Turkey President Recep Tayyip Erdogan’s latest intervention at monetary policy pushed the lira to fresh record lows against the U.S. dollar, putting the currency on a dangerous path.
Erdogan’s announcement that it is “imperative” for Turkey to begin lowering interest rates by some vague summer deadline spurred fears that the central bank might embark on a premature cycle of rate cuts (although the new governor quickly dismissed that possibility).
A surprise slowdown in May inflation is amplifying fears that Governor Sahap Kavcioglu may bow to Erdogan’s growing demands for lower borrowing costs.
But a closer look at the most recent price data show inflationary pressures remain strong. A miscalculated step to prematurely start an easing cycle could easily “put pressure on the lira and hurt the disinflation process,” according JPMorgan Chase economist Yarkin Cebeci.
Chart of the Week
A supply glut that’s held down Dubai’s property prices for over half a decade will likely keep it on the sidelines of a global upswing in values of prime residential real estate.
A burst of supply in 2021 and 2022 will probably leave Dubai, alongside Buenos Aires, as the only two cities in Knight Frank’s selection of 25 prime locations to witness a drop in values for their top-end residential properties.
The Slant
Benjamin Netanyahu, Israel’s longest-serving prime minister, is on the brink of being unseated by an unlikely alliance of bitter enemies. If Netanyahu is anxious about his future, he needn’t worry about his political legacy, Bobby Ghosh writes for Bloomberg Opinion.
His signature achievements as prime minister — the rightward lurch of domestic politics, the hobbling of the Israeli-Palestinian peace process and the normalization of relations with Arab countries — will not be challenged by this marriage of political convenience.
For now, their opposition to Netanyahu is what binds them together. But should the 71-year-old retire, or allow a surrogate to replace him as head of the Likud, this coalition won’t last long enough for a group picture, Zev Chafets writes.
Need to Know
Investcorp, the Middle East’s biggest alternative asset manager, will delist from the Bahrain stock exchange after almost four decades in response to low trading volumes. It’s the latest in a string of companies in the region to go back into private ownership.
Saudi Aramco, the world’s biggest energy firm, is preparing to sell bonds to help fund a $75 billion dividend commitment. Bahrain has also started talks with banks for a potential debt sale.
Israel health officials have found a probable link between Pfizer and BioNTech’s coronavirus vaccine and dozens of cases of heart inflammation in young men following the second dose of the vaccine.
Oil rallied to more than $70 a barrel, a welcome respite for the Middle East’s energy-dependent economies. OPEC+ predicted that oil stockpiles will drop rapidly from August as lockdowns ease and travel picks up.
Prospects have waned for a speedy return of Iranian barrels to the oil market. Nuclear talks between Iran and world powers in Vienna have been adjourned after a bleak assessment of the nation’s nuclear transparency by the IAEA.
Coming Up
- Turkey is expected to report April industrial production numbers and unemployment rate this week
- Israel is expected to report May consumer confidence and foreign currency balance this week
Last Word
Qatar Airways Chief Executive Officer Akbar Al Baker threatened to stop taking deliveries of Airbus jets this year because of an unspecified “serious” disagreement.
The subject of the spat remains a mystery, but he denied a report that the dispute concerned the painting of an A350 jetliner.
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world Middle East Newsletter: Turkey's Lira at Crossroads (TRY: USD) - Bloomberg
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