A currency dealer at a foreign exchange brokerage in Tokyo. Japan has been actively seeking to weaken the yen. Yuriko Nakao / Bloomberg News
A currency dealer at a foreign exchange brokerage in Tokyo. Japan has been actively seeking to weaken the yen. Yuriko Nakao / Bloomberg News

Talk of currency exchange wars fades



If a week is a long time in politics, it is an eternity in foreign currency exchange.

Only a few weeks ago talk of a currency war was everywhere and politicians were lambasting each other for currency weakening measures. Now it is all quiet on the forex front.

The biggest developed economy actively seeking to weaken its currency - Japan - drew fire for the controversial monetary easing plan known as Abenomics earlier this year.

But the prime minister, Shinzo Abe, survived a meeting of the Group of 20 (G20) this month without harsh words from the United States for the yen's weakening.

That emboldened traders to begin another charge at the ¥100 per dollar barrier. Though the Japanese currency touched lows of ¥99.87 on Sunday, it has hit resistance below the psychologically important threshold and has not yet broken through.

The Chinese yuan also escaped criticism from the United States by name, though the US treasury secretary, Jack Lew, made a none-too subtle jab at countries seeking to devalue their currencies.

"In addition to measures to boost domestic demand, one key to this effort is a strong commitment by many countries, especially in emerging Asia, to adhere firmly to the G20's exchange rate commitments - namely, to move more rapidly toward market-determined exchange rate systems and exchange rate flexibility to reflect underlying fundamentals, avoid persistent exchange rate misalignments and refrain from competitive devaluation of currencies," he said. "Countries must also fulfil their commitment not to target exchange rates."

The yuan has depreciated 1.05 per cent since the start of the year to hit a 20-year low of 6.1659 per US dollar last week. During the same period, the Shanghai Composite Index has weakened 3.08 per cent as investors reacted to disappointing economic data with bets against Chinese companies.

Part of the weakness in Asian currencies is attributable to the resurgence of the US economy and the strength in the greenback, Neil Mellor, the senior currency strategist at BNY Mellon, wrote last week. "Given weak fundamentals in both Europe and Japan, the US looks favourable by comparison - despite the recent deterioration in US data," he said. "Far more important are recent comments by Fed officials underscoring commitment to ultra-accommodative monetary policy and the willingness to temporarily increase the pace of monthly asset purchases if conditions warrant."

The US Federal Reserve meets on Tuesday for its latest policy meeting, which is not expected to bring any changes to its current 0.25 per cent target rate.

In another reversal of fortunes from a few weeks ago, the British pound experienced a sudden spike after the release of GDP numbers for the first quarter showed the economy growing at 0.3 per cent from the previous quarter - crucially escaping a so-called "triple-dip" recession.

"While we think the news has significantly lessened the chances that the Monetary Policy Committee will announce additional unconventional monetary easing next month, we still expect the Committee to do more to help the economy after the Governor-in-waiting, Mark Carney, arrives in July," analysts from Capital Economics, wrote in a research note.

Capital expects bond-buying from the Bank of England to increase to £500bn from a current £375bn once Mr Carney settles in.

Investors were looking for good news from the British economy as an excuse to buy sterling, Max Knudsen, head of research at ADS Securities, wrote in a research report.

Elsewhere, the euro slipped briefly against the dollar after unexpectedly ugly industrial data raised hopes of a rate cut from the European Central Bank. The euro held broadly steady against the dollar, falling 0.58 per cent to at $1.3009 each, but there were signs that could easily change, Mr Knudsen added.

"Signals for sentiment this week are for some consolidation and indecision and after three days trading prices are virtually unchanged on the week," he wrote.

The European Central Bank announces interest rates on Thursday, with most economists polled by Bloomberg News predicting no change to the bank's main 0.75 per cent rate. However, a growing number are anticipating a 25 basis point cut in rates.

* with agencies

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CREW
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63 - Mike Lorenzo-Vera (FRA)

64 - Rory McIlroy (NIR)

66 - Jon Rahm (ESP)

67 - Tom Lewis (ENG), Tommy Fleetwood (ENG)

68 - Rafael Cabrera-Bello (ESP), Marcus Kinhult (SWE)

69 - Justin Rose (ENG), Thomas Detry (BEL), Francesco Molinari (ITA), Danny Willett (ENG), Li Haotong (CHN), Matthias Schwab (AUT)

UPI facts

More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions

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Director: Kangana Ranaut, Krish Jagarlamudi

Producer: Zee Studios, Kamal Jain

Cast: Kangana Ranaut, Ankita Lokhande, Danny Denzongpa, Atul Kulkarni

Rating: 2.5/5

Cryopreservation: A timeline
  1. Keyhole surgery under general anaesthetic
  2. Ovarian tissue surgically removed
  3. Tissue processed in a high-tech facility
  4. Tissue re-implanted at a time of the patient’s choosing
  5. Full hormone production regained within 4-6 months
Other workplace saving schemes
  • The UAE government announced a retirement savings plan for private and free zone sector employees in 2023.
  • Dubai’s savings retirement scheme for foreign employees working in the emirate’s government and public sector came into effect in 2022.
  • National Bonds unveiled a Golden Pension Scheme in 2022 to help private-sector foreign employees with their financial planning.
  • In April 2021, Hayah Insurance unveiled a workplace savings plan to help UAE employees save for their retirement.
  • Lunate, an Abu Dhabi-based investment manager, has launched a fund that will allow UAE private companies to offer employees investment returns on end-of-service benefits.
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Director: Kangana Ranaut

Stars: Kangana Ranaut, Anupam Kher, Shreyas Talpade, Milind Soman, Mahima Chaudhry 

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Dubai works towards better air quality by 2021

Dubai is on a mission to record good air quality for 90 per cent of the year – up from 86 per cent annually today – by 2021.

The municipality plans to have seven mobile air-monitoring stations by 2020 to capture more accurate data in hourly and daily trends of pollution.

These will be on the Palm Jumeirah, Al Qusais, Muhaisnah, Rashidiyah, Al Wasl, Al Quoz and Dubai Investment Park.

“It will allow real-time responding for emergency cases,” said Khaldoon Al Daraji, first environment safety officer at the municipality.

“We’re in a good position except for the cases that are out of our hands, such as sandstorms.

“Sandstorms are our main concern because the UAE is just a receiver.

“The hotspots are Iran, Saudi Arabia and southern Iraq, but we’re working hard with the region to reduce the cycle of sandstorm generation.”

Mr Al Daraji said monitoring as it stood covered 47 per cent of Dubai.

There are 12 fixed stations in the emirate, but Dubai also receives information from monitors belonging to other entities.

“There are 25 stations in total,” Mr Al Daraji said.

“We added new technology and equipment used for the first time for the detection of heavy metals.

“A hundred parameters can be detected but we want to expand it to make sure that the data captured can allow a baseline study in some areas to ensure they are well positioned.”

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
 
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
 
Round 3: February 7-9, Dubai Autodrome – Dubai
 
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
 
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia