Clare » May 5th, 2022
Gold rises 1% after the US Federal Reserve raises interest rates
Gold prices rose, on Thursday, after the Federal Reserve (the US central bank) raised the interest rate by 50 basis points to curb inflation, which the central bank sees as a factor threatening the economy, while ruling out a larger rate hike this year.
And by 04:02 GMT, gold in spot transactions rose 0.9 percent to $ 1898.06 an ounce, after rising by one percent earlier in the session.
US gold futures rose 1.4 percent to $1,894.20 an ounce.
The US Federal Reserve raised interest rates on Wednesday by half a percentage point, the biggest jump in 22 years. Fed Chairman Jerome Powell appealed to Americans suffering from high inflation to be patient while officials take tough measures to control it.
As for other precious metals, silver rose 1.1 percent to $23.19 an ounce, platinum rose 0.6 percent to $997.19 an ounce, and palladium rose 0.8 percent to $2274.43 an ounce. LINK
Al-Kazemi’s advisor: Iraq’s revenues will exceed $150 billion this year
The financial advisor to the Prime Minister, Mazhar Muhammad Salih, expected today, Thursday, that Iraq’s revenues during the current year will exceed 150 billion dollars.
Saleh said, “The International Monetary Fund’s reading and expectation of a jump in Iraq’s public revenues during the current year 2022 focuses on the total oil and non-oil public revenues of the federal Iraq.”
He added, “The Fund may have estimated the average daily exports of crude oil at 3.4 million barrels per day, with an average annual price of 104 dollars per barrel exported from oil or more, with non-oil revenues of no less than 8-10 billion dollars.”
He continued, “If the Kurdistan region’s oil revenues and other revenues are added, the total federal revenues could easily exceed $150 billion at the end of the 2022 fiscal year.”
The International Monetary Fund expected, earlier, that Iraq would achieve a jump in its public revenues during the year 2022, after the increase in oil prices, amounting to 149 billion dollars and an annual change rate of 73 percent from the year 2021. LINK
Source: Dinar Recaps
Clare » May 5th, 2022
6 Arab countries raise interest rates
The US Federal Reserve raised the main interest rate, by 50 basis points, as a more aggressive step so far in its battle against inflation spikes.
A number of central banks in Arab countries raised interest rates, including Saudi Arabia, the UAE, Kuwait, Bahrain, Qatar and Jordan.
The Central Bank of Egypt is scheduled to meet on May 16 to discuss monetary policy, including raising interest rates.
The US Central Bank’s decision to fight high inflation, which recorded 8.5% last March, was prompted by the lack of supply of goods due to supply chain problems, whether as a result of the Covid closures in China, or the Ukrainian war and its impact on the prices of many basic commodities from food to energy.
Interest rates are one of the central banks’ weapons in curbing inflation, by sucking excess liquidity out of the economy and undermining demand.
However, the US raising interest rates means a lot to the direction of the movement of capital around the world.
Your personal wallet
It is expected that the decision of 5 Gulf countries, in addition to Jordan, to raise interest rates, will have a clear impact on the personal portfolio of its citizens, and the expected start will be on the cost of new borrowing.
Therefore, your financing needs will be more expensive at the present time, especially loans with fixed interest, as they carry higher risks for financiers from banks and finance companies, with the possibility of a new increase in interest rates.
Just as the existing loans with variable interest rates, whether it is real estate loans or car financing, they will also witness an increase, and you should review your loans at these times and contact the financing entity for your loans to find out the size of the impact on your personal budget.
It means loans with variable (moving) interest: loans that consist of two parts, one of which is fixed, which is the interest margin obtained by the financing bank and varies from one bank to another and according to each customer and his creditworthiness, in addition to a variable part, which is the official interest rate announced by the Central Bank.
The general activity
is not only that, with the increase in interest rates, the cost of financing economic activities becomes higher, and the economic feasibility of many projects decreases, as investors resort to investing their money in risk-free and fixed-return vessels, with the ambiguity of the economic scene and the presence of a higher return from banks, which is Which may affect all economic activities.
In most cases, bank deposits rise significantly with the rise in interest rates, which may reduce the money supply and lead prices to fall again and thus inflation levels, depending on the speed of response to interest decisions.
On the other hand, many analysts rely on what is known as the “risk-free rate of return” – or the interest rate on treasury bills and bonds – in evaluating companies’ shares, as the future cash flows of companies are discounted at a higher interest rate to calculate the present value of those funds, and thus The higher the discount rate (synonymous with interest rate) the lower the present value of the future cash flows and therefore the lower the valuation of the shares.
It is expected that many research centers and investment banks will start adjusting their recommendations and target values for the companies they cover.
Contrary to this picture, bank shares usually witness a rise due to the net interest margin, which moves positively with the rise in interest rates.
Determinants of interest
With the US Federal Reserve raising interest rates, many global central banks are forced to follow in his footsteps, as even if their recorded inflation rates are not high enough to raise interest rates, they may be forced to make this decision either to maintain capital flows coming to them. As a result of competition with higher interest rates offered by US Treasury bonds, or because its currency is directly linked to the dollar, and thus the need to maintain exchange rates with the dollar, which is expected to witness a significant increase compared to many currencies.
The US dollar recorded its highest level since the global financial crisis last month, before retreating slightly after the decision to raise interest rates. However, the closest expectation is that the dollar prices will rise against global currencies, especially emerging market currencies.
In turn, 5 Gulf central banks announced raising interest rates by 50 basis points, namely: Saudi Arabia, Kuwait, Bahrain, the United Arab Emirates and Qatar, with their currencies linked to the dollar, despite inflation readings that were significantly lower than their counterparts in the United States.
The banks attributed their decisions to the high rates of global inflation, and to spare their economies imported inflationary shocks from the rise in global commodity and energy prices. LINK
Source: Dinar Recaps
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