Central banks are boosting USD reserves: The number of central banks increasing their exposure to the USD is increasing this year as a move towards de-dollarization stalls amid a need for liquidity and higher interest rates in the US, according to an annual survey by the Official Monetary and Financial Institutions Forum (OMFIF). A net 18% of global central banks plan to increase their USD allocation over the next one to two years to combat heightened US interest rates, up from just 6% last year.

The increase marks a break from a gradual decline in USD reserves, after changes in global trade and geopolitical tensions — including sanctions on Russia — had prompted some economies to reduce their reliance on the greenback. Now, demand for the CNY has stalled in favor of the USD, driven by “expected higher returns from the US, where rates are forecast to remain higher than in China.”

Fast facts: The USD currently accounts for nearly 58% of global reserves, according to IMF data picked up by the Financial Times.

Gold reserves are also seeing an uptick in demand, with the proportion of central banks' reserves held in gold rising from 9% to 11% over the past year, and a net 15% eyeing further increases to their gold holdings in the next one to two years.

A 10-year view still sees a “very gradual decline in the USD’s share of global reserves” to an average allocation of 55% USD compared with 5.5% for the CNY, in line with trends over the past decade, according to OMFIF Managing Director Nikhil Sanghani.

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THE CLOSING BELL: TADAWUL-

The TASI rose 2.6% yesterday on turnover of SAR 54 bn. The index is down 0.9% YTD.

In the green: Miahona (+18.2%), Wataniya (+10.0%) and Awpt (+8.3%).

In the red: Atheeb (-10.0%), Thimar (-9.7%) and Fakeeh Care (-2.3%).

THE CLOSING BELL: NOMU-

The NomuC rose 0.3% yesterday on turnover of SAR 34.1 mn. The index is up 7.3% YTD.

In the green: Miral (+14.8%), Naba AlSaha (+8.9%) and Al Modawat (+7.8%).

In the red: Lana (-11.7%), Mayar (-9.7%) and Edarat (-7.8%)

CORPORATE ACTIONS-

#1- Sumou Real Estate will increase its capital by SAR 125 mn to SAR 500 mn via a bonus share issuance, to bolster its financial position and support future expansions, it said in a filing to the exchange. The issuance will be financed from the company’s retained earnings.

#2- Tadawul-listed Baazeem Trading approved a SAR 11.1 mn dividend for 2H 2023 at SAR 1.1 per share, it said in a statement (pdf). Dividends will be distributed on Tuesday, 25 June, it added.

#3- Etihad Atheeb Telecommunication’s board of directors recommended dividends worth SAR 10.2 mn at SAR 0.3 per share for the year ended on 31 March 2024, according to a disclosure to Tadawul.

#4- Bupa Arabia is planning a 860k share buyback for its employee stock ownership program, it said in a filing to the exchange. The transaction will be financed by the company’s own resources.

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