Gulf Arab inflation expected at 8% in 2008 April 1, 2008
Posted by mylastresort in analysis, bahrain, qatar, rumors, saudi arabia.Tags: Arab, Asia, bahrain, Bank, Cap, currency, Dinar, Director, Dirham, Dollar, Federal Reserve, Gulf, IMF, inflation, Inflation Report, International Monetary Fund, kuwait, Lending, Level, Liquidity, Middle East, Mohsen Khan, oman, Peg, qatar, Rental, Riyal, Saudi, saudi arabia, uae
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The International Monetary Fund (IMF) has stated that it expected the average Gulf Arab inflation levels to increase in 2008 to 8% from 7% in last year. Inflation has been a major problem in the Gulf arab region with migrants workers protesting and import prices increasing due to the dollar peg by Arab countries. As the US Dollar loses value the Gulf countries are forced to lower rates in succesion to the US’s Federal Reserve.
“The inflation rate in the Gulf was around 7 percent last year and we expect it to be seven to eight percent this year… On the demand side, there is a big push to expand government spending and liquidity is high in the system, which means people have more access to liquidity and more access to spending power”
- Mohsen Khan, IMF director of the ME
Qatar lowers interest rate March 23, 2008
Posted by mylastresort in analysis, bahrain, qatar, saudi arabia.Tags: analysis, Appreciation, bahrain, Bank, Basis point, CBB, CBK, Central Bank, Countries, Currencies, currency, Cut, Depeg, Dove, economy, FED, Federal Reserve, Food, Gulf, inflation, kuwait, oman, Peg, Products, qatar, Qatari, Qatari Riyal, Rate cuts, Rent, Revaluations, saudi arabia, speculation
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Qatar has just announced a rate cut of 75 bp (basis points) on its depository facility rate to 2.25%. Thus far Saudi Arabia, Bahrain and now Qatar have been forced to lower their rates, despite rising inflation, to match the Fed cuts made in the previous week.
Annual inflation in Qatar has risen to 13.74% in December 2007. The second highest rate on record as food and rent costs surged in the economy. The Gulf central banks are torn between efforts to fight inflation and prevent appreciation of their dollar pegged currencies.
Speculation on the Gulf currencies revaluation has been seen to increase as inflationary pressures push the countries in to rapid reformation of their monetary policies. As of now the Qatari Riyal forward contract is has appreciated 3.9% to 3.4989 per dollar in a year.
US Fed slashes rates, Gulf to follow March 19, 2008
Posted by mylastresort in analysis, bahrain, qatar, saudi arabia.Tags: bahrain, Bahrain Central Bank, Benchmark, Central Bank, Dinar, Federal Reserve, Gulf, oman, qatar, Rate cuts, Riyal, saudi arabia, Saudi Arabian Monetary Policy Agency (SAMA), Stagflation, uae, United States, US
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US Fed lowers interest rates by 75 basis points (.75%). Gulf countries pegged to the US dollar must follow the Feds cuts. As of now Saudi Arabia and Bahrain have lowered their rates by the same points. news from UAE, Qatar, and Oman is still pending. (more…)
Fed actions in chronological order (Article) March 18, 2008
Posted by mylastresort in analysis.Tags: Bank of Canada, Bank of England, Central Bank Actions, Credit Crunch, Crisis, Cuts, Discount Rate, economy, Emergency, European Central Bank, FED, Federal Reserve, Federal Reserve Actions, Feds actions, Financial Markets, Great Depression, Housing, Intervention, JPMorgan Chase, Rate cut, Swiss National Bank, Target, United States, US, USD
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Everyone is talking about the Feds actions in the market and I just found this article very interesting. It depicts the US Federal Reserves actions in chronological order.
(Reuters) – The Federal Reserve on Sunday lowered the discount rate it charges on direct loans to banks and announced a new lending program to provide credit to other big Wall Street firms, the latest in a series of moves to try to stabilize financial markets.
The Fed cut the discount rate to 3.25 percent from 3.5 percent, effective immediately, and said it would increase the maximum maturity of discount rate loans to 90 days from 30 days.
US Federal Reserve rate cut rumors March 17, 2008
Posted by mylastresort in analysis, bahrain, qatar, rumors, saudi arabia.Tags: bahrain, Dirham, Dubai, Federal Reserve, inflation, Kuwiat, Pegs, qatar, Rate cut, Riyal, rumors, saudi arabia, uae
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Rumors are going around that the U.S. Federal Reserve will be cutting rates by 100 basis points (or 1%) this week. News that a number of financial institutions will be going into bankruptcy and the Fed’s attempts at reviving the decaying economy are not enough.This is plausible and if true will prompt Gulf countries to decrease rates along with the Fed, forcing inflation to sky rocket in the Gulf and testing the economies’ strength (once again) at handling more pressure from their dollar denominated pegs.
Rumors that CBK will cut rates March 17, 2008
Posted by mylastresort in analysis, bahrain, qatar, rumors, saudi arabia.Tags: Arab, bahrain, Cut, Dollar, Economies, economy, Emergency meeting, Federal Reserve, Gulf, inflation, Interest Rates, kuwait, Monetary Union, Peg, qatar, Rate, saudi arabia, uae
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Since the Federal Reserve cut its rates less than 12 hours ago the pegged currencies in the region must follow suit. Therefore, the UAE, Bahrain, Qatar & Saudi Arabia will cut rates even though these countries should depeg and increase rates to stem inflation.
Kuwaits Central Bank is also expected to cut rates, rumors in the market that the Central Bank will drop 25 basis points off the Discount Rate. The drop in the interest rates should increase corporate borrowing from banks and fund local business pushing the stock markets up.
Federal Reserve emergency intervention March 17, 2008
Posted by mylastresort in analysis.Tags: Action Economics, analysis, Ben Bernake, Crisis, David Cohen, Depression, Discount Rate, economy, EURO, FED, Federal Reserve, global, Gold, Record Levels, subprime, US, Wall Street, Yen
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The US federal reserve has set an emergency interest rate cut on Sunday. The news shocked the global economy. This is the biggest sign of how devastating the credit crisis is for Wall Street.
“The fear is how many more skeletons in the closet are still there in the global credit markets? …This is another effort by the Fed to calm things down, but the cloud on the horizon is just how much more of these credit issues are still out there.”
- David Cohen, economist at Action Economics in Singapore.
The market has shrugged off news that the Fed has announced fresh emergency measures to stem the quick spreading financial crisis. It is claimed the tools they are using have not been used since the Great Depression. The weakening dollar has spurred fresh new records across the board.
- Euro $1.5905
- Yen 95.77
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Gold 1,030
“The Federal Reserve in close consultation with the Treasury is working to promote liquid, well functioning financial markets, which are essential for economic growth. To that end we took two steps today… These steps will provide financial institutions with greater assurance of access to funds,”
- Ben Bernanke, Federal Reserve Chairman
Gold (XAU) crossing record level March 13, 2008
Posted by mylastresort in analysis.Tags: Economics, economy, Fear, FED, Federal Reserve, global, Gold, Market, recession, Safe haven, Tennis court, USD, XAU
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Gold is regarded as a safe haven for investments. It is a scarce commodity. It is said that if you collect all the Gold excavated all-throughout history it would be the size of a standard tennis court (length x width x height).During times of a recession or fear in the market speculators usually flock to Gold. As per my previous posts I have given my analysis of the markets and the effects on the global economy. As Gold crosses never before seen levels it is proving that the economic events taking place are in fact serious and should be feared.
Gold (XAU) crosses $1,000
