February First Week Middle East Finance Newsletter
Summary:
This article discusses the recent move by Lebanon's central bank to devalue the pound's official exchange rate by 90%, replacing three different rates with a unified rate of 15,000 per dollar.
Key takeaways:
1. The new rate is a step towards Lebanon's commitment to economic reforms as part of its preliminary agreement with the International Monetary Fund for a $3 billion loan.
2. The new rate applies mainly to banking operations and will change the rate at which people can save or borrow dollars.
3. Other emerging markets like Pakistan and Egypt are also facing mounting pressure on their currencies.
Counter arguments:
1. The new rate offers little comfort to most Lebanese people as it does not match the unofficial rate that most economies use.
2. The IMF deal requires authorities to take several measures before the fund’s executive board can approve disbursement, and politicians remain deadlocked over how to rescue the country from the turmoil.
Summary:
This article discusses the US Treasury's efforts to pressure the UAE and Turkey to reduce their economic and financial ties to Russia to curb Moscow's invasion of Ukraine.
Key takeaways:
1. The US Treasury has warned Turkey and the UAE that their economic and financial ties to Russia are hampering efforts to curb Moscow's invasion of Ukraine.
2. US officials have asked Turkey to clamp down on the flow of goods to Russia, which the defence industry could use to extend the conflict.
3. The US has also raised concerns over UAE businesses' role in transferring Iranian drones to Moscow and in enabling Tehran to skirt sanctions on oil exports.
Counter arguments:
1. Turkey has deepened its economic and trade ties with Russia, which have benefited from a strong personal relationship between President Recep Tayyip Erdogan and Putin.
2. Erdogan has sought to position Turkey as a mediator in the war, helped secure deals to resume grain shipments from Ukraine’s Black Sea ports, and facilitated prisoner exchanges.
Summary:
This article discusses the impressive economic growth of Saudi Arabia in the fourth quarter of 2021, which was the fastest among major global economies.
Key takeaways:
1. Saudi Arabia's non-oil sector grew faster in more than a year.
2. The kingdom recorded the fastest overall growth among major global economies.
3. The International Monetary Fund raised its global growth outlook for the first time in a year.
Counter arguments:
1. Saudi Arabia and its Persian Gulf neighbours have been shielded from global economic woes.
2. Saudi officials announced a spending boost to narrow this year’s budget surplus.
Turkish President Recep Tayyip Erdogan pledged the nation would keep slashing its benchmark interest rates. The remarks ramp up the odds that Turkey’s monetary authority will reduce its key rate. The path of monetary policy in recent years have closely followed explicit calls by Erdogan.
The UAE's national energy company has started pitching an initial public offering of its gas business. Adnoc Gas said it generated a record profit last year, according to people familiar with the matter. The strong performance came as global gas prices soared after Russia invaded Ukraine.
Saudi Arabia unexpectedly raises oil prices for customers in its main market of Asia. The kingdom raised prices for European buyers by $2 a barrel and most for the US by 30 cents. OPEC members have sounded bullish about China, perhaps the single-biggest factor determining oil-price moves this year.
Kuwait says oil demand in China is rising strongly following the ending of coronavirus lockdowns. Oil traders are watching China closely, saying the pace of its recovery will be the single biggest factor determining price moves this year.