremony.
To Rawlinson, the best value for shareholders is to continue on a rapid expansion, maximizing the share value return for an investor, rather than meeting short-time demands of breaking even.
Lucid Motors signed agreements on May 18 to build a production factory in King Abdullah Economic City, the western part of the Kingdom, with an annual capacity of 150,000 zero-emission EVs.
With this deal, Lucid is estimated to receive up to $3.4 billion in finance and incentives over the next 15 years to build and run the manufacturing facility in the Kingdom.

HIGHLIGHTS

The prices of Lucid’s units range from $87,000 to $179,000. It is planning to launch an edition later this year named Air Pure at the price of $87,000.

Air Pure could cover over 400 miles on a single charge.

Lucid Motors signed agreements on May 18 to build a production factory in King Abdullah Economic City with an annual capacity of 150,000 zero-emission EVs.

 

Production plans in the Kingdom
“We will ship semi-knocked-down kits of Lucid Airs from Arizona to KAEC, and we assemble those SKD kits here in Saudi Arabia,” Rawlinson said.
The production will start next year, and a complete assembly will be ready by 2025.
“And we will grow this volume up through 2026 to get to 150,000 units a year as soon as possible, and that’s the installed capacity of the factory we are building,” he added
Part of the factory’s function in KAEC will manufacture all-electric powertrains in-house, including battery packs, motors, inverters and transmissions.
“We make the most advanced battery pack globally, and we are well known for that,” he said.


The strategy will involve sending workers from Saudi Arabia to Arizona, where they will be trained to replicate the whole process in the Kingdom.
“This is not just an assembly plot where we build cars together; the core technology is actually built in-house,” he added.
Besides Lucid, only Tesla builds its technology in-house, which Rawlinson believes is the reason behind Tesla’s success. 
“I think they are four to five years ahead of everybody else, but today if you look at our technology, we are probably about three years ahead of what Tesla is,” he said.
Rawlinson measures this on efficiency, as he believes that the right way of measuring an EV technology is in miles per kilowatt-hour efficiency, given the size and sector the car is in.
“No one is even close to us. I think we are several years ahead of everyone else,” he said.


NEOM's The Line project to receive bids for spine's water infrastructure by June 1

NEOM's The Line project to receive bids for spine's water infrastructure by June 1
Updated 22 May 2022

NEOM's The Line project to receive bids for spine's water infrastructure by June 1

NEOM's The Line project to receive bids for spine's water infrastructure by June 1

RIYADH: Saudi Arabia’s The Line project, a 170-km long linear urban development in NEOM, is set to receive bids for its main work package to build spine water transmission by June 1, MEED reported. 

This package, which will be the latest in a series of tenders for the Line and Spine components, includes design, build, testing and commissioning work for a pressurized permanent water system. 

As part of the project, the contractors are required to create the complete design — right from the concept to the detailed design — besides providing supply, construction and installation services for the SWT line.

The water system includes the SWT line within a reinforced concrete box culvert running along the length of NEOM’s Spine.

According to MEED, some bidders have requested an extension of the deadline for the package.

The SWT culvert will run parallel to the Spine’s alignment about 360 meters north of the centreline of the Line alignment. The estimated 35-km SWT line will provide potable water for NEOM's Spine infrastructure and Line buildings. 

Whereas, contractors of the 160-km long rail line are also expecting NEOM to issue requests for prequalification within the next two months for the work on the high-speed rail line that forms the backbone of The Line. 

This development stretches from the coast towards Tabuk.