The greenback is tumbling as US inflation slows — and that’s good news for risk assets: The accelerating decline of the USD on the back of easing US inflation is increasing investor appetite for higher-yielding risk assets around the globe, Reuters reports. The greenback has now dropped almost 13% against a basket of currencies from last year’s two-decade high, and last week hit its lowest level in 15 months. The decline was accelerated by last week’s slower-than-expected inflation data, which is fuelling bets that the US Federal Reserve will soon bring its aggressive tightening cycle to an end.

EM assets stand to benefit: The MSCI International Emerging Market Currency Index has gained 2.4% this year as the greenback’s decline makes USD-denominated debt easier to service. The USD’s fall could also continue to boost the EM carry trade, the process whereby investors borrow greenbacks at low interest rates to invest in higher-yielding EM currencies. The Colombia’s COP has yielded 25% year-to-date, while Poland’s PLN has gained 13%, according to data from Corpay.

India, UAE jump to de-dollarize trade, link payment systems: The UAE and India have agreed to use their own local currencies for cross-border trade and link their payments systems under MoUs inked during Indian Prime Minister Narendra Modi’s visit to the UAE yesterday, according to statements from the UAE and India’s central bank.

We’re noticing a trend here: Major emerging markets such as China, Russia, India, Brazil and Saudi Arabia have accelerated the use of local currency settlements in response to Washington’s unprecedented financial sanctions against Moscow, cutting out the USD for bilateral trade.

ALSO WORTH NOTING-

  • BlackRock, KKR to exit Adnoc pipeline unit: US private equity giants BlackRock and KKR are reportedly close to selling their combined 40% stake in Adnoc Oil Pipelines to Abu Dhabi wealth fund ADQ for USD 4 bn, and look set to exit in a matter of days. (Bloomberg)
  • China exports stall: Exports from the world’s second-largest economy saw their steepest fall since the covid-19 pandemic three years ago in May, according to official figures out Thursday. Beijing’s assessment: “a weak global economic recovery, slowing global trade and investment, and rising unilateralism, protectionism and geopolitics.” (Reuters)

EGX30

17,342

+1.2% (YTD: +18.8%)

USD (CBE)

Buy 30.83

Sell 30.96

USD at CIB

Buy 30.85

Sell 30.95

Interest rates CBE

18.25% deposit

19.25% lending

Tadawul

11,708

-0.2% (YTD: +11.7%)

ADX

9,672

+0.5% (YTD: -5.3%)

DFM

4,010

+0.1% (YTD: +20.2%)

S&P 500

4,505

-0.1% (YTD: +17.3%)

FTSE 100

7,435

-0.1% (YTD: -0.2%)

Euro Stoxx 50

4,400

+0.2% (YTD: +16.0%)

Brent crude

USD 79.87

-1.8%

Natural gas (Nymex)

USD 2.54

-0.2%

Gold

USD 1,964

0.0%

BTC

USD 30,311

+0.2% (YTD: +83.4%)

THE CLOSING BELL-

The EGX30 rose 1.2% at Thursday’s close on turnover of EGP 1.40 bn (about 38% below the trailing 90-day average). Local investors were net buyers. The index is up/down 18.8% YTD.

In the green: Amoc (+7.7%), Eastern Company (+4.2%) and Fawry (+3.7%).

In the red: Qalaa Holdings (-2.4%), TMG Holding (-1.6%) and Palm Hills Development (-1.4%).

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