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Foreign direct investment in Saudi Arabia reaches $1.4 bln in Q2 2021: Ministry

Foreign direct investment (FDI) in Saudi Arabia has reached $1.4 billion in the second quarter of 2021, the investment ministry said on Sunday.

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FDI rose 56 percent year on year, the ministry added.

The Kingdom has pushed to increase FDI in recent years as part of the Vision 2030 plan to end reliance on fossil fuels.

Riyadh is aiming for $100 billion in annual FDI by 2030.

To be consistent with its GDP target, the $100 billion goal means the economy would have to expand by 150 percent to reach $1.75 trillion by 2030.

Saudi authorities say much of the plan is still in its initial phases, which consist mostly of regulations and planning, and money will increasingly start pouring into the kingdom over the next few years.

Saudi Investment Minister Khalid al-Falih said the FDI numbers were already improving.

“We are fixing the system, we are preparing the deals, we are engaging companies,” he told Reuters. “A lot of our transactions are being prepared.”

In the first half of 2021 – excluding the leasing of Saudi Aramco's (2222.SE) oil pipelines – FDI rose 33 percent from the same period in 2020 and was already above targets for this year as a whole, he said.

At Saudi Arabia's annual “Davos in the Desert” Future Investment Initiative last month, several memoranda of understanding were signed and a national infrastructure fund was launched.

In a sign of its desire to attract more investors, Saudi Arabia issued a new law decreeing that foreign firms must set up their regional headquarters in the country by the end of 2023, or risk losing out on government contracts.

Saudi authorities announced at the investment forum that they had licensed 44 international companies to set up regional headquarters in the capital Riyadh.

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Russia allows gas flows to Gazprom Marketing & Trading for 90 days

Russia gave permission for natural gas supplies to Gazprom Marketing & Trading Singapore Ltd, part of Gazprom Germania, from Yamal LNG project for 90 days, a government decree showed on Wednesday.
The move comes less than two weeks after the Kremlin said that Russian sanctions imposed on state gas company Gazprom’s former German unit and other entities meant they could not receive gas supplies from Russia.
Germany, Russia’s top client in Europe, in early April transferred Gazprom Germania, an energy trading, storage and transmission business ditched by Russia’s Gazprom, to its energy regulator to ensure energy security.
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Energy ties between Russia and Europe plunged into crisis after Moscow started what it calls “a special military operation” in Ukraine on February 24 and the West responded with sweeping sanctions that put Russia on the brink of recession and a default on external public debt.
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Dieselgate: Volkswagen settles UK emissions class action for £193 million

Volkswagen settled its UK class action lawsuit for £193 million ($242 million) with more than 90,000 drivers impacted by the emissions scandal.

No admissions of liability have been made by Volkswagen and the terms and conditions are confidential, according to a statement from the auto giant.

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A separate contribution toward the claimants’ legal costs and other fees will be made by the company.

Volkswagen alongside law firms Slater & Gordon, Leigh Day and PGMBM, who were representing the claimants in the case, said Wednesday that both sides had come to the out of court settlement and as many as 91,000 claims had been resolved.

The automaker has faced numerous lawsuits in what’s been dubbed the ‘dieselgate litigation’ after the use of the software designed to lower emissions when being tested was exposed as fraudulent by a US investigation in 2015.

That led to a recall throughout Europe that cost the company billions of euros and massive fines from European regulators.

“The settlement is another important milestone as the Volkswagen Group continues to move beyond the deeply regrettable events leading up to September 2015,” Philip Haarmann, chief legal officer of Volkswagen, said.

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Turkey’s lira falls beyond 16.3 vs dollar as FX need grows

Turkey’s lira slid beyond 16.35 against the dollar on Wednesday to its weakest level since the depths of a December crisis, as analysts questioned authorities’ ability to continue steadying it without new sources of foreign currency.

The lira has weakened 9 percent this month and 19 percent this year, despite months of costly interventions in which the central bank has sold dollars to soften the blow and the state has backed an FX-protected deposit scheme.

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The currency dipped as far as 16.3515 and stood at 16.3300 at 1257 GMT, after a 1 percent fall against the greenback.

On Dec. 20, the emerging market currency hit a record low of 18.4 after a series of unorthodox interest rate cuts which pushed it down 44 percent on the year as a whole. In response, inflation has since leapt to 70 percent in April.

The lira held mostly steady early this year due to the government’s scheme, known as KKM, that protects some depositors against lira depreciation. The central bank has also sought to meet the market’s foreign-currency needs since the December crisis.

But those efforts to keep the currency steady have taken their toll on the Central Bank of the Republic of Turkey’s (CBRT) already depleted reserves, according to bankers.

“We estimate that the CBRT’s FX sales exceeded $30 billion in the January-April period,” said economist Haluk Burumcekci, adding that balance sheet data showed sales were more intense in May.

Adjusted for swaps, the bank’s net international reserves fell by another $7.7 billion after the first 20 days of May, he said.

Data last Friday showed the central bank’s net international reserves dropped some $3.5 billion to $11.53 billion in the week to May 13. Bankers calculate that they fell to $10 billion or less in the following week.

Economists say rate hikes could help relieve both the lira and reserves. But President Tayyip Erdogan’s opposition to policy tightening has left few expecting a turnaround any time soon, including when the bank meets on Thursday.

Robin Brooks, chief international economist at the Institute of International Finance, said “intense depreciation pressures” are rising. “We think risk of a severe overshoot – much like in 2021 – is high, given rising global recession risk and the big credit expansion in Turkey,” he said on Twitter.

The war in Ukraine began harming the lira in March as Western sanctions on Russia sent energy prices soaring, pushing up Turkey’s already hefty import bill and fueling inflation.

On Tuesday, the cost of insuring Turkey’s debt against default shot to its highest since the 2008 global financial crisis. IHS Markit data showed 5-year credit default swaps (CDS) had risen to 730 basis points from 704 points.

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