Saturday, 3 July 2010
Bahrain is committed to maintaining its exchange rate peg to the U.S. dollar, the governor of the Central Bank of Bahrain said Saturday, while at the same time continuing talks with several states of the Persian Gulf region to achieve monetary union.
"We are going to maintain this peg as this is the best way to serve our economy," Rasheed Al Maraj, the governor of the Central Bank of Bahrain, told Dow Jones Newswires in an interview Saturday on the sidelines of an economic conference in Aix-en-Provence, southern France.
Bahrain argues that it needs to maintain a dollar peg to reflect that its economy is open to the outside world, with external trade representing more than double its gross domestic product.
Asked whether Bahrain would consider following China's lead, which indicated recently it would slightly relax the peg between the yuan and the U.S. dollar and let its currency rise gradually, Al Maraj said: "The exchange peg reflects the nature of our economy. ... What other countries do reflects the nature of their economy."
The governor of the Central Bank of Bahrain also said that talks between several countries of the Gulf region to achieve monetary union are progressing, dismissing suggestions that the project has been shelved due to disagreement between governments in the area.
The monetary union has been approved by four states in the region--Bahrain, Saudi Arabia, Qatar and Kuwait--Al Maraj said, adding a monetary council has been set up in charge of implementing a monetary union agreement between these four countries.
"The role of the monetary council is to implement convergence criteria," Al Maraj said, adding that no deadline for achieving a single currency has been discussed. "This will take time," he said.
Petrochemical companies and banks led Saudi shares to retreat for a fifth day, sending the Tadawul All Share Index to its lowest level in almost a month.
Saudi Basic Industries Corp., the world’s largest petrochemical maker, Samba Financial Group, the kingdom’s second-biggest bank by market value, and Saudi British Bank paced the decline, as all 15 industry groups dropped. The index fell 1 percent to 6,033.91, the lowest level since June 8.
“It should be of little surprise that Saudi shares are down today, given that global equities were in a downward mode over the past two days and oil is down to $72,” said John Sfakianakis, chief economist at Banque Saudi Fransi in Riyadh. It is Tadawul’s longest losing streak since May 25.
The Dubai government announced on Saturday the appointment of a new board for its Economic Zones World, a subsidiary of the troubled Dubai World conglomerate which is undergoing restructuring.
UAE businessman Hisham Abdullah al-Shirawi -- vice president of the Dubai chamber of commerce and industry and a member of the city state's economic council -- is to head the new board, it said in a statement.
The mission of the new board will be to develop the activities of Economic Zones World (EZW) based on "regional and global economic conjuncture," the statement said.
Aabar Investments PJSC, the Abu Dhabi company that is the largest shareholder in Daimler AG, began syndicating a $2 billion loan, Reuters reported, citing bankers close to the deal.
Deutsche Bank AG, Morgan Stanley, National Bank of Abu Dhabi and Royal Bank of Scotland Group Plc are arranging the financing, according to the report. The four banks, along with Credit Suisse Group AG and Union National Bank, have partially prefunded the deal, Reuters said.
The three-year financing includes a $1.4 billion term loan and a $600 million revolving credit, both of which pay interest at 150 basis points more than the London interbank offered rate, according to the report. Money in a revolving credit can be borrowed again once it’s been repaid; in a term loan it can’t.
A spokeswoman for Aabar Investments wasn’t available to comment outside normal business hours.
Energy hedge funds in Europe are collapsing after investor withdrawals forced managers to scale back bets amid sliding prices for oil, coal and electricity.
At least six funds managing more than $158 million shut in the first half, including four in May and June, according to data compiled by Bloomberg. London-based Rampart Capital LLP succumbed after failing to reach “critical mass” within nine months of opening, according to Chief Investment Officer Marcello Romano.
The funds were battered after Brent crude fell in May by the most since November 2008 and German power had its fourth monthly drop this year. The average loss from January through May for global energy funds was 19 percent, according to a June 10 report from JPMorgan Chase & Co., compared with a 0.9 percent gain for Hedge Fund Research Inc.’s main index of more than 2,000 members.