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Turkey’s Credit Outlook Cut to Negative by Moody’s

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  • Turkey’s Credit Outlook Cut to Negative by Moody’s

Turkey’s credit outlook was lowered by Moody’s Investors Service, which cited persistent political uncertainty after last July’s failed coup. The lira erased its gain.

Moody’s reduced the outlook to negative from stable and kept its rating one notch below investment grade at Ba1, on par with Russia, according to a statement Friday. Fitch Ratings ranks the nation at the same level.

“The impact of ongoing political and geopolitical tensions on domestic confidence, and the heightened external pressures that led to a steep depreciation of the lira and high inflation, will suppress growth in the near-term relative to expectations last year,” Moody’s said in the statement.

The lira dropped 0.3 percent to 3.6365 per dollar at 5 p.m. in New York, erasing gains.

The ratings agency cited the continuing erosion of Turkey’s institutional strength and weaker growth outlook as reasons for its change.

Political developments affecting the economy include government-backed purges against alleged members of a group blamed for last year’s failed coup attempt. Moody’s said a referendum on April 16 to change the constitution to give President Recep Tayyip Erdogan more powers is unlikely to erase divisions between the ruling AK Party and the opposition. Steps taken to reduce various forms of opposition since the coup attempt have undermined the country’s administrative capacity and damaged private sector confidence, it said.

April Referendum

Erdogan is seeking to transform the mostly ceremonial post of president into the official nexus of political power, with Turks voting in the referendum on the shift. While critics accuse the president of trying to create a one-man rule, Erdogan and the government claim the changes will help to foster growth.

Turkey’s economy contracted 1.8 percent in the third quarter and recorded only “so so” growth in the fourth, Deputy Prime Minister Mehmet Simsek said in January, as the political fallout from July’s failed coup weighed on sentiment. The government said the July actions were orchestrated by U.S.-based cleric Fethullah Gulen, and responded by purging more than 100,000 alleged followers of the preacher from their jobs in the military, judiciary and other state institutions.

Turkey lost its last investment grade rating in January when Fitch cut its sovereign debt to junk. Moody’s downgrade adds to the country’s troubles as it relies on short-term capital flows, foreign borrowing, tourism revenues as well as foreign direct investment to finance its current-account deficit.

According to Moody’s, weaker growth is also hurting Turkey’s key credit anchor — its healthy public finances and low government debt.

Following Moody’s announcement, Bulent Gedikli, a senior adviser to Erdogan, criticized the report on his Twitter account and said, “Moody’s has done a night operation again and announced a report based on virtual fears and non-existing risks.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Crude Oil

Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Energy

Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm Oil - Investors King

Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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