The Central Bank of Egypt (CBE) on Monday devalued the Egyptian pound to 8.85 per dollar from 7.73 and said it would move to a more flexible exchange rate policy, as it sold $198.1 million to local banks in a $200 million exceptional auction.
Markets welcomed the move, with the EGX 30 benchmark index rising 6.4 percent. “The CBE decided to adopt a more flexible policy to heal the exchange rate distortions and to sustainably and regularly restore the circulation of foreign currency in banks,” the bank said in a statement. “The central bank affirms that it will follow all developments closely and will not hesitate to use all the tools and authority at its disposal to maintain order in the currency market and stability in price levels in the medium term.” The CBE added that it expects to rebuild foreign currency reserves to $25 billion by year-end from about $16.5 billion. [Reuters, Bloomberg, Ahram Online, 3/14/16]
Tunisia’s government will ask parliament next month to strengthen central bank autonomy to shield it from political interference. According to draft legislation, the Central Bank of Tunisia (BCT) will not take instructions from the government and will have absolute control over monetary policy, currency reserves, and gold reserves. There is currently no law preventing the government from seeking to intervene in central bank policy or making demands on reserves. “The goal is to establish a modern central bank and good monetary governance and avoid any possible political bickering or demands to impose certain monetary policies regardless of the economic trend for the next government,” said a BCT official said. The draft includes a clause allowing the government to form a committee to monitor the CBT in case of suspicions of corruption or criminal misdeeds. [Reuters, 3/14/2016]
Saudi Arabian Monetary Agency (SAMA) Governor Fahad al-Mubarak said Monday that he is committed to to maintaining the kingdom’s currency peg of 3.75 riyals per dollar. Currency speculators have put pressure on the riyal in recent months due to the impact of lower oil prices on Saudi Arabia’s fiscal balance.”I would like to assure that the monetary agency will continue to manage its monetary policies to achieve the goal of stabilizing the value of the riyal at the exchange rate of 3.75 riyals to the dollar,” Mubarak said. SAMA has been drawing down its overseas assets at an annual rate of more than $100 billion, although it still has enough to support the riyal for several years. [Reuters, 3/14/2016]
Kuwait’s Central Bank Governor Mohammad al-Hashel warned that authorities may adjust monetary policy if the government does not act urgently to cut a budget deficit caused by low oil prices. Hashel said the legislative and executive branches of the government need to prove that public finances are stable in the next two months. “[If this does not happen,] it will reflect negatively on the credit rating of the state of Kuwait because of the negative consequences on financial institutions, and then it may affect monetary policy,” he said. Hashel did not say how monetary policy might change, but the Kuwaiti dinar, which is pegged to a weighted basket of the currencies of major trading partners, has been under pressure in the foreign exchange market since late last year. [Reuters, 3/13/2016]
The Kurdistan Regional Government (KRG) received $200 million from Turkey to assist Kurdish finances, which have been hit by a recent oil pipeline export stoppage, industry sources said. “An emergency aid transfer has been sent to KRG this week. The pipeline was pumping 600,000 barrels per day and the halt has deprived the KRG of an important source of revenue,” the sources said. Iraqi Kurdistan was reconnected to oil markets on Friday as pumping from its fields to Turkey resumed. Meanwhile, Iraq’s state-run North Oil Company stopped feeding a pipeline to Turkey with crude produced at fields it operates in Kirkuk. The order to halt pumping through the pipeline came from the oil ministry in Baghdad. North Oil, which normally exports 150,000 barrels, is continuing to produce crude, but is storing it in Kirkuk instead of exporting it through the pipeline. [Reuters, 3/11/2016]
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Egypt devalues currency to record low against the dollar
The Central Bank of Egypt (CBE) on Monday devalued the Egyptian pound to 8.85 per dollar from 7.73 and said it would move to a more flexible exchange rate policy, as it sold $198.1 million to local banks in a $200 million exceptional auction. Markets welcomed the move, with the EGX 30 benchmark index rising 6.4 percent. “The CBE decided to adopt a more flexible policy to heal the exchange rate distortions and to sustainably and regularly restore the circulation of foreign currency in banks,” the bank said in a statement. “The central bank affirms that it will follow all developments closely and will not hesitate to use all the tools and authority at its disposal to maintain order in the currency market and stability in price levels in the medium term.” The CBE added that it expects to rebuild foreign currency reserves to $25 billion by year-end from about $16.5 billion. [Reuters, Bloomberg, Ahram Online, 3/14/16]
Tunisia parliament to debate law on central bank autonomy
Tunisia’s government will ask parliament next month to strengthen central bank autonomy to shield it from political interference. According to draft legislation, the Central Bank of Tunisia (BCT) will not take instructions from the government and will have absolute control over monetary policy, currency reserves, and gold reserves. There is currently no law preventing the government from seeking to intervene in central bank policy or making demands on reserves. “The goal is to establish a modern central bank and good monetary governance and avoid any possible political bickering or demands to impose certain monetary policies regardless of the economic trend for the next government,” said a BCT official said. The draft includes a clause allowing the government to form a committee to monitor the CBT in case of suspicions of corruption or criminal misdeeds. [Reuters, 3/14/2016]
Saudi central bank governor vows to keep currency peg
Saudi Arabian Monetary Agency (SAMA) Governor Fahad al-Mubarak said Monday that he is committed to to maintaining the kingdom’s currency peg of 3.75 riyals per dollar. Currency speculators have put pressure on the riyal in recent months due to the impact of lower oil prices on Saudi Arabia’s fiscal balance.”I would like to assure that the monetary agency will continue to manage its monetary policies to achieve the goal of stabilizing the value of the riyal at the exchange rate of 3.75 riyals to the dollar,” Mubarak said. SAMA has been drawing down its overseas assets at an annual rate of more than $100 billion, although it still has enough to support the riyal for several years. [Reuters, 3/14/2016]
Kuwait’s central bank says may act if budget gap isn’t cut
Kuwait’s Central Bank Governor Mohammad al-Hashel warned that authorities may adjust monetary policy if the government does not act urgently to cut a budget deficit caused by low oil prices. Hashel said the legislative and executive branches of the government need to prove that public finances are stable in the next two months. “[If this does not happen,] it will reflect negatively on the credit rating of the state of Kuwait because of the negative consequences on financial institutions, and then it may affect monetary policy,” he said. Hashel did not say how monetary policy might change, but the Kuwaiti dinar, which is pegged to a weighted basket of the currencies of major trading partners, has been under pressure in the foreign exchange market since late last year. [Reuters, 3/13/2016]
Iraqi Kurdistan gets $200 million from Turkey after oil pipeline halt
The Kurdistan Regional Government (KRG) received $200 million from Turkey to assist Kurdish finances, which have been hit by a recent oil pipeline export stoppage, industry sources said. “An emergency aid transfer has been sent to KRG this week. The pipeline was pumping 600,000 barrels per day and the halt has deprived the KRG of an important source of revenue,” the sources said. Iraqi Kurdistan was reconnected to oil markets on Friday as pumping from its fields to Turkey resumed. Meanwhile, Iraq’s state-run North Oil Company stopped feeding a pipeline to Turkey with crude produced at fields it operates in Kirkuk. The order to halt pumping through the pipeline came from the oil ministry in Baghdad. North Oil, which normally exports 150,000 barrels, is continuing to produce crude, but is storing it in Kirkuk instead of exporting it through the pipeline. [Reuters, 3/11/2016]
Also of interest
Saudi Arabia raises import fees on cigarettes | Reuters
Qatar central bank acting to increase liquidity | Reuters
VAT in UAE will not impact essential commodities | Gulf News
Oil producer meeting on output freeze likely to be in mid-April | Reuters
Iran says no to oil freeze until it reaches higher production | Bloomberg
NBE, Banque Misr to offer EGP investment certificates for foreign currency | Reuters
Egypt to issue euro-denominated debt for Egyptians abroad | Reuters
Egypt PM announces plan to lower the budget deficit, reduce inflation | DNE
Egypt PM says reduction of natural gas prices temporary | Aswat Masriya
Egypt to allocate additional $32 million to airport security | Aswat Masriya
Algeria’s Sonatrach awards $880 million drilling tubes deal | Reuters
Tunisia plans EUR 750 million to EUR 1 billion bond in April | Reuters
Tunisia seeks to join African economic communities | TAP
IMF lowers 2016 growth forecast for Jordan’s economy | Jordan Times