Egypt’s pound hit a record low against the dollar on Wednesday after its central bank hiked interest rates by 600 points and devalued the currency.

The steps were meant to facilitate an agreement with the International Monetary Fund, which is expected to confirm the extension of its current $3 billion financial support package for Egypt.

The Egyptian pound was trading at roughly 50 to the dollar following the announcement, from 30.85 previously, according to LSEG data. The country’s key interest rate now stands at 27.25%, the central bank said Wednesday.

The development “shows that policymakers are committed to the turn back toward economic orthodoxy. This is likely to pave the way for an IMF deal within hours,” James Swanston, a Middle East and North Africa economist at London-based Capital Economics, wrote in a research note.

“This appears to be a positive step for Egypt on the path out of its current crisis,” he wrote.

This is a breaking news story, and it is being updated.

Israel’s gross domestic product shrank by nearly 20% in the fourth quarter of 2023, according to official figures.

The contraction was significantly larger than expected — analysts predicted a contraction of around 10% — and reflects the toll of the country’s war against Hamas in Gaza, now entering its fifth month.

The economic data out Monday “pointed primarily to a contraction in private sector consumption and a deep contraction in investment, especially in real estate,” analysts at Goldman Sachs wrote in a research note.

“The deep GDP contraction occurred despite a strong surge in public sector consumption as well as a positive net trade contribution, with the decline in imports outpacing the decline in exports.”

Official figures showed a 26.9% quarter-on-quarter annualized drop in private consumption, and fixed investment plummeting by nearly 68% as residential construction ground to a halt amid a shortage of both Israel workers due to military mobilization and Palestinian workers as the latter group have been mostly barred from entering Israel since Oct. 7.

Before then, more than 150,000 Palestinian workers from the occupied West Bank entered Israel daily for work in a range of sectors, predominantly in construction and agriculture.

Israel’s GDP contraction “was much worse than had been expected and highlights the extent of the hit from the Hamas attacks and the war in Gaza,” Liam Peach, senior emerging markets economist at London-based Capital Economics, said in an analysis note.

“While a recovery looks set to take hold in Q1, GDP growth over 2024 as a whole now looks likely to post one of its weakest rates on record.”

Israel’s high-tech economy is particularly impacted by the fact that it’s mobilized 300,000 of its men and women as military reservists to deploy in both Gaza and on its northern border with Hezbollah in Lebanon.

The mobilization was triggered by the terror attack of Oct. 7 led by Palestinian militant group Hamas that killed roughly 1,200 people in Israel. Israel’s subsequent offensive against the Gaza strip and relentless bombing campaign has killed more than 28,000 people in the blockaded territory, according to Gaza’s Hamas-run health ministry.

In January, Turkish inflation logged its biggest monthly jump since August with a 6.7% rise from December, while year-on-year inflation hit nearly 65%, according to the Turkish central bank’s figures released Monday.

The consumer price index for the country of 85 million people increased by 64.86% annually, up slightly from 64.77% in December. Sectors with the largest monthly price rises were health at 17.7%, hotels, cafes and restaurants at 12%, and miscellaneous goods and services at just more than 10%. Clothing and footwear was the only sector showing a monthly price decrease, with -1.61%.

Food, beverages and tobacco, as well as transportation, all increased between roughly 5% and 7% month on month, while housing was up 7.4% since December.

The monthly rises, economists say, stem from a significant increase to the minimum wage that Turkey’s government mandated for 2024. The minimum wage for the year has risen to 17,002 Turkish lira ($556.50) per month, a 100% hike from January 2023.

Turkey’s central bank has been on a prolonged mission to bring down inflation, implementing eight consecutive interest rate hikes since May 2023, for a cumulative 3,650 basis points. The bank’s latest increase, on Jan. 25, raised the key interest rate by 250 basis points to 45%.

The more conventional approach follows several years of unorthodox policy during which Ankara refused to tighten rates despite ballooning inflation. The lira is down 38% against the dollar year to date and has lost more than 80% of its value against the greenback over the last five years. 

The latest inflation print comes just days after Turkey’s central bank governor, Hafize Gaye Erkan, announced her resignation, saying Friday that the decision was due to a “reputation assassination” campaign and the need to protect her family.

Erkan became the bank’s central governor by presidential decree in June 2023, and led — along with Turkish Finance Minister Mehmet Simek — the turnaround in Turkey’s monetary policy and subsequent series of interest rate rises.

She was replaced on Saturday by the central bank’s deputy governor, Fatih Karahan, who spent nearly a decade as an economist at the Federal Reserve Bank of New York.

January’s inflation figures “highlight the continued strength of services inflation and may put pressure on new central bank governor Karaham to restart the central bank’s tightening cycle,” Liam Peach, senior emerging markets economist at London-based Capital Economics, wrote in a research note.

“The fact that inflation didn’t rise significantly more than expected in January is positive given the uncertainty about the impact of the minimum wage hike,” Peach wrote. “But the figures present a small setback to the disinflation process and highlight the continued strength of services inflation. For now, the central bank’s end-year inflation forecast of 36% remains intact.”  

The immediate ban on nearly all Palestinian workers to enter Israel following the Hamas-led terror attack of Oct. 7 has dealt a shock to the Israeli economy, the country’s central bank chief said at the World Economic Forum in Davos.

“We’re working in a very uncertain environment, as you can tell, and I would say there are two types of shocks: there is a supply shock,” Bank of Israel governor Amir Yaron told CNBC’s Dan Murphy. “And it’s primarily in the construction industry where … a third of that industry is Palestinians from the West Bank, and now they’re not coming in to work.”

“It’s also affecting agriculture, where they are in, and there are other foreign workers,” Yaron said. “So that will take a little bit, that’s a negative supply shock, and it could affect prices going up towards the second half of the year.”

He said that the bank must monitor these price developments, adding, “On the other hand, we’ve seen negative demand shock, obviously in a war. And so far that negative demand shock has been the most dominant one. And we will have to monitor that as well, as we go forward with how we are thinking about continuing with monetary policy.”

Before Oct. 7, more than 150,000 Palestinian workers from the occupied West Bank entered Israel daily for work in a range of sectors, predominantly in construction and agriculture.

The ban on most of these workers returning to their employment in Israel has dramatically hurt the economy of the West Bank. It has also contributed to anger and rising unrest over Israel’s decades-long occupation and its relentless bombardment of the Gaza Strip, which Palestinian health authorities say has killed more than 24,000 people. The Israeli offensive began after Hamas militants from Gaza launched a surprise attack on southern Israel that killed some 1,200 people and took another 240 hostage, of which 136 people remain in captivity.

In late December, Israel’s finance ministry warned that the ban on Palestinian workers could cost Israel’s economy billions of shekels per month.

“We calculated what the economic damage would be if Palestinians do not go to work…and it is estimated at approximately NIS 3 billion ($830 million) per month,” a representative of the finance ministry told Israel’s parliament, the Knesset, at the time, according to local media.

Business and factory owners in December pressured lawmakers to allow between 8,000 and 10,000 Palestinian workers to return to their jobs in Israeli settlements and businesses in the West Bank.

In comments reported by the Times of Israel, Raul Sargo, president of the Israel Builders Association, had told the Knesset: “We are in very dire straits … The industry is at a complete standstill and is only 30% productive. Fifty percent of the sites are closed and there is an impact on Israel’s economy and the housing market.”

Israel’s agriculture sector is also heavily dependent on foreign labor, in particular workers from Thailand — at least 10,000 of whom have left the country after the October attack, during which many Thai farm workers were killed and taken hostage.

Asked about what tools the bank has at its disposal to respond to a potential expansion of the war to Israel’s northern border with Lebanon, Yaron stressed the focus on preventing financial instability.

“We all hope it doesn’t happen. In case it does, then your mindset becomes financial stability,” the banker said. “That means the whole view on interest rate process … expansionary monetary policy probably stops, and you use the types of tools we’ve used so far, like the FX or things like that, and we hope we don’t need to go there.”

Yaron added that he was optimistic about his country’s ability to deal with shocks, given its familiarity with wars over the decades.

“I think we still have to remember, Israel is a dynamic economy,” he said. “It’s resilient, it has shown it can bounce back … pretty much over every military event, it has shown that it can come back and grow fast. I would say, actually, Homeland Security, economics has demand for that has grown. And hopefully, if there is a day after in which there’s a better environment with moderate states, those will bring in also new opportunities.”

NEW DELHI — The African Union became the second regional grouping to be admitted to the Group of 20 leading industrialized and developing nations as a full permanent member, Indian Prime Minister Narendra Modi announced Saturday at the start of the two-day G20 leaders’ summit in Delhi.

The widely-anticipated move underscores India’s wide-ranging agenda to elevate the global multilateral forum’s focus on the Global South in its presidency of the G20 this year. The 55-member bloc of African nations joins the European Union as only the second regional organization to become a permanent member of the G20.

“India’s G20 presidency has become a symbol of inclusion with a spirit of together with all, both within and outside the country,” Modi said in his opening remarks, according to a translation provided by the summit organizers. “It is in the spirit of together with all that India proposed permanent membership for the African Union in the G20.”

With an embrace after the announcement, Modi welcomed AU Chairperson Azali Assoumani and offered him a place at the conference table for permanent members of the G20.

This weekend’s agenda includes expediting climate action, mitigating the impact of geopolitics on food and energy security, the provision of more loans to developing nations by multilateral institutions and reforming the world’s debt architecture as well as an international framework for cryptocurrencies.

“This period in the 21st century is the time to give the world a new direction,” Modi said. “It is a time in which age-old challenges are demanding new solutions from us, and therefore it is with a human-centric approach that we must fulfill each of our responsibilities and move forward.”

At a time of shifting global alliances, India is hoping to persuade the Global South that its deepening strategic partnership with the U.S. offers a more viable alternative from food security to debt resolution.

World leaders present in Delhi this weekend include Brazilian President Lula da Silva, Canadian Prime Minister Justin Trudeau, French President Emmanuel Macron, Germany’s Chancellor Olaf Scholz, Japan Prime Minister Fumio Kishida, Saudi Arabia’s Crown Prince Mohammed bin Salman, Turkey’s President Recep Tayyip Erdoğan and U.S. President Joe Biden.

Russian President Vladimir Putin and Chinese President Xi Jinping are conspicuous absentees, with both G20 member states having objected to the wording referring to the war in Ukraine. Russian Foreign Minister Sergey Lavrov and China Premier Li Qiang are representing their respective countries this weekend.

The pair’s absence has sparked fears that a communique binding member states may not be issued at the end of a G20 leaders’ summit — undercutting India’s clout and diminishing his domestic messaging.

“After the Covid pandemic, the world is going through a major crisis, and that is a lack of trust. War has deepened this trust deficit,” Modi said Saturday.

There’s a corner of the market gaining traction among ETF investors, according to The ETF Store’s Nate Geraci.

The firm’s president finds international ETFs are experiencing stronger inflows.

“There is a little bit of performance chasing going on here, because broad international stocks have fairly significantly outperformed U.S. stocks since about the beginning of the fourth quarter of last year,” he told CNBC’s “ETF Edge” this week. “Investors are looking at that performance and perhaps reallocating there.”

BofA Global Research’s latest market data out late this week appears to support Geraci’s thesis. It shows emerging markets are seeing strong inflows so far this year.

According to the firm, inflows into emerging-market equities are clipping along at $152.3 billion on an annualized basis. This would mark the group’s largest ever inflows if the pace continues.

Geraci believes a weakening U.S. dollar due to a potential pivot away from interest rate hikes by the Federal Reserve is partially responsible for the shift. The U.S. Dollar Currency Index is down almost 1% year to date.

Valuations of overseas companies may also be more attracting investors, he added.

And, there may be even more growth ahead.

D.J. Tierney of Schwab Asset Management contends retail investors don’t own enough global stocks. He suggests the upside will continue into the second quarter, which starts Monday.

“Rebalancing [to international stocks] to get some more exposure could make sense for a lot of investors,” said the senior investment portfolio strategist.

His firm’s Schwab International Equity ETF, which tracks large- and mid-cap companies in over 20 developed global markets, is up 8.1% so far this year.

Some Western media outlets are facing backlash from Iranian activists over headlines printed Sunday saying that Iran was abolishing its “morality police.” 

The news – an interpretation of a comment by an Iranian official during a press conference – turned out to be anything but clear cut. The country’s state media has since denied it. Many Iranian anti-government activists now feat it will distract from three days of major strikes around the country. 

So what happened?

Iran’s Attorney General Mohammad Jafar Montazeri, when asked over the weekend about why the country’s “morality police,” or Gasht-e Irshad, had become inactive, replied: “The morality police had nothing to do with the judiciary, and the same institution that established it has now shut it down.”

He added that “the judiciary will continue to supervise social behaviors.”

The question reflected the experience of many Iranians who say they have not seen the morality police on the streets since anti-government protests across the country began in mid-September. They were triggered by the death of 22-year-old woman Mahsa Amini while in the custody of the morality police after she was arrested for allegedly wearing her headscarf improperly.

This branch of the police is responsible for enforcing Iran’s mandatory headscarf law and other strict measures that disproportionately affect women. 

But when several Western media outlets such as the Wall Street Journal and New York Times seized on the quote to run headlines saying that Iran’s morality police had been abolished, Iranian activists and country analysts responded with a torrent of criticism. The attorney general’s statement has no effect on actual policy, they said, and he has no authority over that particular branch of law enforcement. 

What’s more, the higher branches of Iran’s government have not confirmed it, and Iranian state media has denied any abolition of the morality police. 

“No official in the Islamic Republic of Iran has confirmed the closure of the Irshad Patrol,” an article from Iranian state-run Arabic language outlet Al Alam said Sunday evening.

It added that “the maximum impression that can be taken” from Montazeri’s comment is that the morality police and his branch of government, the judiciary, are unrelated. 

Many of the Iranian protesters and those supporting the demonstrations overseas fear the headlines are misleading and create a false impression that Iran’s hardline Islamic government is making genuine concessions to the protesters.  

Instead, the government has announced several more executions of people who took part in the protests. Rights groups say that more than 450 people have been killed in the state’s crackdowns so far, while Iranian officials say more than 300 have been killed in the unrest.

Several Iranian activists and researchers used the words “misleading,” “fake news” and “shame on you” in their social media posts criticizing certain major Western outlets for their headlines claiming the morality police had been abolished.

“So amazing how many news outlets are going with the ‘Iran abolishes morality police’ line based on a convoluted quote from one official,” Borzou Daragahi, the international correspondent for The Independent, wrote on Twitter. “In reality morality police have been inactive since protests started, but there is no substantive news on their future.” 

“Reports that Khamenei’s regime has abolished the ‘morality police’ are fake news,” Kasra Aarabi, the Iran Program lead at the Tony Blair Institute for Global Change, wrote in a Twitter post Sunday. “This disinfo was propagated today to distract media attention from the 3 days of major protests in Iran which begin tomo. Why did mainstream media ignore this context?”

Nicole Najafi, a writer and activist, wrote in an Instagram post: “The laws and punishments concerning women have not changed. Even if they did abolish the morality police, this is meaningless, because Iranians want the regime gone … it’s like Putin saying he offered a free dinner to Ukrainian soldiers as a peace offering. NO DICE.”  

Protests have rocked Iran for more than 70 days now in what has become the biggest challenge to the government in decades. Unlike previous protest movements in Iran directed against issues like elections, living standards or a specific law, the current demonstrations are directly demanding the removal of the Islamic Republic, which was installed as a theocratic government following Iran’s Islamic Revolution in 1979.

Iran’s protest movement on Monday started a concerted effort to hold three days of strikes, with reports of thousands of businesses closed in several parts of the country. Footage posted to social media shows rows of shuttered shops. Teachers, factory workers and students are staging strikes and sit-ins as well, according to London-based outlet Iran International. CNBC has not been able to independently confirm the footage. 

“Nationwide strikes, particularly in key sectors, could be used to put time on the side of protestors while creating chaos and financial issues for the state,” Behnam Ben Taleblu, an Iran expert and senior fellow at the Foundation for Defense of Democracies, told CNBC.  

Coordinated efforts for organized strikes are growing in Iran. Leaflets and graffiti are increasingly used to highlight important protest and strike days. 

If the attorney general’s comments convey one thing, Ben Taleblu said, it’s “the imperative of keeping up domestic and foreign pressure against the Islamic Republic. And nobody understands this better than the Iranian people, who have been bravely protesting for almost three months now and are looking to amplify street power with strike power.” 

The strikes are key for the protesters because any idea of real concessions from the government is likely a pipe dream, says Arash Azizi, an Iranian historian and analyst. 

“There have been signs that some in the regime are thinking of giving some concessions including relaxing hijab (headscarf) laws,” Azizi said. “This is not surprising given the unprecedented nature of the revolutionary movement in Iran.” 

“But,” he added, “these are unlikely to go far since the leader, (Ayatollah) Ali Khamenei, has long not been interested in concessions, and knows that significant concessions can do the opposite of defusing the movement; they can encourage it further.”

SINGAPORE — Ukraine President Volodymyr Zelenskyy warned that the world will face a “severe food crisis,” with Russia’s war on his country dragging on, as he virtually addressed the Shangri-La Dialogue in Singapore on Saturday.

Zelenskyy told delegates that his country was unable to export enough food because of Russia’s blockade at Black Sea ports, which was preventing exports from being shipped to other countries.

“The world will face an acute and severe food crisis and famine,” he said, addressing 575 delegates from 40 countries at the dialogue, Asia’s top defense conference.

Ukraine along with Russia are among the largest producers and exporters of wheat and other essential foods like other grains and oils.

“The food [crisis] touches Asia, Europe and Africa. Russia has blocked the Black Sea. Prices are rising. Russia is violating international law,” Zelenskyy said in a question-and-answer session following his speech.

Zelenskyy said that Russia’s war on Ukraine is a threat to the system of international law — beyond the impact on his country.

Zelenskyy said that Russia has embarked on a “disinformation campaign” and has alleged that its war on Ukraine is “ostensibly something about NATO … about the intention of the West to somehow advance in Europe.”

“But in reality, Russia’s war against Ukraine is not only about Europe, it is about globally important things,” he said.

Russian leadership “strives to discard” all the historical achievements of humankind, especially the system of international law,” said Zelenskyy, calling on countries to ‘break the ability” of Russia to block seas and the freedom of navigation.

“If there had been no international law, and the big fish ate the small fish and the small fish ate shrimps, we would not have existed,” he said, invoking the words of Singapore’s founder Lee Kuan Yew.

Addressing the audience from an undisclosed location in Kyiv, Zelenskyy said that Ukraine will “certainly win” this war that Russia has started, in an occasionally impassioned 20-minute address, which the delegates responded to with lengthy applause. The three-day security dialogue is being held for the first time after a two-year hiatus because of the pandemic.