MONDAY, FEBRUARY 16, 2015
BUSINESS
News
Dimah report
i n
b r i e f
US dollar needs
to be revalued
Dubai’s NPS signs
$200m financing
By Hayder Tawfik
DUBAI: Dubai-based oilfield services firm National
Petroleum Services (NPS) has secured a $200 million refinancing deal from a group of banks and financial institutions, Arab Petroleum Investments Corp (APICORP), one of
the participants, said yesterday. APICORP said in a statement that HSBC, Emirates NBD and Abu Dhabi’s Al Hilal
Bank were also participating in the deal which includes a
$150 million fixed rate Islamic facility and $50 million to be
used by the company for working capital. The interest rate
and lifespan of the facilities were not disclosed in the statement, although NPS CEO Adnan Ghabris was quoted as
saying in the statement that the cash would help fuel NPS’
growth over the next five years. The statement added the
refinancing “offers the company better terms and will positively impact the company’s bottom line”. APICORP was
part of a consortium of Gulf-based investors that also
included Fajr Capital which last year agreed to acquire NPS
in a deal valued “in excess of $500 million”.
T
Dollar stable against
Kuwaiti dinar at 0.295
KUWAIT: The exchange rate of the US dollar against
the Kuwaiti dinar was stable yesterday exchanging at
KD 0.295, while the euro went up to reach KD 0.336
compared to Thursday’s exchange rates, said the daily
bulletin of the Central Bank of Kuwait (CBK). The sterling pound exchange stabilized at KD 0.450, as well as
the Swiss franc at KD 0.318 and the Japanese Yen
remained unchanged at KD 0.002. The dollar was
affected by the major currencies following the drop in
consumers trust in the United states, being the greatest drop since the 11 years.
UAE’s CBI names
Robinson as CEO
DUBAI: Commercial Bank International (CBI), the Abu
Dhabi-listed lender, has appointed Mark Robinson as its
new chief executive, it said yesterday. Robinson joins from
ANZ Banking Group, where he was chief executive for
Europe, Middle East and America, CBI said in a statement.
He replaces Kris Babicci, who stepped down from the post
in October. Qatar National Bank, the largest bank in the
Gulf, owns a 40 percent stake in CBI.
United Finance agrees
to Bank Nizwa merger
DUBAI: Oman’s United Finance Co has agreed in principle to merge with Islamic lender Bank Nizwa , the
financial firm said yesterday. On Wednesday, United
Finance said it would consider Bank Nizwa’s merger
proposal when its board next met, which was the following day, according to a statement to Muscat’s
bourse. Bank Nizwa, which started operations in 2013
as one of Oman’s two full-fledged Islamic banks, has a
market capitalization of about $339 million, according to Thomson Reuters data. United Finance
describes itself as Oman’s largest non-bank financial
institution, and offers loans and leasing services as
well as corporate deposits. Its market capitalization is
about $106 million.
Emaar Properties lifts
quarterly profit by 14$
DUBAI: Dubai’s Emaar Properties , builder of the
world’s tallest tower, reported a 14 percent rise in
fourth-quarter net profit yesterday. The developer, in
which Dubai’s government owns a minority stake,
made a net profit of 861 million dirhams ($235 million)
in the three months to Dec. 31, it said in a statement.
That compares with a profit of 756 million dirhams in
the same period a year earlier.
Quarterly revenue was 2.85 billion dirhams, up 3 percent year on year, although costs rose 6 percent to 1.32
billion dirhams. The company’s annual profit last year
was 3.29 billion dirhams, up from 2.57 billion dirhams in
2013. Full-year revenue was 9.89 billion dirhams. Of this,
its shopping malls, retail and hospitality businesses
accounted for a little more than half, rising 12 percent
year on year. Emaar’s share price jumped 4.6 percent
yesterday, outperforming the wider market’s 1.5 percent gain. The results were released after the stock market close. — Reuters
Many people in Turkey-which has one of the lowest private savings rates among major economies-keep gold as
security for a “rainy day” rather than products offered by banks.
Gold’s luster lures
Turkish savers
CB allows businesses to hold gold reserves
ISTANBUL: From the outside, it looks like any other automatic bank machine on the streets of Istanbul. But rather
than notes, this one distributes small pieces of gold. Gold
is hugely prized in Turkey not just for ornamentation or
investment by banks but as a secure way for private individuals to hold their savings.
Many people in Turkey-which has one of the lowest private savings rates among major economies-keep gold as
security for a “rainy day” rather than products offered by
banks.
According to estimates, Turks hold some 3,500 tons of
gold. Banks have sought to capitalize on the tradition by
offering accounts denominated in gold. “We were thinking about putting all that gold back into the financial system somehow, so we decided to create gold accounts for
our clients,” said Seda Yilmaz, marketing manager of the
Kuveyt Turk Bank, the first to do so, in 2007. “So we
bought one kilo of gold, and the demand on the first day
was three kilos. It was a very good decision, so we decided to move ahead.”
Eight years on, Kuveyt Turk manages 200,000 gold
accounts with different products allowing sales by
cheque, bank transfer or mobile phone. Now with the
introduction of the first ATMs that issue gold as well as
the usual banknotes, consumers can withdraw pieces of
gold weighing 1.0 or 1.5 grams.
The success of the ATMs started a trend, with many
other Turkish banks latching on. The volume of gold in
their reserves has gone from two tons in 2007 to 250 tons.
The government has also tried to join the bandwagon
with the central bank allowing commercial businesses to
hold some of their reserves in gold and opening this up
to private investors.
“Thanks to this measure, our sales jumped 85 percent
last year,” said Aysen Esen, head of a leading gold refinery
in the country.
“Over the last two years, banks have taken in some 40
tons of gold that people had stashed under their beds.
And it’s just a small proportion of the reserves.”
‘Huge opportunity’
Turkey, where the mythical Phrygian King Midas
turned everything to gold and Trojan King Priam was said
to amass his gold hoard, has historically been a centre for
gold mining. The first gold was mined in Anatolia several
millennia before the birth of Christ but until recent years
there had been a long break in extraction. This changed
in the 1980s with new legislation facilitating foreign
investments, resulting in the discovery of new gold
deposits at home.
The extraction of gold has since risen exponentially,
from two tons mined in 2002 to 33.5 tons in 2013. A
bright future is assured, with underground reserves estimated at 6,500 tons. “The main reason for this boom is
that we still don’t have any tax on gross gold transactions,
we only pay VAT (value added tax) on finished products,”
said Ali Bulut chief executive of Turkey’s number one gold
retailer Altinbas. “I’m very optimistic in the long run about
domestic demand, not only for fashion and jewellery but
also for savings.”
Even if exchange rate variations have an effect on
activity and profits, Turks are the number four global consumers of gold and number two exporters. “In 2013, recycling, fabrication and consumption (of gold) boosted the
Turkish economy by at least $3.8 billion,” said Alistair
Hewitt, author of a recent report published by the World
Gold Council.
“The opportunity is huge. We are only at the early
stages here, there is a huge potential. “It’s looking very,
very exciting... all that infrastructure allows Turkey to
become a gold trading hub within the region.” Made a little jealous by the successes of banks in a market that they
once had to themselves, Turkish gold jewellers staked
their interest in joining the gold investment industry. “We
are a little bit disappointed. We may need new legislation
and have this gold end up with the jewellers instead of
the banks,” said Sarp Tarhanci of the Istanbul Chamber of
Jewellery.
“Jewellers are customer-based, they build trust and
good relationships with their clients.” Turkey’s performance
in 2014 remained strong, according to the latest figures
published by the World Gold Council, even if purchases
were down on the extremely strong 2013. 2014 demand
for gold jewellery of 68.2 tons in Turkey was down 7 percent, “slightly more resilient” than the overall global trend
of minus 10 percent. Meanwhile, investment demand of
54.8 tons was 46 percent below the previous year’s 102.1
tons record. — AFP
he US dollar has been appreciating over the
past year and the appreciation against the
major currency has accelerated this year. It has
appreciated over 14 percent against a basket of currencies just over one year. Its strength has been
more noticeable against the currency of the developing economies and more so against the currencies of the emerging economies.
Some of these currencies have hit record lows
against the dollar. Currencies of Russia, India,
Turkey, Malaysia, Brazil and so on have been devaluing aggressively nearly on daily basis. No one knows
if this is an informal devaluation process against the
US dollar or just investors are getting more bullish
on the US economy and at the same time panicking
about the Federal Reserve raising rates any time
soon.
I believe the US will have to accept a stronger
exchange rate as the Federal Reserve turns toward
raising interest rates for the first time since 2006.
The Federal Reserve will have to start at some point
normalizing interest rates. The problem is that
unless the Federal Reserve starts doing it, others
aren’t or cannot follow suit. Once the Federal
Reserve raise rates, it will have to accept some
appreciation of the dollar simply because it’s the
first one to do so. I think the Foreign Exchange markets are starting to prepare and position themselves
for the rise in US interest rates.
I have warned previously against borrowing in
the dollar. The easy access to the dollar is not a
sound investment decision to take when measured
against possible rate rises or crises around the world
as we are experiencing now. Business and investors
around the world should be ready and resign themselves to a stronger US dollar. Appreciation in the
dollar, spurred by the US economy outperforming
most of its industrialized counterparts, already has
damaged earnings at some of the US multinational.
Some US companies have been complaining about
the strength of the dollar but the benefits of the
strong dollars for US consumers outweigh any noise
made by those American multinationals.
Policy shift
At the end of the day it has never been the policy
of the US to interfere in the global currency markets. It
lets the dollar finds it own level or price. International
developments would contribute to deciding how
long to keep the benchmark rate near zero.
The US Treasury always refrains from making any
public concern at the competitiveness hit from a
stronger dollar. There is no doubt that they are happy with a strong dollar and believe like anyone else
that a strong dollar is good for America. The Federal
Reserve’s trade-weighted broad dollar index
climbed 13percent in the six months through
January, and ended the month less than 1 percent
from its high reached during the global financial crisis back in 2009.The net effect of the stronger dollar,
together with lower oil prices, is still likely a very
positive one, but I think this should not prevent the
Federal Reserve from raising rates later this year. At
some point the foreign exchange markets will discount the rate raise on the dollar but I don’t think it
has done it yet.
This year at least ten central banks have cut interest rates as plunging oil prices lead to slowing inflation. The cuts in interest rates have been one reason
why some currencies have depreciated but it is not
the only reason. I think more cuts in interest rates
are more likely as inflation rates fall further. May be
it is a good reason to devalue your currency against
the dollar. Some argue that cuts in interest rates and
the expansion of the monetary base have not led to
increase in domestic economic activity but just
weakened the currency further.
This is something quite noticeable in the eurozone area. If there is no domestic economic activity
but only devaluing the currency then will lead to
increase in exports. This process will not go without
notice and the others will devalue their currencies
to compete aggressively for market share. This literally means we are seeing a global competitive
devaluation. — Dimah Capital
EXCHANGE RATES
Al-Muzaini Exchange Co.
ASIAN COUNTRIES
Japanese Yen
Indian Rupees
Pakistani Rupees
Srilankan Rupees
Nepali Rupees
Singapore Dollar
Hongkong Dollar
Bangladesh Taka
Philippine Peso
Thai Baht
Irani Riyal transfer
Irani Riyal cash
2.527
4.798
2.918
2.217
3.002
219.200
38.133
3.793
6.706
9.101
61.555
121.740
GCC COUNTRIES
Saudi Riyal
Qatari Riyal
Omani Riyal
Bahraini Dinar
UAE Dirham
78.811
81.270
768.650
785.700
80.561
UAE Exchange Centre WLL
COUNTRY
Australian Dollar
Canadian Dollar
Swiss Franc
Euro
US Dollar
Sterling Pound
Japanese Yen
Bangladesh Taka
Indian Rupee
Sri Lankan Rupee
Nepali Rupee
Pakistani Rupee
UAE Dirhams
Bahraini Dinar
Egyptian Pound
Jordanian Dinar
Omani Riyal
Qatari Riyal
Saudi Riyal
SELL DRAFT
SELL CASH
224.24
239.29
324.35
338.45
296.55
454.53
2.52
3.807
4.767
2.223
2.973
2.931
80.58
787.08
38.79
421.36
769.08
81.66
78.99
ARAB COUNTRIES
Egyptian Pound - Cash
Egyptian Pound - Transfer
Yemen Riyal/for 1000
Tunisian Dinar
Jordanian Dinar
Lebanese Lira/for 1000
Syrian Lira
Morocco Dirham
39.065
38.822
1.381
153.610
417.130
1.985
2.108
31.291
EUROPEAN & AMERICAN COUNTRIES
US Dollar Transfer
295.700
Euro
336.800
Sterling Pound
445.692
Canadian dollar
234.870
Turkish lira
121.540
Swiss Franc
321.410
Australian Dollar
231.090
US Dollar Buying
294.500
GOLD
20 gram
10 gram
5 gram
238.100
121.740
61.560
Dollarco Exchange Co. Ltd
Rate for Transfer
US Dollar
Canadian Dollar
Sterling Pound
Euro
Swiss Frank
Bahrain Dinar
UAE Dirhams
Qatari Riyals
Saudi Riyals
Jordanian Dinar
Egyptian Pound
Sri Lankan Rupees
Indian Rupees
Pakistani Rupees
Bangladesh Taka
Philippines Pesso
Cyprus pound
Japanese Yen
Syrian Pound
Nepalese Rupees
Selling Rate
296.250
240.325
456.890
340.055
276.690
788.025
81.035
82.195
79.190
418.150
38.750
2.222
4.758
2.920
3.806
6.689
727.170
3.490
2.565
3.975
Malaysian Ringgit
Chinese Yuan Renminbi
Thai Bhat
Turkish Lira
83.445
47.870
10.060
120.790
Bahrain Exchange Company
COUNTRY
Belgian Franc
British Pound
Czech Korune
Danish Krone
Euro
Norwegian Krone
Romanian Leu
Slovakia
Swedish Krona
Swiss Franc
Turkish Lira
Australian Dollar
New Zealand Dollar
Canadian Dollar
US Dollars
US Dollars Mint
Bangladesh Taka
Chinese Yuan
Hong Kong Dollar
Indian Rupee
Indonesian Rupiah
Japanese Yen
Kenyan Shilling
Korean Won
Malaysian Ringgit
Nepalese Rupee
Pakistan Rupee
Philippine Peso
Sierra Leone
Singapore Dollar
SELL CASH
Europe
0.007726
0.450567
0.004264
0.041466
0.332804
0.035168
0.085049
0.008733
0.031279
0.313438
0.118730
SELLDRAFT
0.008728
0.459567
0.016264
0.046466
0.340804
0.040368
0.085049
0.018733
0.036279
0.323638
0.125730
Australasia
0.222280
0.215554
0.233780
0.225054
America
0.233203
0.292400
0.292900
0.241703
0.297100
0.297100
Asia
0.003508
0.046133
0.036143
0.004462
0.000019
0.002418
0.003285
0.000260
0.079324
0.003031
0.002698
0.006589
0.000066
0.215690
0.004108
0.049633
0.038893
0.004863
0.000025
0.002598
0.003285
0.000275
0.085324
0.003201
0.002978
0.006869
0.000072
0.221690
South African Rand
Sri Lankan Rupee
Taiwan
Thai Baht
0.019455
0.001885
0.009314
0.008748
0.027955
0.002465
0.009494
0.009298
Bahraini Dinar
Egyptian Pound
Iranian Riyal
Iraqi Dinar
Jordanian Dinar
Kuwaiti Dinar
Lebanese Pound
Moroccan Dirhams
Nigerian Naira
Omani Riyal
Qatar Riyal
Saudi Riyal
Syrian Pound
Tunisian Dinar
Turkish Lira
UAE Dirhams
Yemeni Riyal
Arab
0.780011
0.035956
0.000082
0.000191
0.414149
1.000000
0.000147
0.022000
0.001210
0.764111
0.080730
0.078430
0.001269
0.150684
0.118730
0.079745
0.001339
0.788011
0.039056
0.000083
0.000251
0.421649
1.000000
0.000247
0.046000
0.001845
0.769791
0.081943
0.079130
0.001389
0.158684
0.125730
0.080894
0.001419
Al Mulla Exchange
CurrencyTransfer
US Dollar
Euro
Pound Sterlng
Canadian Dollar
Indian Rupee
Egyptian Pound
Sri Lankan Rupee
Bangladesh Taka
Philippines Peso
Pakistan Rupee
Bahraini Dinar
UAE Dirham
Saudi Riyal
*Rates are subject to change
Rate (Per 1000)
295.600
334.700
450.800
236.700
4.765
38.710
2.219
3.796
6.685
2.925
787.100
80.450
79.000