US stimulus plan seen having positive impact on Arab world

US stimulus plan seen having positive impact on Arab world -- "Higher oil prices will mean larger surplus dollars that seek investment outlets including equity markets," he said.
Abdul Jalil Mustafa-  Nov 4, 2010-US stimulus plan seen having positive impact on Arab world Arab News Nov. 5, 2010 (McClatchy-Tribune Regional News delivered by Newstex) -- AMMAN -- The Arab countries, particularly in the oil-rich Gulf region, stand to benefit from the US Federal Reserve's quantitative monetary easing, economists and financial analysts said Thursday. They expected the US stimulus plan to give a hand to struggling Middle East equity prices and push up oil prices on the world market, enabling Arab oil producers to collect larger surplus petrodollars. The US central bank on Wednesday decided to buy 600 billion dollars in additional bonds to boost the sluggish economy. "I believe the US step will have a positive impact on both Arab stocks and oil prices in the short term," Jawad Anani, a prominent Jordanian economic expert and columnist, told Arab News. "In the medium term, the US stimulus plan will push up both prices and interest rates," said Anani, who runs an economic consultancy bureau in Amman. However, Anani expected the Fed's quantitative monetary easing to put downward pressure on the dollar, due to the large quantities of dollars which will be available at the world market by mid-2011. "This means that Middle East currencies, particularly those pegged to the greenback, will come under devaluation pressures," Anani said. Financial analyst Wajdi Makhamreh expected the new US stimulus to leave a "positive sentiment" in Arab countries, particularly in the Gulf states. Makhamreh, CEO of the Amman-based Noor Investments brokerage, said the Middle East petrochemical sectors and governments would be the major beneficiary in both the short and long terms. "Any gains scored by the Wall Street and other global markets as a result of the US monetary easing will have a positive psychological impact on Arab markets, particularly in the Gulf Cooperation Council states, which have direct affiliations with US and European markets," Makhamreh said. "Higher oil prices will mean larger surplus dollars that seek investment outlets including equity markets," he said. Newstex ID: KRTB-1066-50430317

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