Gulf currencies collapse 40% April 8, 2008
Posted by mylastresort in analysis, bahrain, qatar, rumors, saudi arabia.Tags: AED, bahrain, BHD, Central Banks, Currencies, Dirham, Dollar, Dubai, gcc, Gulf, kuwait, KWD, oman, OMR, qatar, Revaluation, saudi arabia, Saudi Riyal, US
1 comment so far
Many have called for a revaluation of Gulf currencies from the historical dollar peg. The flood of liquidity and rapid inflation has been hailed as a warning to the falling interest rates, decline of the US Dollar, and record high oil. The loss in value of the Gulf currencies has been partially responsible in the rise of inflation. The inflationary pressures, which should govern an increase in rates by the central banks, have created markets so liquid that deposits are being quoted at negative rates. The list below shows the Gulf currencies depreciation, in value, due to the Dollars decline.
Gulf currency reform meeting today April 6, 2008
Posted by mylastresort in analysis, bahrain, qatar, saudi arabia.Tags: Arab, Central Banks, Dirhan, Governers, Gulf, oman, qatar, Reform, Riyal, saudi arabia, Single currency, uae
2 comments
The Gulf central bank governers last meeting was six months ago. In the meeting the governers decided not to revalue their currencies in anticipation of a single currency union (plan of 2010). Since their meeting:
- UD Dollar has fallen 14% against the Euro
- US Federal Reserve lowered rates 6x
- Inflation in the Gulf has almost doubled
As Saudi Arabia claims that it has no currency reform plans, Qatar and UAE, have publicily announced that they are rethinking their pegs. It will be interesting to see how todays meeting turns out…
U.S. Federal Reserve feeds cash starved credit markets March 12, 2008
Posted by mylastresort in analysis.Tags: Asian, Central Banks, Crash, Credits Markets, Dow Jones Industrial, Intervention, Investments, Jakarta, Nasdaq, Nikkei 225 Index, S&P, Sensex, US Federal Reserve, USD
add a comment
The U.S. Federal Reserve and four other central banks on Tuesday teamed up to get hundreds of billions of dollars in fresh funds to cash-starved credit markets, allowing financial firms to use securities backed by home mortgages as collateral for central bank loans. Stocks surged, bonds fell and the long-suffering U.S. dollar soared in reaction to the moves, a sign financial markets saw the plan as a step in the right direction to ease a crisis that has threatened world economic growth. The effects on the stock markets are as follows:
- Dow Jones Industrials +3.55%
- S & P 500 Index +3.71%
- Nasdaq 100 +4.06%
The first markets to open after the US would be the East Asian Economies thus far in the day the Nikkei 225 Index is up 1.70%, Sensex up 2.15%, & the Jakarta IDX is at 1.95%…
Stronger indication of a revaluation March 5, 2008
Posted by mylastresort in analysis, bahrain, qatar, saudi arabia.Tags: Central Banks, Currencies, Derivitives, Forwards, inflation, kuwait, qatar, Revaluation, saudi arabia
add a comment
Forward rates on Gulf Arab currencies strengthened today as investors renewed bets thats the U.S. recession will compel Gulf States to change their dollar pegs. As I have claimed before it is not a matter of if but when. The basis for the stronger assumptions is the further declination of the USD and an evident change in the 3 month, 1 year and 2 years outlook on the currencies. Just recently the dollar reached lifetime lows on all major currencies mainly due to expections that the Federal Reserve will continue to cut rates.
The main concern of gulf states, (except Kuwait) is the near-record peaks of inflation caused by the USD pegs which are forcing the economies to cut rates to shadow the U.S. Federal Reserves actions even though the economies are booming at a 500% rise since 2002. The Saudi Arabian inflation data showed 7% in January the highest in 27 years. Also, Qatar recorded inflation as high as 13.74 in January (off of a record high experienced earlier in 2007.)
Although the Central Bankers of Saudi Arabia and UAE reiterated last week that a revaluation of their currencies will not occur the fears of rising inflation, economic instability, and speculators will infact break the Bankers decision soon.
Charts & Numbers 