ISTANBUL: Turkey’s lira firmed on Friday to its strongest level in seven weeks, notching a weekly gain of some 12%, after President Tayyip Erdogan’s pledge to adopt a new economic model raised expectations of a sharp rate hike from the central bank.
The lira hit 7.6150 to the dollar in morning trade, its firmest level since Sept. 25. It subsequently eased back to 7.6700 by 0825 GMT from Thursday’s close of 7.6625.
The currency’s rally this week, after touching a record low of 8.58 last Friday, was sparked by expectations of a more orthodox economic policy after the central bank governor and the finance minister left office over the weekend.
Erdogan shifted to a more market-friendly tone on Wednesday, promising economic growth based on stability and international investment — a turnaround from blaming foreigners and high rates for Turkey’s woes.
The central bank is seen raising its policy rate next week to 15% from 10.25%, a Reuters poll showed. Erdogan’s speech was viewed as implying he would condone such a hike.
Bankers say foreign investors are leading the purchase of Turkish assets on optimism for economic policy changes.
“In a scenario where locals are also on the sell side (for dollar holdings), we see a high probability for a tendency to a trend between 7.53-7.73” in the dollar-lira exchange rate, said Orkun Godek, a strategist at Deniz Invest.
Turkish locals’ forex and gold holdings hit a record high of $224.23 billion on Nov. 6, indicating a rise of some $30 billion this year due to a lack of confidence in the lira.
The central bank raised its policy rate by 200 points in September but held steady last month, leading to a sell-off in the lira. The bank’s use of backdoor policies, funding the market above the policy rate, has brought the weighted average cost of funding to 14.46% as of Thursday.
The lira also firmed sharply against the euro this week, to as much as 8.9823 on Friday.
Turkey’s economy has been recovering after a contraction of nearly 10% year-on-year in the second quarter due to restrictions aimed at slowing the spread of the coronavirus.
Industrial production jumped 8.1% year-on-year in September, data showed on Friday.
A rate hike could stall the economy’s rebound from the coronavirus fallout but could help avert broader balance of payments problems by boosting the lira.
Turkish lira notches weekly gains of 12% on cenbank’s new look
https://arab.news/mn284
Turkish lira notches weekly gains of 12% on cenbank’s new look
- Erdogan shifted to a more market-friendly tone on Wednesday, promising economic growth based on stability and international investment
- The lira also firmed sharply against the euro this week, to as much as 8.9823 on Friday
New ownership rules spark foreign demand for Saudi real estate
RIYADH: Property developers in Saudi Arabia are seeing increased interest from international investors following the Kingdom’s recent amendments to real estate ownership laws, industry figures told Arab News.
Speaking at the Real Estate Future Forum in Riyadh, developers said the new regulations permitting foreign ownership of land are beginning to influence market behavior, including decisions by developers and speculators.
The updated regulatory framework officially came into effect on Jan. 22, enabling non-Saudis to apply for property ownership through the Saudi Arabia Real Estate digital platform.
Under the new rules, foreign individuals, companies, and entities are allowed to own property across the Kingdom, including in major urban centers such as Riyadh and Jeddah. Ownership in Makkah and Madinah, however, remains limited to Saudi companies and Muslim individuals.
Developers say the policy shift is already shaping large-scale projects, including Alma Destination on the Red Sea coast.
The waterfront mixed-use tourism development is opening opportunities for hospitality operators and investors, with plans encompassing residential units, hospitality offerings, marina facilities, and entertainment venues.
Zuhair Bakheet, CEO of Al Thuraya Al Omranya Properties and master developer of Alma Destination, said the project’s location in Jeddah, situated between the holy cities of Makkah and Madinah, enhances its appeal to international buyers.
“If we attract people who would love to have a unit within the Makkah and Madinah region, it’s a good option. If we think of Muslim countries like … Malaysia, Indonesia, Egypt, they would love to have a unit within close proximity of the holy cities,” he said.
Another developer factoring the regulatory change into its strategy is Emaar Economic City, the main developer of King Abdullah Economic City.
Emaar Economic City Chief Investment Officer Ali Al-Khatib told Arab News that the new framework represents a major shift for the sector. “We believe these new regulations for non-Saudi ownership are a significant turning point in the real estate sector in the Kingdom, and specifically for King Abdullah Economic City.
“We’ve already seen interest before the system was launched from last year … we’ve had interests from all around the world from Southeast Asia, from Africa, from Europe, from the West.”
