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Middle East Daily
SOOJIN KIM
Research Analyst
DIFC Branch – Dubai
T: +44(4)387 5031
E: soojin.kim@ae.mufg.jp
MUFG Bank, Ltd. and MUFG Securities plc
A member of MUFG, a global financial group
Middle East Daily
COMMODITIES / ENERGY
Oil retreat amid supply uncertainty and US tariff tensions. Oil prices fell after a four-day rally as traders awaited clearer signals on supply trends and digested wider market volatility triggered by President Trump’s dismissal of Fed Governor Lisa Cook. Brent slipped toward USD68/b, while WTI traded below USD65/b, pressured by concerns over global demand and the broader risk-off sentiment in equities. Adding to uncertainty, the US Department of Homeland Security issued a draft notice to double tariffs on all Indian imports, as part of US’s push to penalise India for continuing purchases of Russian crude. While such measures could temporarily disrupt Russian flows, crude markets remain overshadowed by OPEC+ supply increases and an International Energy Agency warning of a record surplus next year as demand growth slows. Looking ahead, the combination of trade frictions, geopolitical risks, and signs of a softer US economy is likely to keep oil trading in a narrow range, with short-term volatility tied to tariff decisions and ceasefire negotiations.
Gold gains on Fed independence concerns after Trump ousts Governor Cook. Gold rose after US President Trump announced the removal of Fed Governor Lisa Cook, intensifying worries over the central bank’s independence and boosting haven demand. Gold climbed as much as 0.6% in early Asian trading, supported by a weaker dollar and falling treasury yields. Trump’s move follows his repeated calls for lower interest rates, which the Fed has resisted so far in 2025 amid tariff-driven inflation risks, though Chair Powell recently hinted at a possible cut in September. Traders are also watching upcoming US consumption data, expected to show the fastest annual pace in five years, which could complicate the Fed’s path on easing.
MIDDLE EAST - CREDIT TRADING
End of day comment – 22 August 2025. Powell stirred markets up. A weaker morning turned a bit in a price discovery process in the afternoon. What remains is that it was another low volume day overall and the market might take Monday/Tuesday to reprice further. However the morning was weak, and whilst we saw better buyers post Powell and the street bidding bonds up, it will have to be seen if the market will chase these lower yield levels. Closing cash anywhere from 0.125/0.5pt higher and +2/5bp in spreads. What is clear in any case is that the new issue window will now be wide open and it feels like the market is pre-positioning for it in some names which might explain the relative weakness this week against macro markets.
MIDDLE EAST - MACRO / MARKETS
Turkey ends FX-protected deposit scheme and injects market liquidity. Turkey has officially ended its FX-Protected deposit scheme, a costly mechanism once used to shield lira savers from currency depreciation, effective August 23, 2025. Although at its peak this program covered USD140bn in deposits, it had shrunk to just USD11bn by the time of its termination. The scheme, which cost the government an estimated USD60bn, was designed to shield savers from lira volatility but had become a heavy fiscal burden. Existing account will remain active until maturity, though new openings and renewals are longer allowed, and the government has tightened rules on reserve requirements and commission practice. To smooth the transition, the Central Bank of Turkey (CBRT) injected TRY100bn into the financial system via a one-week repo operation that drew TRY258.9bn in bids, underscoring banks’ elevated short-term liquidity needs as the policy shift took effect. The end of this program marks a decisive move toward orthodox monetary policy, reducing reliance on costly and distortionary mechanisms while aiming to restore confidence in economic governance. Going forward, the CBRT will need to carefully balance tight monetary conditions with timely liquidity support, as persistent inflationary pressures, lira weakness, and external financing needs continue to test policy credibility and the broader economic stability.
Global sukuk market resilient and expanding in H1 2025. Global sukuk markets remained resilient in the first half of 2025, with Fitch Ratings reporting that most hard-currency sukuk listed on international exchanges were investment grade, carried a stable outlook, and saw no defaults. The London Stock Exchange retained its leadership, hosting over 40% of global sukuk listings, followed by Euronext Dublin, the Frankfurt Stock Exchange, and Nasdaq Dubai, all of which provide clear framework for issuance and trading. Fitch-rated sukuk globally surpassed USD210bn by end-1H25, up 16% y/y, with around 80% investment grade. ESG sukuk, concentrated in Europe and Dubai, also showed strong ratings profiles. Regionally the GCC drove issuance, with Middle Easter issuers raising USD65bn on the LSE in the first seven months alone, while Nasdaq Dubai, listed 87% of its dollar debt in sukuk format as part of the UAE’s boarder Islamic finance strategy, which targets AED395bn (USD107.5bn) in sukuk listings by 2031. Overall, global outstanding
