On Friday, the Japanese yen weakened against the dollar following a Reuters report suggesting that the Bank of Japan (BoJ) is likely to maintain its key yield control policy unchanged in the upcoming week’s meeting, amidst a busy schedule of central bank meetings in the U.S. and Europe.
BoJ policymakers reportedly prefer to gather more data to ensure sustained wage and inflation growth before considering any policy changes. However, there is no consensus within the central bank, making the decision a potentially close call.
While market expectations anticipate the BoJ to maintain yield curve control and interest rates unchanged, there remains a possibility of surprises. The recent data showed Japan’s core inflation at 3.3%, surpassing the BoJ’s 2% target for over a year.
As a result of these developments, the dollar strengthened by 1.24% against the yen, reaching the highest level since July 10. Investors speculate whether the BoJ will tweak yield curve control during the July 27-28 meeting, given the country’s higher-than-expected inflation.
Furthermore, central bank meetings from the U.S. and Europe are also scheduled next week, with expectations of rate hikes by both the Federal Reserve and the European Central Bank by 25 basis points. Investors will closely watch comments from Fed Chair Jerome Powell for clues on the future rate path.
The dollar index, tracking the greenback against major peers, rose 0.30%, experiencing its most substantial weekly gain in two months. Meanwhile, the euro declined slightly against the dollar, and the pound extended its losing streak for the sixth consecutive day, facing its most significant weekly fall since early February.
Emirates and SriLankan Airlines Forge Interline Agreement for Seamless Travel Connectivity
Emirates and SriLankan Airlines have recently entered into a reciprocal interline agreement, aiming to enhance connectivity and convenience for passengers of both carriers. This strategic partnership facilitates seamless travel experiences, allowing passengers to access additional destinations on each other’s networks via Colombo and Dubai, all while utilizing a single ticket and enjoying the ease of baggage transfers.
For Emirates passengers, this interline collaboration provides access to a network of 15 regional destinations operated by SriLankan Airlines through Colombo. This expanded network includes new Indian destinations such as Madurai and Tiruchirapally, along with Gan Island in the Maldives. Furthermore, travelers can explore Far East and South Asian destinations, including Cochin, Chennai, Bangalore, Hyderabad, Malé, Bangkok, Kuala Lumpur, Singapore, Jakarta, Guangzhou, Seoul, and Tokyo, as detailed in a press release.
SriLankan Airlines’ customers will also reap the benefits of this partnership, gaining access to Emirates’ extensive global network. They can conveniently connect to 15 cities across the Middle East, Africa, Russia, and the United States, all operated by Emirates beyond Dubai. Notable destinations include Bahrain, Amman, Dammam, Medina, Cairo, Muscat, Nairobi, Moscow, Tel Aviv, as well as several key U.S. cities like New York JFK, Los Angeles, San Francisco, Chicago, Boston, and Houston.
Travelers can already book their itineraries through various channels, including emirates.com, srilankan.com, and preferred online and offline travel agencies. In addition, Emirates has expanded its service to Dhaka, now offering 21 weekly flights and convenient connections to nearly 140 destinations spanning six continents.
Turkey’s Central Bank Set to Raise Interest Rates Amidst Policy Reversal
Turkey’s central bank is anticipated to implement a significant increase in its key interest rate for the second consecutive month, signaling a shift towards conventional economic policies by President Recep Tayyip Erdogan. This reversal in policy direction followed Erdogan’s challenging re-election in May and the country’s severe economic crisis, largely attributed to his unconventional belief that high interest rates fuel inflation.
Erdogan’s previous stance, advocating low-interest rates to spur economic growth, has been abandoned in favor of the advice from his new economic team comprising former Wall Street executives and respected technocrats, who have emphasized the necessity of substantially raising interest rates to avert a systemic crisis. The policy rate has already surged from 8.5 percent during Erdogan’s re-election to 25 percent last month, and another substantial increase is expected. Despite these changes, concerns linger as interest rates still remain considerably below the level required to combat rising consumer prices, potentially causing an overheating economy.
In a brighter outlook for Turkey, Fitch Ratings has upgraded the country’s outlook from “negative” to “stable” due to the recent policy shift, though it cautioned about uncertainty surrounding the effectiveness and duration of the inflation-control measures, partly influenced by political considerations. Finance Minister Mehmet Simsek, credited with influencing Erdogan’s change in approach, anticipates keeping interest rates elevated until the middle of the next year.
However, a significant challenge lies in unwinding the costly bank deposit support scheme, which compensates for the depreciation of the Turkish lira against foreign currencies. Scaling back this system cautiously is essential, as abrupt changes could prompt depositors to flock to the US dollar and further depreciate the lira. Emerging markets economist Timothy Ash suggests that significantly higher policy rates, ideally positive in real terms, may be a solution, potentially requiring external support such as an IMF program. Nevertheless, Erdogan has consistently rejected seeking assistance from the International Monetary Fund.
Norway’s Innovative Solar Panel Project Lights Up Arctic Darkness
Norway has initiated a groundbreaking project to install solar panels in its Svalbard archipelago, a region characterized by round-the-clock darkness throughout the winter season. This pilot project aims to facilitate the transition to green energy for remote Arctic communities.
Positioned neatly in six rows within a field, a total of 360 solar panels will begin generating electricity for the Isfjord Radio, a former shipping radio station converted into a base camp for tourists. The Svalbard archipelago, also known as Spitsbergen, is situated approximately 1,300 kilometers (800 miles) from the North Pole and is accessible primarily by boat or helicopter, weather permitting.
Mons Ole Sellevold, a renewable energies technical adviser at the state-owned energy group Store Norske, described this project as what they believe to be the world’s northernmost ground-mounted photovoltaic (PV) system. It is the first instance of deploying solar panels at this scale in the Arctic. Another 100 solar panels have been placed on the radio station’s roof, aiming to fulfill around half of the station’s electricity requirements while reducing its CO2 emissions.
During the summer, the region experiences abundant sunlight, featuring a “midnight sun” that never sets. Solar panels in the Arctic also benefit from the “albedo” effect, where snow and ice reflect sunlight, as well as low temperatures that enhance their efficiency. In contrast, the region is immersed in complete darkness from early October until mid-February during the winter, making it impractical to entirely eliminate fossil fuels at Isfjord Radio.
Store Norske is exploring additional alternatives, including wind farms, to further the station’s transition to green energy. This initiative is driven by environmental concerns and economic factors, given the cost and logistical challenges of diesel usage in the remote region. Solar panels are cost-effective, require minimal maintenance, and have long lifespans.
Moreover, this installation serves as a pilot project to evaluate whether this technology can be adopted by approximately 1,500 other Arctic sites or communities lacking access to traditional electricity grids. These regions also require a transition to sustainable energy sources.
The overarching goal is to establish Isfjord Radio as a testing ground to develop Arctic-proven technology that can subsequently be applied in similar locations. The Arctic has experienced nearly four times the rate of warming compared to the rest of the world over the past four decades, leading to accelerated ice melting and ecosystem disruptions. This initiative seeks to address environmental challenges while providing a model for sustainable energy in remote Arctic communities.
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