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Saudi Arabia Aims to Boost National Automotive Industry

The Saudi Minister of Industry and Mineral Resources, Bandar al-Khorayef, and the Minister of Economy and Planning, Faisal al-Ibrahim, signed the agreement with Hyundai Motor Company (Asharq Al-Awsat)
The Saudi Minister of Industry and Mineral Resources, Bandar al-Khorayef, and the Minister of Economy and Planning, Faisal al-Ibrahim, signed the agreement with Hyundai Motor Company (Asharq Al-Awsat)
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Saudi Arabia Aims to Boost National Automotive Industry

The Saudi Minister of Industry and Mineral Resources, Bandar al-Khorayef, and the Minister of Economy and Planning, Faisal al-Ibrahim, signed the agreement with Hyundai Motor Company (Asharq Al-Awsat)
The Saudi Minister of Industry and Mineral Resources, Bandar al-Khorayef, and the Minister of Economy and Planning, Faisal al-Ibrahim, signed the agreement with Hyundai Motor Company (Asharq Al-Awsat)

The Saudi Ministry of Industry and Mineral Resources signed a memorandum of understanding with Hyundai Motor Company to promote the automotive industry in the Kingdom.

The MoU was signed in the presence of the Minister of Industry and Mineral Resources, Bandar al-Khorayef, and the Minister of Economy and Planning, Faisal al-Ibrahim.

The MoU aimed to enhance cooperation in vehicle manufacturing in the region to realize the national strategic goals for the industry in developing local manufacturing capabilities and is in line with the targets of the Saudi Vision 2030 that seeks to diversify the economic base in Saudi Arabia.

The agreement stipulated planning for building a Saudi Arabia-based assembly plant with the CKD system for electric and internal combustion engine cars after Hyundai showed high interest.

It also sought to explore joint investment opportunities with Saudi Arabia to achieve entrepreneurship in businesses and projects that guarantee environmental safety and sustainability.

The approach came as part of a government strategy to support the transition to clean energy in the automotive industry.

In early November, Saudi Crown Prince Mohammed bin Salman launched the "Ceer" company, branded as the first Saudi electric vehicle brand.

The new company would contribute to attracting local and international investments and create many job opportunities for local competencies.

Last May, the Ministry of Investment announced a significant investment from Lucid Group as the firm began constructing an advanced automotive manufacturing plant that targets 150,000 vehicles per year with more than $3.2 billion in assets.

The facility is also expected to contribute significantly to job creation and development of the skill base of the Saudi automotive manufacturing sector.

Investment Minister Khalid al-Falih stated that the development of the electric car industry in Saudi Arabia reflected the strong commitment to attracting qualitative investments that contribute to diversifying the economy, transferring technology, and developing skills among Saudi youth.

It also reflected the Kingdom's global commitment to promoting a green economy and reducing carbon emissions.

Falih added that the development of the electric car manufacturing sector is part of the Kingdom's broader efforts to advance the industrial sector and advanced industries.

The sector would also play an essential role in the Kingdom's transition to a greener economy and in the Kingdom's efforts to realize its commitment to reach net zero by 2060.

The Lucid factory will produce four electric cars from 2023, reaching total capacity in 2028.

The planned factory in the Kingdom would produce two exclusive models. The facility will export nearly 95 percent of its production, supporting the Kingdom's balance of payments. It would also back supply chains and open new investment opportunities.

Lucid's electric vehicle factory would be located in the Industrial Valley of King Abdullah Economic City, on the Red Sea coast in the west of the Kingdom, to meet energy needs, local supply chains, and a location that facilitates access to global logistics.

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Dollar Gains as Iran War Keeps Central Banks in Wait-and-see Mode

US dollar banknotes. (Reuters)
US dollar banknotes. (Reuters)
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Dollar Gains as Iran War Keeps Central Banks in Wait-and-see Mode

US dollar banknotes. (Reuters)
US dollar banknotes. (Reuters)

The dollar edged up against the euro on Wednesday on lingering concerns about the ongoing US-Israeli war with Iran, even after President Donald Trump extended the ceasefire to give Tehran more time to present a unified proposal for ending the conflict. Iran seized two ships in the Strait of Hormuz on Wednesday, tightening its grip on the strategic waterway, after Trump called off attacks indefinitely with no sign of peace talks restarting.

Markets have been swayed by alternating bouts of optimism that a deal is within reach and fears that the conflict could drag on, causing prolonged disruptions to energy markets.

"It's tough to have a really strong conviction at this point," said Dominic Bunning, head of G10 FX strategy at Nomura. That said, "overall it seems like both sides are more inclined to make progress than to re-escalate."

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, was last up 0.06% at 98.44, with the euro down 0.09% at $1.1731. The Japanese yen strengthened 0.09% against the greenback to 159.26 per dollar. Sterling strengthened 0.01% to $1.3507.

CENTRAL BANKS ON HOLD

Markets are pricing in low odds that the Federal Reserve will cut interest rates this year, given the risk that the war could fuel higher inflation.

Fed funds futures traders now see only a 35% chance of one cut by the end of 2026. Traders previously had forecast two cuts, with Kevin Warsh - Trump's nominee to lead the US central bank - seen as more likely to cut rates than Fed Chair Jerome Powell.

Warsh said on Tuesday he had made no promises to Trump about cutting rates, seeking to assure senators considering his confirmation that he would act independently of the White House while pursuing broad reforms.

US Treasury Secretary Scott Bessent said earlier this month that the Fed should "wait and see" before deciding whether to lower rates amid the war in Iran, noting that the US economy had been "very strong" in January and February.

"Since the war began, comments from Treasury Secretary Bessent make it seem like he recognizes that it might take Warsh some time to cut interest rates," said Marc Chandler, chief market strategist at Bannockburn Global Forex.

"And this is what I think we're going to see next week. You've got five G10 central banks that meet and none of them are going to do anything. It's a watch-and-wait" situation, Chandler said.

The Fed, European Central Bank, Bank of Japan, Bank of England and Bank of Canada are all scheduled to hold policy meetings next week.

Business

Türkiye Central Bank Holds Rates at 37% as it Eyes Iran War Fallout

Central Bank of Türkiye (official website)
Central Bank of Türkiye (official website)
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Türkiye Central Bank Holds Rates at 37% as it Eyes Iran War Fallout

Central Bank of Türkiye (official website)
Central Bank of Türkiye (official website)

Türkiye's central bank held its key interest rate at 37% as expected on Wednesday, deciding not to hike but warning that fallout from the Iran war could yet change the inflation outlook.

It was the second straight policy meeting at which the bank held steady despite some expectations that it could tighten, suggesting it was preparing to stand pat well into the summer, analysts said.

The central bank also did not adjust its overnight lending and borrowing rates from 40% and 35.5% respectively. Since the war started in late February, it has halted an easing cycle that began in late 2024 and taken other liquidity steps that pushed the lira overnight rate up to the 40% limit - moves that prompted some analysts to predict a 300-point hike this week.

The bank said it is closely monitoring any "potential second-round effects" on inflation, for which "leading indicators suggest a slight increase in the underlying trend in April".

"Amid geopolitical developments and the resulting uncertainties, energy prices remain elevated and exhibit notable volatility," its policy committee added.

In a Reuters poll, 19 of 23 economists predicted no change to borrowing costs, while four forecast a rate hike. The war-related surge in energy prices has rattled import-heavy economies like Türkiye where inflation was 30.87% last month, but where expectations have risen. On Tuesday, US President Donald Trump extended the war ceasefire indefinitely.

The ceasefire allowed the central bank "to refrain from tightening," William Jackson, economist at Capital Economics, said in a note. "So long as energy prices don't spike again, we think the CBRT will opt to leave interest rates on hold for at least a few more months."

Economists generally anticipate that rate cuts may resume in September. The Reuters poll predicted rates would be cut to only 32.75% by year-end. A separate poll found end-2026 consumer price inflation at 27.53%, compared with 25.38% in a previous poll.

In its quarterly inflation report in February - before the war began - the central bank had kept its end-2026 interim inflation target at 16%, while lifting its forecast range to 15-21% from 13-19% previously.

A year ago, the central bank temporarily reversed course and hiked rates in the face of political instability that rattled markets, though it returned to rate cuts by mid-2025.

Business

Oil Prices Rise despite US-Iran Ceasefire Extension

FILE PHOTO: FILE PHOTO: A view shows oil pump jacks outside Almetyevsk in the Republic of Tatarstan, Russia June 4, 2023. REUTERS/Alexander Manzyuk/File Photo
FILE PHOTO: FILE PHOTO: A view shows oil pump jacks outside Almetyevsk in the Republic of Tatarstan, Russia June 4, 2023. REUTERS/Alexander Manzyuk/File Photo
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Oil Prices Rise despite US-Iran Ceasefire Extension

FILE PHOTO: FILE PHOTO: A view shows oil pump jacks outside Almetyevsk in the Republic of Tatarstan, Russia June 4, 2023. REUTERS/Alexander Manzyuk/File Photo
FILE PHOTO: FILE PHOTO: A view shows oil pump jacks outside Almetyevsk in the Republic of Tatarstan, Russia June 4, 2023. REUTERS/Alexander Manzyuk/File Photo

Oil prices edged higher Wednesday while Europe's main stock markets eased on uncertainty surrounding the prospect of resumed Mideast peace talks following an extension to the US-Iran ceasefire.

Asian equities had a mixed trading day as investors wait for clarity but broadly expect that both US President Donald Trump and the authorities in Iran want to end a war that has sent oil and gas prices soaring.

"The ceasefire extension hasn't done much to calm nerves given that worries remain about the impact of the energy squeeze on the global economy," said Susannah Streeter, chief investment strategist at Wealth Club, AFP reported. 

"Shipments from the Middle East are in limbo and a resolution to the conflict remains elusive, and the price of Brent crude, the benchmark, reflects this."

Brent North Sea was once more closing in on $100 a barrel while main US contract, West Texas Intermediate, traded back above $90.

Iranian gunboats attacked at least one container ship in the Strait of Hormuz on Wednesday, maritime agencies said, despite US President Donald Trump announcing he was extending a ceasefire to allow more time for peace talks.

Trump said the US blockade of Iran's ports would continue while Pakistani mediators try to revive dialogue.

Tehran has all but shut the strait in the seven weeks since the United States and Israel launched attacks on Iran that plunged the Middle East into war, with higher energy prices threatening economic growth worldwide.

"The US and Iran may be trying to shore up leverage and playing a game of who blinks first," said Christopher Wong, a strategist at Oversea-Chinese Banking Corp.

"Whatever the outcome, the suspense in the interim may see risk appetite being curtailed," he said.

Away from the war, investors were keeping tabs on the confirmation hearing by senators of Kevin Warsh, Trump's pick to replace Federal Reserve boss Jerome Powell, whose term ends in May.

Warsh told lawmakers he would not be controlled by the president as he fielded questions on his assets and central bank independence during his first hearing.

Trump has assailed Powell for not cutting interest rates more aggressively, and told CNBC on Tuesday that he would be disappointed if the new chair did not swiftly lower borrowing costs despite rising inflation.

In Britain, official data showed that annual inflation jumped to 3.3 percent in March as the Middle East war sent oil and gas prices surging.