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Sovereign Wealth Funds Briefing - Category | Reserve Currencies more

Kazakh sovereign wealth fund expects stabilization of tenge rate

Posted on 25 May 2016 by VRS  |  Email |Print

The Department of Research and Knowledge Management of Samruk-Kazyna Sovereign Wealth Fund of Kazakhstan forecasted stabilization of the national currency of the country in 2016, according to the department’s report May 24.
“The average exchange rate of the USD-KZT is projected in the range of 355 for 2016″, said the analytical report of the department. Based on the current momentum observed on the USD-KZT, the tenge is expected to strengthen gradually moving forward, underpinned by several factors………………………………………..Full Article: Source

Kazakh sovereign fund raises forecast for 2016 average tenge rate

Posted on 25 May 2016 by VRS  |  Email |Print

Kazakh sovereign wealth fund Samruk Kazyna has raised its forecast for the average tenge exchange rate this year to 355 per dollar, the fund said in a research note on Tuesday.
In January, Samruk Kazyna forecast the average 2016 exchange rate at 380 per dollar under an optimistic scenario and 400 under the baseline one, but the currency has strengthened over the last four months alongside oil prices………………………………………..Full Article: Source

How the Second-Richest Arab Nation Is Reacting to Oil Shock

Posted on 20 May 2016 by VRS  |  Email |Print

Kuwait has enough financial firepower to respond gradually to the plunge in global crude prices. Its sovereign wealth fund is the world’s fifth-largest with $592 billion in assets under management, according to data compiled by the Sovereign Wealth Fund Institute.
Kuwait’s gross domestic product, adjusted for exchange rates, was more than $70,000 per head in 2015 — making it the world’s sixth-richest nation and second only to Qatar in the Arab world, according to IMF estimates. The oil decline “has clearly shown the structural issues in our economy,” said the minister, who is also the wealth fund’s chairman………………………………………..Full Article: Source

Central Bank again becomes a buyer of Oil Fund’s currency, but not key one

Posted on 18 May 2016 by VRS  |  Email |Print

The State Oil Fund of Azerbaijan (SOFAZ) has appeared today at the foreign exchange auction of the Central Bank as a seller. According to SOFAZ, today it has applied for sale of $50 million and sold $49 million through the auction.
“Eight commercial banks ($34 million) and the Central Bank ($15 million) became the buyers,” the Fund said. At the previous auction on 12 May the Fund sold $44.8 million to the 9 banks, including IBA, through auction. The Fund promises to continue selling currency through CBA auctions………………………………………..Full Article: Source

Who is Dipping Into Their Sovereign Wealth Funds Now Oil is Cheap?

Posted on 17 May 2016 by VRS  |  Email |Print

As many as 44 of the world’s countries have at least one sovereign wealth fund set up for a rainy day, and now it seems that for many of them that day has arrived. Let’s take a look at which of these countries have made use of their piggy banks.
Norway, the owner of the largest of the funds, set up in 1990s to safeguard the country’s oil wealth for future generations, announced in January that it had made its first withdrawal from the country’s sovereign wealth fund while trying to counter the economic slowdown………………………………………..Full Article: Source

Norway Uses Oil Wealth Fund Again to Stay Afloat

Posted on 13 May 2016 by VRS  |  Email |Print

The Norwegian government will tap into its wealth fund once again to sustain government operations, as the sting of a low-priced oil market burdens the Scandinavian country, according to Reuters. Officials have used the fund once before as a rainy day fund and may continue to do so as the economy lacks the necessary revenue. The economy is expected to expand 1.0% in 2016.
As wealthy as Norway may be, its Achilles heel is a non-diversified economy that relies heavily on oil exports. Norway will have to consider diversifying its economy in major ways to lessen the shock of price fluctuations in the energy markets. Because of revenue shortfalls, the government is forced to spend additional money to plug deficit holes………………………………………..Full Article: Source

Jensen dips into the oil fund again

Posted on 12 May 2016 by VRS  |  Email |Print

Norwegian Finance Minister Siv Jensen announced plans on Wednesday to bolster Norway’s surprisingly resilient economy once again, by tapping another NOK 10.4 billion of the country’s Oil Fund reserves. NOK 900 million will be earmarked to combat unemployment in the southwestern portions of Norway that have been hit hardest by the dive in oil prices.
Jensen had referred to the government’s “expansive budget” earlier in the day, before confirming that even more money from the country’s huge “Oil Fund” will be spent………………………………………..Full Article: Source

Central Bank remains buyer of Oil Fund’s currency, but not key

Posted on 11 May 2016 by VRS  |  Email |Print

The State Oil Fund of Azerbaijan (SOFAZ) has appeared today at the foreign exchange auction of the Central Bank as a seller. According to SOFAZ, today it has applied for sale of $50 million and sold $47.8 million through the auction.
“12 commercial banks ($27.8 million) and the Central Bank ($20 million) became the buyers,” the Fund said. At the previous auction on 5 May the Fund sold $45.8 million to the eight banks, including IBA, through auction. The Fund promises to continue selling currency through CBA auctions………………………………………..Full Article: Source

Saudi Arabia Can’t Quit Oil

Posted on 27 April 2016 by VRS  |  Email |Print

Saudi Arabia announced the seemingly impossible. The world’s largest oil producer and owner of an oil company reportedly worth more than $2 trillion, is going to kick its fossil fuel habit, Deputy Crown Prince Mohammed bin Salman said.
“We have developed a case of oil addiction in Saudi Arabia,” he told al-Arabiya television news channel, after officially unveiling a plan whose key parts had already been carefully released. Forty percent of the kingdom’s GDP and a whopping 90 percent of the government’s revenue comes from oil………………………………………..Full Article: Source

Meet the Norwegian Currency’s Oil Buffer

Posted on 19 April 2016 by VRS  |  Email |Print

Norway’s sovereign wealth fund has shielded the krone from the steeper falls suffered by the Russian ruble. When oil price gyrations hit currencies, it’s good to have a cushion to soften the blows. Norway has a big cushion, a 7.5 trillion kroner ($906 billion) sovereign fund.
After this Sunday’s summit in Doha failed to secure an agreement among oil-producers to curb crude supply, the oil price fell and the currencies of the big crude exporters fell with it. When crude later rebounded, these currencies followed suit………………………………………..Full Article: Source

Petro-dollar crunch hits GCC sovereign wealth funds

Posted on 05 April 2016 by VRS  |  Email |Print

The Gulf Cooperation Council (GCC) countries are facing a major financial crisis if they fail to make changes to their own structures or economies. A continued period of low prices for oil and natural gas will have a detrimental effect on the overall stability of the regional economies. After years of high oil prices, generating vast amounts of revenues being put into sovereign wealth funds (SWFs), the market is oversupplied.
Still, gross domestic growth overall in the region is positive, and inflation remains under control. Total growth of the GGC’s GDP, according to the IMF, is set to decrease to 2.7% in 2016, in comparison to 3.2% in 2015 and 3.4% in 2014………………………………………..Full Article: Source

Three Surprising Reasons Saudi Arabia May Be Getting Out of the Oil Business (Video)

Posted on 04 April 2016 by VRS  |  Email |Print

Saudi crown prince Muhammad bin Salman announced Friday that Saudi Arabia would use its oil assets to back a $2 trillion sovereign wealth fund. The move suggested to many observers that the kingdom is preparing for a likely end of the petroleum business and transitioning to being primarily an investor.
While it is true that the money for the sovereign wealth fund is expected to come from petroleum sales, it also seems clear that the kingdom recognizes that it has a stranded asset that won’t be nearly as valuable in a decade or two as it is now. It could even end up, like coal, being regulated out of existence in many countries. Here are 3 reasons Saudi Arabia is likely making this massive change in economic strategy:……………………………………….Full Article: Source

Gulf nations left to raid reserves

Posted on 04 April 2016 by VRS  |  Email |Print

Earlier this year, a sleepy, little-watched, financial gauge sprang to life. The moribund forwards market for the Saudi riyal suddenly started pricing in speculation that the world’s largest oil producer could be forced to abandon its 30-year peg to the US dollar.
Kuwait, Qatar and the United Arab Emirates have sufficient sovereign wealth fund assets and central bank reserves to maintain spending at current levels for decades with oil at $50 or even $30, according to Bank of America. However, Oman and Bahrain would run out of money in two or three years, although they could potentially extend this by issuing debt………………………………………..Full Article: Source

Saudi central bank net foreign assets fall $584bn in Feb

Posted on 30 March 2016 by VRS  |  Email |Print

Net foreign assets at Saudi Arabia’s central bank dropped 1.7 percent from the previous month to 2.19 trillion riyals ($584 billion) in February, central bank data showed on Tuesday.
Assets fell 17.3 percent from a year earlier to their lowest level since May 2012. They reached a record high of $737 billion in August 2014 before starting to shrink. The central bank, which serves as Saudi Arabia’s sovereign wealth fund, has been drawing down its assets to cover a huge state budget deficit caused by low oil prices………………………………………..Full Article: Source

Local banks buy $0.5M from SOFAZ

Posted on 29 March 2016 by VRS  |  Email |Print

Azerbaijan’s state oil fund SOFAZ sold $0.5 million to three local banks through the auction held by Azerbaijan’s Central Bank (CBA) March 28, SOFAZ reported on March 28. SOFAZ offered $100 million for sale through the auction, and will continue selling foreign currency through auctions in 2016.
The foreign currency is sold as part of SOFAZ’s transfers to the Azerbaijani state budget, which are envisaged to stand at 7.615 billion Azerbaijani manats in 2016. SOFAZ was established in 1999 with assets of $271 million………………………………………..Full Article: Source

Fiscal surplus of $3.45b, thanks to Temasek’s inclusion in NIR

Posted on 29 March 2016 by VRS  |  Email |Print

From a $4.88 billion deficit last year to back in the black this year. An overall surplus of $3.45 billion is projected for 2016, buoyed by bigger contributions from Singapore investment company Temasek Holdings.
What is more, the surplus is forecast even as spending rises, including a marked increase in healthcare and business support. Helping offset the rising expenditure is Temasek’s inclusion in the net investment returns (NIR) framework this year. This will push the NIR contribution to the nation’s coffers to $14.7 billion, up 48.6 per cent from $9.9 billion last year………………………………………..Full Article: Source

Lower oil tests sovereign wealth funds

Posted on 23 March 2016 by VRS  |  Email |Print

Bader Al Sa’ad, the head of the Kuwait Investment Authority, isn’t spending much time these days assessing new investments. Instead he is advising his government as it moves to establish a debt management office. Circumstances have changed in the Gulf, bringing in their wake a host of ripple effects. A while ago, the biggest headache for the sovereign wealth funds of the Middle East was finding safe but profitable homes for their portion of swelling oil revenues.
Now, many are fortunate if they do not have to liquidate holdings at the request of their cash strapped governments. Kuwait is among the best managed of the sovereign wealth funds in the Gulf which means it is under less pressure to sell, rather it is simply putting out less new money………………………………………..Full Article: Source

Azerbaijan’s Oil Fund sold $34.3 million through Central Bank’s foreign exchange auction

Posted on 21 March 2016 by VRS  |  Email |Print

The State Oil Fund of Azerbaijan (SOFAZ) has take part in today’s foreign exchange auction of the Central Bank as a seller. According to SOFAZ, today it applied for sale of $100 million and sold $34.3 million through the CBA auction.
“Two banks were among the buyers,” SOFAZ said. At the previous auction on 16 March the Fund sold $39.1 million to eight banks through auction. SOFAZ promises to continue currency sales through CBA auctions………………………………………..Full Article: Source

Not All Carnival In Trinidad & Tobago

Posted on 21 March 2016 by VRS  |  Email |Print

Should Prime Minister Andrew Holness desire vindication for his promise to honour Jamaica’s agreement with the International Monetary Fund (IMF), including the programme of fiscal consolidation, he might look to Trinidad and Tobago (T&T), the English-speaking Caribbean’s economic powerhouse, where the Fund has just completed its annual Article IV consultation on the country’s economy.
The positive news of the Port-of-Spain government is that the country has foreign reserves of around US$9.6 billion. There is another US$5.6 billion in sovereign wealth fund - the Heritage and Stabilisation Fund - the kind of investment that Jamaica was expected to make when it imposed its bauxite levy but was mostly consumed in general spending………………………………………..Full Article: Source

Azeri fund sells $39.1 mln on forex market

Posted on 17 March 2016 by VRS  |  Email |Print

Azerbaijan’s SOFAZ fund sold $39.1 million on the foreign exchange market on Wednesday out of $100 million it offered, its press service said.
Azeri authorities have been selling foreign currency to support the country’s manat currency………………………………………..Full Article: Source

Azeri central bank says frenzy on FX market averted, market adapts to manat float

Posted on 16 March 2016 by VRS  |  Email |Print

Azerbaijan’s central bank said on Tuesday its policies had successfully calmed the Azeri foreign exchange market and that investors and businesses are gradually adapting to the manat’s floating exchange rate regime. The manat was freed to float in mid-December, triggering a plunge of 35 percent against the dollar, after the central bank burned through more than half its foreign reserves to defend the currency as prices for the country’s main export oil plunged.
“Research carried out this year has shown that a frenzy on the foreign exchange market in Azerbaijan has been averted and economic players are adapting step-by-step to the new regime,” the central bank told Reuters in a written answer to questions………………………………………..Full Article: Source

Azerbaijan’s Oil Fund sold $11.9 million through Central Bank’s foreign exchange auction

Posted on 15 March 2016 by VRS  |  Email |Print

The State Oil Fund of Azerbaijan (SOFAZ) has appeared today on the foreign exchange auction of the Central Bank as a seller. According to SOFAZ, today it has applied for sale of $150 million and sold $11.9 million through the auction.
“Nine banks were among the buyers,” SOFAZ said. At the previous auction on 11 March the Fund sold $68.4 million to 25 banks through auction. SOFAZ promises to continue selling currency through the CBA auctions………………………………………..Full Article: Source

Putin’s $50 Billion Oil Cache Gives Russia Luxury to Ignore ECB

Posted on 15 March 2016 by VRS  |  Email |Print

Russian central bankers have fewer reasons to offer relief to their recession-wracked economy than you might think. Their decision whether to resume an interest rate-cutting cycle this week is almost beside the point as the government of Vladimir Putin lubricates the economy in the background with oil wealth amassed in better times.
The Finance Ministry transferred 2.6 trillion rubles ($37 billion) of accumulated oil riches from the $50 billion rainy-day sovereign wealth fund into the economy last year to cover a fiscal gap. It’s budgeting another 2 trillion-ruble drawdown from the Reserve Fund in 2016………………………………………..Full Article: Source

Angola Cuts 2016 Spending by 20%

Posted on 15 March 2016 by VRS  |  Email |Print

Angola, facing economic and political pressures, has cut spending under its 2016 budget by 20% and is reassuring international investors it can cope with persistently low oil prices, Finance Minister Armando Manuel said Monday.
Manuel declined to comment on speculation that Mr. dos Santos could push for his son, José Filomeno de Sousa dos Santos, the head of Angola’s sovereign-wealth fund, or his daughter, business magnate Isabel dos Santos, to take over………………………………………..Full Article: Source

China’s sovereign wealth fund not included in FX reserves - regulator

Posted on 10 March 2016 by VRS  |  Email |Print

Assets of China’s sovereign wealth fund are not included in the country’s foreign exchange reserves and do not impact China’s reserves, China’s FX regulator said on Wednesday.
China has ample FX reserves, the State Administration of Foreign Exchange said on its official microblog………………………………………..Full Article: Source

PBOC intervening to prop up forex reserves: Daiwa

Posted on 10 March 2016 by VRS  |  Email |Print

China’s central bank is probably using stealth measures to intervene in the foreign-exchange market and shore up its currency reserves, according to Daiwa Capital Markets Inc. The People’s Bank of China (PBOC) might have bought foreign currency from local banks, used the forwards market to prop up the yuan and asked the nation’s sovereign wealth fund to liquidate overseas assets, Daiwa analysts Kevin Lai and Junjie Tang wrote in a note on Tuesday.
China’s State Administration of Foreign Exchange (SAFE) yesterday said on its microblog that assets of the nation’s sovereign wealth fund, China Investment Corp, are not included in the country’s foreign-exchange reserves. SAFE, which did not name Daiwa, said its reserves are ample………………………………………..Full Article: Source

Azerbaijani banks buy $50M from State Oil Fund

Posted on 08 March 2016 by VRS  |  Email |Print

The State Oil Fund of the Republic of Azerbaijan (SOFAZ) sold $49.7 million to 28 local banks through the auction held by Azerbaijan’s Central Bank (CBA) March 7, SOFAZ said March 7. SOFAZ offered $50 million for sale through the auction.
Thus, SOFAZ will continue selling foreign currency through auctions in 2016. The foreign currency is sold as part of SOFAZ’s transfers to the Azerbaijani state budget, which are envisaged to stand at 7.615 billion Azerbaijani manats in 2016. SOFAZ was established in 1999 with assets of $271 million………………………………………..Full Article: Source

Kingdom’s credit profile ‘fundamentally solid’

Posted on 08 March 2016 by VRS  |  Email |Print

Saudi Arabian Monetary Agency’s (SAMA) foreign exchange reserves are estimate to reach $500 billion (SR1,874 billion) by the end of 2016, compared to $598 (SR2,241 billion) in January 2016, according to Jadwa Investment.
“This is consistent with our view that the Kingdom will run a budget deficit of SR402 billion, a current account deficit of $72 billion, and total new debt issuance of SR120 billion,” Jadwa’s economic research team said in its latest Monetary and Financial Update………………………………………..Full Article: Source

Norway Taps Its Oil Money ‘Piggy Bank’ to Cope With Economic Downturn

Posted on 08 March 2016 by VRS  |  Email |Print

The Norwegian government has announced that it has made its first withdrawal from the country’s massive $826 billion sovereign wealth fund, which it had set up for a “rainy day,” for the first time since it was set up 20 years ago, in an effort to counter an economic downturn.
Norway’s government has made its first withdrawal from the country’s $826 billion sovereign wealth fund, 20 years after first depositing cash from its vast oil sector into the account. The withdrawal took place in January when 6.7 billion Norwegian kroner ($780 million) was used to pay for public spending, according to the local newspaper Dagens Naeringsliv………………………………………..Full Article: Source

Norway dips into sovereign wealth fund to counter oil rout

Posted on 07 March 2016 by VRS  |  Email |Print

Norway said Friday it had, for the first time, drawn out more cash from its huge sovereign wealth fund in January than it paid in, as the oil-rich nation grapples with plummeting crude prices. “State oil revenues have fallen considerably, and for the first time in a long time have become less than the national budget deficit,” state secretary for finance Paal Bjornestad said in an email to AFP.
The government withdrew in January a net 6.7 billion kroner (713 million euros, $780 million) from the fund — much more than the 4.9 billion kroner forecast last year by the right-wing government for the whole of 2016. The fund was as of early Friday stocked with a total 7.0 trillion kroner………………………………………..Full Article: Source

Norway says made first withdrawal from oil fund in January

Posted on 04 March 2016 by VRS  |  Email |Print

With its economy weakening, Norway’s government made its first withdrawal from the country’s $826 billion sovereign wealth fund in January, 20 years after first depositing cash from its vast oil sector into the account, the finance ministry said.
The finance ministry did not confirm details of the withdrawal, but newspaper Dagens Naeringsliv said 6.7 billion Norwegian crowns ($780 million) had been extracted to pay for public spending. The government, led by Prime Minister Erna Solberg of the Conservatives and Finance Minister Siv Jensen of the smaller Progress Party, had flagged in its October budget that it might make the first withdrawal from the rainy-day fund this year………………………………………..Full Article: Source

How Oil Is Burning a Hole in Asia

Posted on 01 March 2016 by VRS  |  Email |Print

As the price of oil drops, so do the foreign-exchange reserves of those nation’s central banks. That’s an indication that sovereign wealth funds built with petrodollars aren’t investing much lately. In fact, they’re selling. Such sovereign wealth funds are, naturally, key buyers of sukuk, or Islamic bonds.
After decades of buying, sovereign wealth funds globally hold more than $3 trillion of stocks. According to a report released earlier this month by the Las Vegas-based Sovereign Wealth Fund Institute, some $404.3 billion of that may be withdrawn this year if crude stays between $30 to $40 a barrel………………………………………..Full Article: Source

110 Billion Decline in Petroleum Revenues of Norway

Posted on 01 March 2016 by VRS  |  Email |Print

General government surplus is estimated at NOK 180 billion in 2015. Due to a substantial decrease in petroleum revenues, this is close to NOK 100 billion NOK lower than the previous year. Petroleum revenues totalled NOK 184 billion in 2015, according to preliminary figures.
General government revenue excluding petroleum is calculated at slightly less than NOK 1 500 billion in 2015 – an increase of almost 7 per cent from 2014. Income from interest and dividends in the Government Pension Fund Global, as well as taxes from households and companies in Mainland Norway, were contributing factors to this………………………………………..Full Article: Source

Saudi c.bank net foreign assets fall 2.4 pct in January

Posted on 29 February 2016 by VRS  |  Email |Print

Net foreign assets at Saudi Arabia’s central bank dropped 2.4 percent from the previous month to 2.23 trillion riyals ($594.6 billion) in January, central bank data showed on Sunday.
Assets fell 18.2 percent from a year earlier to their lowest level since late 2012. They reached a record high of $737 billion in August 2014 before starting to shrink. The central bank, which acts as Saudi Arabia’s sovereign wealth fund, has been drawing down its assets to cover a huge state budget deficit caused by low oil prices………………………………………..Full Article: Source

Norway Central Bank Chief Warns on Oil Wealth as Coffers Raided

Posted on 22 February 2016 by VRS  |  Email |Print

Norway’s central bank governor stepped up his warning on excessive use of the nation’s oil income as he predicted the government may need to withdraw almost $10 billion from its massive wealth fund this year.
“The fall in oil prices will reduce Norway’s national wealth,” Norges Bank Governor Oeystein Olsen said Thursday in his annual speech in Oslo. With the $810 billion fund’s era of growth behind it and returns ahead uncertain amid a slowing global economy, “increased spending is not a viable path to follow.”……………………………………….Full Article: Source

Norway to tap rainy day fund

Posted on 19 February 2016 by VRS  |  Email |Print

Norway’s central bank can continue to cut interest rates and the government should use short-term fiscal spending to lift the economy as the boom of the last two decades grinds to a halt, the country’s central bank chief said. He also said more than $9 billion would be taken from Norway’s sovereign wealth fund this year, the first net withdrawal from the rainy day account.
Economic growth in Norway, Western Europe’s top oil and gas producer, hit a six-year low in 2015 while unemployment rose to a 10-year high as the price of crude tumbled, Governor Oeystein Olsen said in his annual policy address to business leaders, politicians and academics………………………………………..Full Article: Source

SOFAZ not plans to up gold reserves

Posted on 10 February 2016 by VRS  |  Email |Print

Azerbaijan’s state oil fund SOFAZ has no plans to increase its gold reserves in 2016, a source in the Fund told Trend. Currently, SOFAZ’s gold reserves portfolio includes 30,175 kilograms of gold, which accounts for about 3.5 percent of total assets.
“Under SOFAZ’s funds management rules, the portion of gold reserves in total assets shouldn’t exceed the five percent limit of the fund’s investment portfolio,” the source said, adding that the issue is not in the agenda of the Fund. The Fund recently started investing in real estate funds, as the share of investments that can be made in real estate has been increased from 5 to 10 percent………………………………………..Full Article: Source

SOFAZ refuses to transfer its gold reserves into other assets

Posted on 04 February 2016 by VRS  |  Email |Print

Azerbaijan’s state oil fund SOFAZ is not planning to transfer its gold reserves into other assets. SOFAZ buys gold not for the sake of purchase or other speculative purposes but for strategic purposes, the Fund told Report.
The investment strategy of SOFAZ presupposes that up to 5 percent of total cost of investment portfolio may be invested in gold. The amount of SOFAZ gold assets was 30,175 kg or 970,146 troy ounces by late 2015. The Fund further noted that sale of the gold reserves or its replacement with other assets is not in the agenda of SOFAZ………………………………………..Full Article: Source

Alaska still richest oil economy on earth, even with big budget deficit

Posted on 28 January 2016 by VRS  |  Email |Print

Alaska may have a nearly $4 billion budget deficit looming over its head, but a Harvard researcher brought to testify before the Alaska Legislature said we’re still better off than most other places.
“Alaska is the richest country in the world based on sovereign wealth fund assets,” Malan Rietveld told the legislature Tuesday. Rietveld misspoke about Alaska being a country, but was right about Alaska’s big oil money investments………………………………………..Full Article: Source

Azerbaijan’s anti-crisis defences larger than dwindling reserves imply

Posted on 27 January 2016 by VRS  |  Email |Print

Azerbaijan’s $34 billion sovereign wealth fund means the energy-rich former Soviet republic has significantly stronger anti-crisis defences than its dwindling central bank reserves imply. But the impregnability of those defences could yet be tested as global oil prices show no sign of staging a lasting recovery from multi-year lows under $30 a barrel.
Azerbaijan let its manat currency float in late December, triggering losses of around a third against the dollar, after burning through $9 billion of its official reserves in 2015 to defend a currency peg. It also started dollar sales from its state oil fund, called SOFAZ, as an emergency measure………………………………………..Full Article: Source

Azerbaijan’s Reserves Rapidly Evaporating Amid Fiscal Storm

Posted on 26 January 2016 by VRS  |  Email |Print

With oil prices now barely above $31 per barrel, Azerbaijan’s energy-export economy is taking on lots of water. And what is worse, Baku’s lifeboat, the State Oil Fund of Azerbaijan, appears to be in danger of foundering. The State Oil Fund of Azerbaijan (SOFAZ), a critical source of funding for Azerbaijan’s state budget, needs help, too, some observers say. The question is what, or who can supply it.
Established in 1999, at the dawn of Azerbaijan’s oil boom, the extra-budgetary fund was designed to safeguard and invest for the public good the windfall profits earned from Azerbaijan’s oil and gas exports………………………………………..Full Article: Source

Azerbaijan considers tighter currency controls to staunch losses

Posted on 19 January 2016 by VRS  |  Email |Print

Azerbaijan’s President Ilham Aliyev has ordered measures to support the economy and ailing manat currency, including a possible tightening of currency controls, help for banks, and a sell-off of state assets, state television reported on Monday.
The State Oil Fund of Azerbaijan (SOFAZ) sold a total of $193.9 million on the foreign exchange market on Monday in a bid to prop up the weakening manat. It was the fund’s third intervention this year. It has sold $539.9 million in total so far, while $100 million was sold by the country’s central bank……………………………………….Full Article: Source

HKMA Pledges to Keep Currency Peg: These Are Some Alternatives

Posted on 18 January 2016 by VRS  |  Email |Print

Speculation is mounting that the Hong Kong dollar’s 32-year-old peg to the greenback will end as tightening U.S. monetary policy and an economic slump in China put the link under pressure. The city’s currency on Friday fell to a four-year low as concern about China’s economy fueled a selloff in the nation’s stock market.
The Hong Kong Monetary Authority a day earlier reaffirmed its commitment to the existing exchange-rate mechanism, while Chief Executive Norman Chan said last month the local dollar’s peg is the cornerstone of financial and monetary stability in the city and there are no plans to amend it………………………………………..Full Article: Source

Azerbaijani State Oil Fund to sell $200M more to local banks

Posted on 15 January 2016 by VRS  |  Email |Print

The State Oil Fund of the Azerbaijan Republic (SOFAZ) will sell $ 200 million more to local banks through the auctions of the Central Bank Jan. 15, SOFAZ said Jan. 15. Thus, SOFAZ will continue selling foreign currency in 2016.
The first auction, held by using a new mechanism - through regular auctions of the Central Bank, was held Jan. 13. SOFAZ sold $ 200 million to 32 local banks through the auctions of the Central Bank. The foreign currency is sold as part of SOFAZ’s transfers to the state budget of Azerbaijan, which are envisaged in the amount of six billion manat in 2016………………………………………..Full Article: Source

Azeri oil fund SOFAZ sells $200 mln on FX market

Posted on 14 January 2016 by VRS  |  Email |Print

The Azeri state oil fund SOFAZ said on Wednesday it had sold $200 million on the forex market, a move to support the country’s weakening national currency. “The Azeri oil fund has started selling foreign currency again this year. The first auction took place today. $200 million was sold and bought by 32 banks,” SOFAZ said in a statement.
The $34 billion SOFAZ sovereign wealth oil fund holds proceeds from oil contracts, oil and gas sales, transit fees and other revenue. It uses income from investments to pay for social spending and infrastructure projects………………………………………..Full Article: Source

Kazakh sovereign wealth fund is latest victim of oil price fall

Posted on 11 January 2016 by VRS  |  Email |Print

Kazakhstan’s $64.2bn sovereign wealth fund has become the latest victim of the collapse in the price of oil and is predicted to be completely drained by 2026. Billions of dollars are expected to be pulled from global asset managers as a result.
The assets managed by the national fund in Kazakhstan, which relies heavily on oil to finance its economy, have fallen by 16 per cent to $64.2bn in just 18 months. During the same period, the price of oil has plummeted to $33 from $115 a barrel………………………………………..Full Article: Source

Kazakhstan’s $64 Billion Question: Will Oil Fund Disappear?

Posted on 11 January 2016 by VRS  |  Email |Print

Kazakhstan’s $64 billion oil fund could run out of money within six or seven years as slumping oil prices cut revenue and the government spends its savings, a central-bank official said.
The so-called National Fund has fallen 17% from its peak of $77 billion in August 2014. The government is drawing as much as $9.5 billion a year from it for spending. Kazakh politicians and the central bank need to cut spending, boost tax collection and invest the fund in higher-yielding assets such as private equity, according to Berik Otemurat, chief executive of the National Investment Corp., a unit of the central bank created in 2012………………………………………..Full Article: Source

Biggest no longer best in Qatar’s strategy for LNG wealth

Posted on 07 January 2016 by VRS  |  Email |Print

Qatar took 10 years to become the fuel’s largest producer in 2006 and even less time after that to build a $250-billion (U.S.) sovereign wealth fund. With a population of 2.4 million people, it tapped the third-biggest gas reserves to become the wealthiest nation per capita.
Qatar’s gross domestic product in 2014 was $134,182 for each resident compared with $49,537 in neighbouring Saudi Arabia, with a population 12 times as large, according to the World Bank………………………………………..Full Article: Source

No changes in SOFAZ investment portfolio foreign currency structure

Posted on 04 January 2016 by VRS  |  Email |Print

The State Oil Fund of Azerbaijan (SOFAZ) hasn’t changed the foreign currency structure of its investment portfolio for 2016. On Dec.29, the president of Azerbaijan issued a decree on the approval of main directions (of the program) of using SOFAZ funds for 2016.
Thus, 50 percent of assets may be placed in US dollars, 35 percent - in euros, five percent - in British pounds, and the remaining 10 percent - in other currencies………………………………………..Full Article: Source

Saudi central bank’s foreign assets drop 1.9 pct in November

Posted on 29 December 2015 by VRS  |  Email |Print

Net foreign assets at Saudi Arabia’s central bank fell 1.9 percent in November from the previous month to 2.356 trillion riyals ($628 billion) as the government liquidated assets to cover a huge budget deficit caused by low oil prices.
Assets dropped 14.2 percent from a year earlier to their lowest level since October 2012, central bank data showed on Monday. They reached a record high of $737 billion in August last year before starting to shrink. The central bank acts as Saudi Arabia’s sovereign wealth fund and has born the brunt of financing the deficit, which totalled 367 billion riyals this year, according to a Finance Ministry statement on Monday………………………………………..Full Article: Source

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