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Saudi Arabia, Iraq Aspire to Build 'Comprehensive Cooperation'

Participants at the Saudi-Iraqi Business Council in Riyadh on Monday. (Asharq Al-Awsat)
Participants at the Saudi-Iraqi Business Council in Riyadh on Monday. (Asharq Al-Awsat)
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Saudi Arabia, Iraq Aspire to Build 'Comprehensive Cooperation'

Participants at the Saudi-Iraqi Business Council in Riyadh on Monday. (Asharq Al-Awsat)
Participants at the Saudi-Iraqi Business Council in Riyadh on Monday. (Asharq Al-Awsat)

The Saudi-Iraqi Business Forum got underway in Riyadh on Monday, with a wide participation of ministers, officials and businessmen in the two countries.

Emphasizing a new page of comprehensive cooperation at all levels, Saudi and Iraqi ministers announced the signing of a power linkage agreement to enhance regional electricity trade, in addition to renewable energy projects and opportunities for joint investments in the oil, gas, agriculture, petrochemicals and smart cities sectors.

Highlighting the supportive political will, Saudi Minister of Commerce Dr. Majid Al-Qasabi pointed to the factors of growth and prosperity for Saudi-Iraqi economic relations.

He stressed the need to launch an annual joint business forum and to establish a database of investment opportunities available in both countries, as well as to develop a joint action plan to translate aspirations and hopes into real opportunities that contribute to strengthening trade and investment relations.

Dr. Hamid Al-Ghazi, Secretary-General of the Iraqi Council of Ministers, affirmed the Iraqi government’s support for the Saudi-Iraqi Coordination Council to open a new page in the historical relations.

The pillars of Saudi Vision 2030 are a major starting point for the strategic partnership between the two countries, he emphasized, adding that the Green Middle East Initiative, the Green Saudi Arabia and the Green Belt Project in Iraq present important areas of cooperation.

Ghazi noted that a delegation from the Iraqi ministry of Agriculture will visit the Kingdom next week to discuss opportunities for cooperation and partnership in the fields of agriculture, irrigation systems and manufacturing industries.

The political will in the two countries is real and serious towards developing economic relations, he said. This is confirmed by the growth in the volume of trade exchange by 15 percent last year, according to the Iraqi official.

The participants in the Saudi-Iraqi Forum, organized by the Federation of Saudi Chambers, reviewed investment opportunities in promising economic sectors, while the forum witnessed the signing of a number of agreements and memoranda of understanding between Saudi government and private agencies, in several vital areas.

Ajlan Al-Ajlan, President of the Federation of Saudi Chambers, stressed the importance of consolidating Saudi-Iraqi ties to become a distinguished model of a successful trade and investment partnership.

According to Al-Ajlan, Iraq ranks 11th among Arab countries in the volume of trade exchange with Saudi Arabia, noting that these numbers were to some extent motivating, but were not commensurate with the historical relationship between the two countries, and do not reflect the aspirations of both sides.

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Dollar Steadies ahead of Trump Inauguration

A teller sorts US dollar banknotes inside the cashier's booth at a forex exchange bureau in downtown Nairobi, Kenya February 16, 2024. REUTERS/Thomas Mukoya/File photo
A teller sorts US dollar banknotes inside the cashier's booth at a forex exchange bureau in downtown Nairobi, Kenya February 16, 2024. REUTERS/Thomas Mukoya/File photo
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Dollar Steadies ahead of Trump Inauguration

A teller sorts US dollar banknotes inside the cashier's booth at a forex exchange bureau in downtown Nairobi, Kenya February 16, 2024. REUTERS/Thomas Mukoya/File photo
A teller sorts US dollar banknotes inside the cashier's booth at a forex exchange bureau in downtown Nairobi, Kenya February 16, 2024. REUTERS/Thomas Mukoya/File photo

The US dollar steadied on Thursday despite the sharp fall in US bond yields after Wednesday’s inflation data as market focus shifted to Donald Trump’s presidential inauguration next week and possible inflationary impact of his policies.

Meanwhile the yen rose against the dollar and the euro as investors expected the Bank of Japan to hike rates next week.

The US dollar index - a measure of the value of the greenback relative to a basket of foreign currencies - was up 0.1% at 109.12.

"Markets are cautious before the inauguration because there is still policy uncertainty," said Paul Mackel, global head of foreign exchange research at HSBC.

"If the risk of US tariffs begins to materialize, the dollar will get another lift," he added, Reuters reported.

The highlight of the day should be the nomination hearing of Trump's choice of Scott Bessent to head the Treasury Department.

Bessent, who will face questioning before the US Senate Finance Committee, is expected to keep a leash on US deficits and to use tariffs as a negotiating tool, mitigating the expected inflationary impact of economic policies expected from the Trump administration.

The US inflation curve "has a well-identifiable 40 bps 'hump' over the next 12 months, which is near-identical to the estimated impact of a 5% universal and 20% China tariff starting as soon as Trump gets in office," said George Saravelos, head of forex research at Deutsche Bank.

"The market is pricing quick but moderate tariffs," he added. "We see risks of slower but bigger tariffs."

Traders who have been growing more worried about inflation responded with relief to Wednesday's US data, buying stocks and sending benchmark 10-year Treasury yields down more than 13 basis points. The currency reaction was more muted.

Analysts flagged that the US consumer price data was better than expected, but still showing inflation above Federal Reserve targets. The figures provided the US bond market with an excuse to do some downside testing for yields, but such a move is unlikely to go far.

"We still think that it will be easy for the Fed to remain on hold for now and wait for more data and fiscal policy clarity," said Allison Boxer, an economist at PIMCO, adding that US data did not change their forecasts for core inflation.

"We expect this to be the message (Fed) Chair (Jerome) Powell aims to communicate at the January meeting."

There was little direct reaction in foreign exchange markets to the ceasefire deal in Gaza, though the Israeli shekel did touch a one-month high on Wednesday.

The yen rose 0.46% against the dollar, after hitting 155.21, its lowest level since Dec. 19. It was up 0.51% against the euro at 160.19.

Recent remarks from Bank of Japan Governor Kazuo Ueda and his deputy Ryozo Himino have made clear that a hike will at least be discussed at next week's policy meeting and markets see about a 79% chance of a 25 basis point increase, while pricing 50 bps of rate hikes by year-end.

"Yen strengthened on expectations for a rate hike, but now the focus is on what BOJ officials will say about the monetary policy outlook," HSBC's Mackel argued.

"They could signal a more gradual path for the future, which could limit yen gains."

Japan's annual wholesale inflation held steady at 3.8% in December on stubbornly high food costs, data showed on Thursday.

"Expectations of a BOJ hike and perhaps fears of more forex intervention in the 158/160 area have helped the yen outperform," said Chris Turner, head of forex strategy at ING.

"We expect that to continue into next week's BOJ meeting. However, dips may exhaust in the 153/155 area," he said.

The euro was up 0.05% at $1.0294.

Sterling dropped sharply against the yen and also weakened versus the dollar and the euro on Thursday as investors focused on monetary policy divergence after last week's selloff in gilts and the pound.

China's yuan, seen on the front lines of tariff risk, was pinned near the weak end of its trading band at 7.3468 throughout the Asia session.