Egypt’s Sisi Receives Warm Welcome In Riyadh.
The Egyptian President, Abdel-Fattah el Sisi, received a royal welcome in Saudi Arabia this week as both sides pledged to further enhance bilateral relations. Meanwhile the Kingdom’s Foreign Minister, Adel al Jubair, has dismissed recent claims of a rift developing between Riyadh and Cairo over certain regional issues; “Recent media outlets’ reports voicing speculation about Saudi-Egyptian relations are completely baseless. The two countries have a historical and a strategic relationship, and we expect these ties to get even stronger,” al Jubair said. His comments were supported by his Egyptian counterpart, Sameh Shoukry, who underlined the need for both countries to hold regular meetings to discuss issues of mutual importance especially national security. “We must not be negligent regarding it. We must stand as one in terms of Arab national security, just like the case is regarding other affairs,” he stated. Saudi Aramco resumed its regular monthly supply of 700,000 tons of fuel products to Egypt in March this year after they were temporarily suspended in October 2016.
Russia & Iran Look To Expand Relations.
Tehran and Moscow appear to be looking to forge even closer ties since the US missile strike on Syria. The desire to expand such relations was highlighted recently by the announcement that Iran’s Defence Minister is set to travel to Moscow at the end of this month to discuss further cooperation, and comments from its Deputy President, Eshagh Jahangiri, who stated last week that “Iran and Russia can take advantage of the opportunity provided by Western sanctions against the two countries to take long steps for broadening and deepening inter-relations.” Meanwhile the Russian Foreign Minister, Sergey Lavrov, has called for Iran to be admitted into the ‘Shanghai Cooperation Organization’ a grouping of Central Asian states, including Russia and China, which was created to encourage economic and military cooperation between its members and act somewhat as a counterweight to western orientated institutions such as NATO. "Iran has settled the problem of the UN Security Council sanctions and hence fully meets the SCO membership criteria. We hope that during their June summit in Astana the heads of our states will be able to discuss the possibility of launching the procedure for admitting Iran into the organization as a full member," Lavrov said.
US Imposes New Sanctions On Syria.
In a separate response to the sarin gas attack reportedly undertaken by the Syrian Air Force on the rebel held town of Khan Sheikhoun earlier this month, the US Treasury has ordered the freezing of any assets belonging to more than 270 employees at the Syrian Scientific Studies & Research Centre, an institution where US authorities believe the chemical was manufactured. In a statement following the announcement of this new measure the US Treasury Secretary said; "These sweeping sanctions target the scientific support centre for Syrian dictator Bashar al-Assad's horrific chemical weapons attack on innocent civilian men, women, and children. The United States is sending a strong message with this action that we will hold the entire Assad regime accountable for these blatant human rights violations in order to deter the spread of these types of barbaric chemical weapons."
Nigeria Creates Yet Another FX Window.
The Nigerian Central Bank’s decision last week to establish yet another special FX window is an attempt to attract foreign investors back into the country. An official circular issued to local banks states that this latest option will be open to both onshore and offshore participants who need to repatriate capital, pay dividends, repay loans or settle trade-related obligations. The CB will also allow the USD/NGN rate to be set by qualified buyers and sellers trading within this window. “Participants are advised to ensure that all trade conversations are recorded and auditable. Consequently, to provide price discovery to the market, FMDQ, OTC Securities Exchange shall be charged with polling buying and selling rates and other relevant information from the major participants in the market to provide them with the requisite price discovery, and the CBN with the indicative market depth until the market migrates to the FX Trading Systems. The supply of foreign currency to the window shall be through portfolio investors, exporters, authorized dealers and other parties with foreign currency to exchange to Naira. The CBN shall also be a market participant at this window to promote liquidity and professional market conduct,” the circular read. The CB also unveiled the establishment of a new index called the Nigerian Autonomous Foreign Exchange Fixing (to be published at 12.00 daily) which will replace the current NIFEX index for pricing NGN settled OTC FX derivative transactions. However while this latest FX window may be more transparent than others, it remains to be seen how liquid it will be and how much CB intervention will take place. The decision also adds yet another layer to Nigeria’s already complicated FX regime.
Libya’s CB Governor Vows To Fight Slide Of The Dinar.
The Tripoli based governor of Libya’s Central Bank, Al Siddiq Al Kabir, has said that his institution will actively work to defend the value of the Libyan Dinar which recently slumped in the parallel market to LYD 10.00 per US Dollar compared to an official rate of 1.40. “The Central Bank will not stand helpless or neutral in the war that our currency is subjected to. We plan to intervene intensively in the coming days to restore the financial situation and to defend the dinar. Changing the official rate of the Libyan dinar won't stand as a solution on its own with a bundle of financial, economic and commercial reforms that are demanded of the legislative and executive authorities in Libya,” Al Kabir was quoted as saying by the Libyan Observer website, adding that the current poor sentiment surrounding the currency was driven primarily by ongoing political divisions and the disruption to the country’s oil production. However it’s not clear yet what steps the CB will be able to take in the near term to ease the current exchange rate pressures and general shortage of hard currency.
Qatar May Not Need To Conduct Bond Issuances This Year.
Qatar’s Finance Minister, Ali Al Emadi, was quoted by Bloomberg last night suggesting again that his country will probably not need to conduct an international conventional or Islamic bond issue this year as the firmer oil price has significantly relieved budgetary pressures. Qatar’s last offshore issuance was a US$9 bio Eurobond sale in May 2016.
GE Signs US$3 Bio Services Agreement In Algeria.
GE Power has signed a 20-year service agreement with the state-owned Sonelgaz worth US$3 bio, its largest ever such contract. The deal includes long-term operations, training and maintenance agreements for 10 Sonelgaz plants in Algeria that generate up to 11GW of electricity.
Oman Hikes Issuance Fees On Tourist Visas.
The Omani authorities have announced a sharp hike in the cost of a short-stay visa to the country. Visitors will now have to fork out OMR 20.00 in order to enter the country compared to just OMR 5.00 previously. The duration of the visa has however been extended from 10 days to one month and citizens of China, India, Iran and Russia will now also be able to apply for their visas online. The move comes as the government seeks to widen its sources of revenue as its faces a OMR 3 bio fiscal deficit this year.
“Lack of intelligence is the greatest poverty” – Arabic Proverb.
Glenn Wepener, Executive Director & Geopolitical Analyst Middle East & Africa
National Bank of Abu Dhabi
Tel: +971 2 6110 127
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