The US dollar wobbled further yesterday, but a strengthening outlook in the second half of the year bodes well for Gulf investors.
The greenback weakened to its lowest level in a month against the Japanese yen after a speech by Ben Bernanke, the chairman of the Federal Reserve, failed to impress investors.
Acknowledging the US economy had slowed, Mr Bernanke's comments added to speculation that US interest rates would remain low to help kick-start growth.
Lower interest rates mean slimmer returns for investors with assets in the currency.
But Mr Bernanke tipped the economy to pick up over the coming months and appeared to show his faith in the US recovery, giving no signal of plans for fresh monetary stimulus in the form of a third round of quantitative easing.
"Our forecast is for the dollar to perform better in the second half of the year," said Tim Fox, the chief economist and head of research at Emirates NBD. "Things will get better, as oil prices are off their peaks and jobs growth will improve modestly."
Nearly two thirds of global reserves, including much of the GCC's oil revenues, are denominated in dollars.
Most Gulf economies also peg their currencies to the dollar.
Regional dollar investments have performed poorly, as the currency has stayed weak in recent months.
Last month it reached a record low since the post-Bretton Woods era began in the early 1970s, according to the Federal Reserve's broad trade-weighted index.
Recent weakness in the labour market and a political standstill surrounding attempts to cut US public debt have also sapped the dollar's strength. At the same time, anticipation of earlier interest rate increases in other economies have pulled investors away from the dollar.
But Mr Bernanke said the dollar's weakness was not a cause for worry. The Fed's pursuit of employment generation and price stability would help to support the currency's value, he said.
At the same time, the outlook for the dollar's rivals is hardly positive.
"The big uncertainty revolves around the euro zone and its debt problems, and markets are still relatively sanguine about that," Mr Fox said. "I wouldn't be surprised if the euro weakens a bit as the US picks up steam."
The euro had risen against the dollar in recent weeks after growing expectations that interest rates would be increased again by the European Central Bank next month. But the euro fell from close to a four-week high against the dollar yesterday as a further twist emerged in the euro zone's sovereign debt drama.
Investors were unnerved after the IMF said a €26 billion (Dh140.04bn) loan to Portugal entailed "important risks" and the German finance minister Wolfgang Schaeuble said bondholders would have to contribute a "substantial" share of a second aid package for Greece.
tarnold@thenational.ae
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Match info
Deccan Gladiators 87-8
Asif Khan 25, Dwayne Bravo 2-16
Maratha Arabians 89-2
Chadwick Walton 51 not out
Arabians won the final by eight wickets
The full list of 2020 Brit Award nominees (winners in bold):
British group
Coldplay
Foals
Bring me the Horizon
D-Block Europe
Bastille
British Female
Mabel
Freya Ridings
FKA Twigs
Charli xcx
Mahalia
British male
Harry Styles
Lewis Capaldi
Dave
Michael Kiwanuka
Stormzy
Best new artist
Aitch
Lewis Capaldi
Dave
Mabel
Sam Fender
Best song
Ed Sheeran and Justin Bieber - I Don’t Care
Mabel - Don’t Call Me Up
Calvin Harrison and Rag’n’Bone Man - Giant
Dave - Location
Mark Ronson feat. Miley Cyrus - Nothing Breaks Like A Heart
AJ Tracey - Ladbroke Grove
Lewis Capaldi - Someone you Loved
Tom Walker - Just You and I
Sam Smith and Normani - Dancing with a Stranger
Stormzy - Vossi Bop
International female
Ariana Grande
Billie Eilish
Camila Cabello
Lana Del Rey
Lizzo
International male
Bruce Springsteen
Burna Boy
Tyler, The Creator
Dermot Kennedy
Post Malone
Best album
Stormzy - Heavy is the Head
Michael Kiwanuka - Kiwanuka
Lewis Capaldi - Divinely Uninspired to a Hellish Extent
Dave - Psychodrama
Harry Styles - Fine Line
Rising star
Celeste
Joy Crookes
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Display: 10.9" Liquid Retina IPS, 2360 x 1640, 264ppi, wide colour, True Tone, Apple Pencil support
Chip: Apple M1, 8-core CPU, 8-core GPU, 16-core Neural Engine
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Main camera: 12MP wide, f/1.8, Smart HDR
Video: 4K @ 25/25/30/60fps, full HD @ 25/30/60fps, slo-mo @ 120/240fps
Front camera: 12MP ultra-wide, f/2.4, Smart HDR, Centre Stage; full HD @ 25/30/60fps
Audio: Stereo speakers
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I/O: USB-C, smart connector (for folio/keyboard)
Battery: Up to 10 hours on Wi-Fi; up to 9 hours on cellular
Finish: Space grey, starlight, pink, purple, blue
Price: Wi-Fi – Dh2,499 (64GB) / Dh3,099 (256GB); cellular – Dh3,099 (64GB) / Dh3,699 (256GB)
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Engine: Direct injection 4-cylinder 1.4-litre
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Sunday's fixtures
- Bournemouth v Southampton, 5.30pm
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A timeline of the Historical Dictionary of the Arabic Language
- 2018: Formal work begins
- November 2021: First 17 volumes launched
- November 2022: Additional 19 volumes released
- October 2023: Another 31 volumes released
- November 2024: All 127 volumes completed
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Industry: e-commerce
Initial investment: Dh10 million
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