Turkish lira tanks as Ankara-exposed stocks tumble

The currency fell to as low as 8.47 against the dollar compared to 7.22 on Friday. (AFP)
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Updated 22 March 2021

Turkish lira tanks as Ankara-exposed stocks tumble

  • Erdogan abruptly ousted latest bank chief Agbal on Saturday
  • New bank chief an outspoken critic of tight policy

DUBAI: The Turkish lira crashed by nearly 15 percent Monday after the sacking of the country’s central bank chief rattled global markets.
The currency fell to as low as 8.47 against the dollar compared to 7.22 on Friday.

The currency recovered slightly later in the session to 8.09.

President Recep Tayyip Erdogan's abrupt dismissal of the reformist governor Naci Agbal sent shock waves across markets and triggered fresh worries for millions of Turks concerned about their savings.

The governor was replaced by former ruling party lawmaker Sahap Kavcioglu over the weekend.
A presidential decree on Friday did not explain why Agbal had been removed, but it comes a day after the bank hiked interest rates more than two percentage points to 19 percent in a bid to fight inflation.
“We now see the possibility of an inter-meeting interest rate cut under the new governor, alongside the potential for accelerated capital outflows,” said Abu Dhabi Commercial Bank chief economist Monica Malik, in a note to investors on Monday.
The Borsa Istanbul suspended trading twice when automatic circuit breakers kicked in amid a huge sell-off nearing 8 percent.
Yields on Turkish bonds also rose to record highs.
The fallout was felt across global currency and equities markets. The dollar gained as investors sought safety in the greenback while at the same time some companies with exposure to Ankara had their share price hammered.
Shares in Spain’s BBVA, which makes around 14 percent of its profits in Turkey through its Turkish unit Garanti, plunged as much as 7.7 percent.
The MSCI emerging market currency index was down about 0.1 percent, with high-yielding currencies including the South African rand and the Mexican peso easing about 0.8 percent and 1.4 percent, respectively.
“It may well be that interest rate hikes are once again permitted by Erdogan in a phase of crisis-like lira depreciation but the recent developments should have shown currency traders that even then a sustainable monetary policy regime change is not to be expected,” said Ulrich Leuchtmann, head of FX at Commerzbank.
“The calming effect of interest rate hikes has probably been largely destroyed.”

(With agencies)

Dubai plastic waste-to-clothes startup looks to KSA

Updated 39 min 3 sec ago

Dubai plastic waste-to-clothes startup looks to KSA

  • The company converts plastic bottles — collected from schools, events and businesses across the city — into clothes
  • The UAE produces at least 10 million recyclable bottles per day

ABU DHABI: A Dubai company that makes clothing from plastic water bottles plans to expand in Saudi Arabia and Egypt after the pandemic forced a complete rethink of its business model.

DGrade was established by Kris Barber in 2010 to address the vast amount of plastic water bottles being produced in the UAE.

The company converts plastic bottles — collected from schools, events and businesses across the city — into clothes.

But when the pandemic closed schools across the country, DGrade was forced to rethink how it operates. It also provided the impetus for the company to consider moving into new regional markets.

The clothes-making process begins by putting the plastic through hot and cold washing until it turns into flakes.

“Once we have the flakes, they’re then put through an extrusion process and turned into a fiber,” Emma Barber, managing director of DGrade, told Arab News. Its plant takes about 150,000 bottles per hour and 75 million bottles per month, she added.

Before the pandemic, the team used to collect plastics from schools and events around Dubai, Barber said. But with the closure of schools and a ban on events, DGrade was faced with a potential halt in its raw material.

Despite the closures, it still managed to collect 1 million bottles in the 2019-2020 school year.

“A lot of children have been collecting plastics at home, bringing them to schools and dropping them off,” Barber said.

“We’re planning to expand in Saudi Arabia because of the huge population and also the amount of plastic.”

She said Egypt is also attractive because of its huge population, plastic waste issues and an already well-established textiles sector.

DGrade also plans to import plastic from Gulf countries. It is coordinating with companies in Saudi Arabia, Kuwait and Qatar to bail plastic and bring it to the UAE, Barber added.

On financial support from the banks, she said: “We’ve been looking for some working capital in terms of bridging loans. It has been difficult because the banks are unable to give you that kind of money due to local legislation and restrictions.”

But she said DGrade will soon announce a second round of investment with a large European company that plans to take an equity share.

“Without the investment that we managed to obtain, it would’ve been almost impossible to fund what we’ve done so far on our own,” Barber added.

To expand the business further, she said it coordinated with some companies to place outdoor bins at private events, which are chargeable at 100 UAE dirhams ($27.23) per month, in order to collect as many bottles as possible.

“We’re talking to ministries, waste management companies and private sector organizations to see if we can place larger cages into residential and community areas so people can place plastic at their convenience,” she added.

Like many companies large and small, DGrade was forced to slash costs during the pandemic. It moved to a smaller office, reduced staff wages and made half of their team redundant, Barber said.

The UAE produces at least 10 million recyclable bottles per day and the output is 18 million kg per year of recycled flake, she added.

Multiple companies have switched back to bottled water and away from dispensers in order to keep their staff safe, she said.

DGrade targets uniform or work-wear companies across all sectors. It has developed 200 types of fabric, all from recycled polyester.

“The traditional fashion industry is highly polluting and damaging to the environment,” said Barber. “Traditional fabrics, such as cotton, are highly water- and land-intensive. They also use pesticides and fertilizers.”

Every year, 100 billion garments are produced worldwide and 92 million tons become waste, according to a 2021 BBC Earth report.

DGrade’s aim is not to promote the use of plastic, but to ensure that when it is used it is being responsibly managed and recycled, Barber said.

“In 99 percent of cases, recyclable plastic is the greenest packaging option available. It’s far better for the environment to use plastic than glass, aluminum or paper,” she added.

DGrade’s process of converting plastic to clothes produces 55 percent fewer carbon emissions, and uses 20 percent less water (which it recycles and reuses) and 50 percent less energy, she said.

Qatar wealth fund says no investment in cryptocurrencies until they mature

Updated 24 June 2021

Qatar wealth fund says no investment in cryptocurrencies until they mature

  • Crypto currencies are currently too volatile, QIA CEO says
  • QIA seeks to boost investment in Asia and US

DOHA: Qatar’s wealth fund avoids investing in cryptocurrencies due to their extreme volatility, Bloomberg reported.

Cryptocurrencies “need a bit of maturity before we make our view about investing in that space,” QIA CEO Mansoor Bin Ebrahim Al-Mahmoud said at the Qatar Economic Forum.

Instead of crypto assets, the QIA will focus on continuing to boost investments in Asia and the US as it looks to balance out a concentration of European assets in its portfolio, Al-Mahmoud said.

The fund is also going to be investing more into warehouses in response to the impact of the coronavirus pandemic on retail and office real estate, he said.

Qatar Investment Authority (QIA) is one of the world’s largest sovereign wealth funds with assets estimated at over $360 billion, according to Global SWF.

Bitcoin has lost more than 50 percent from its mid-April high of almost $65,000. The coin started 2021 trading around $29,000 following a fourfold increase in 2020. It bounced back on Wednesday after earlier whipsawing investors with a dip below the $30,000 level.

This year the fund will also look to formalize the process of factoring in environment, sustainability and governance (ESG) considerations into its investment criteria, the Al-Mahmoud said.

“We have been investing in ESG initiatives and projects for quite some time, and this year it will be institutionalized,” he said. “We will embed ESG into our investment process,” he said.

IMF approves one year $5.2bn stand-by arrangement for Egypt

Updated 24 June 2021

IMF approves one year $5.2bn stand-by arrangement for Egypt

  • IMF authorizes Egypt to withdraw $1.7bn after reform program review

RIYADH: The International Monetary Fund (IMF) approved a 12-month stand-by arrangement for Egypt, with access equivalent to 3.76 billion Special Drawing Rights (SDR) equivalent to about $5.2 billion.

After a strong track record of successfully completing a home-grown economic reform program supported by the IMF’s Extended Fund Facility in 2016-2019, Egypt was one of the fastest growing emerging markets prior to the COVID-19 outbreak, the IMF said in a statement on Wednesday.

The new arrangement aims to help Egypt cope with challenges posed by the COVID-19 pandemic by providing IMF resources to meet Egypt’s balance of payments needs and to finance the budget deficit. It will be allowed to withdraw $1.7bn after its reform program has been reviewed.

“Over the past few years, Egypt saw strong growth, falling unemployment, moderate inflation, buildup of strong reserve buffers, and significant reduction in public debt,” said Deputy Managing Director and Acting Chair Antoinette Sayeh.

Sayeh emphasized Egypt’s commitment to broaden and deepen structural reforms, and refocus to address the economic health crisis during the pandemic.

Egyptian president approves July pension and wage increases

Updated 24 June 2021

Egyptian president approves July pension and wage increases

  • Pensions to be raised 13 percent at cost of 31 billion Egyptian pounds
  • Minimum wage to rise from 2,400 Egyptian pounds from 2,000

RIYADH: Egypt’s official gazette published President Abdel Fattah El-Sisi’s decision to increase pensions as of the beginning of July, Al Arabiya reported.

Pensions will be raised 13 percent at a cost of 31 billion Egyptian pounds ($1.9 billion) and minimum monthly wages will be increased from 2,000 Egyptian pounds to 2,400 Egyptian pounds at a cost of 37 billion Egyptian pounds.

This decision will complete the total of the pension, subsidies and increases to minimum wages, local papers reported.

Egyptians’ salaries have jumped more than 240 times in about 41 years, according to data compiled by Al Arabiya.

Egypt’s budget, to be implemented in early July, also includes two bonuses at a cost of about 7.5 billion Egyptian pounds, and an increase in stimulus at a total cost of about 17 billion Egyptian pounds.

Reliance expects Aramco deal to formalize this year amid $10bn energy push

Employees work at the Reliance Industries Petrol pump in Navi Mumbai. (AFP)
Updated 24 June 2021

Reliance expects Aramco deal to formalize this year amid $10bn energy push

  • Plan to invest $10bn in a new energy business over three years
  • Reliance had announced a sale of a 20 percent stake in its oil-to-chemicals business for $15 billion in 2019 to Aramco

BENGALURU: Reliance Industries said on Thursday it hopes to formalize its partnership with Saudi Aramco this year and its Chairman Yasir Al-Rumayyan will join the Indian conglomerate’s board as an independent director.
“Al-Rumayyan joining our board is also the beginning of internationalization of Reliance,” Chairman Mukesh Ambani told shareholders on Thursday.
Reliance had announced a sale of a 20 percent stake in its oil-to-chemicals business for $15 billion in 2019 to Aramco, the world’s top oil exporting firm.
However, the deal stalled after oil prices and demand crashed last year due to the pandemic.
Separately, Reliance Industries said it would invest 750 billion Indian rupees ($10.10 billion) in a new energy business over the next three years, Ambani said.
Reliance will build solar manufacturing units, a battery factory for energy storage, a fuel cell-making factory and an electrolyzer unit to produce green hydrogen as a part of the business, Ambani said.
As a part of the new business — called the Dhirubhai Ambani Green Energy Giga Complex — Reliance will also build solar capacities of at least 100 GW by 2030, Asia’s richest man told his shareholders at the meeting which was held virtually due to COVID-19.
That would account for over a fifth of India’s renewable energy target of installing 450 GW by 2030. India wants green energy sources to make up 40 percent of electricity generated by the end of this decade.