Iraqi markets on the brink of collapse after floating the Dinar

Shafaq News / Iraqi citizens are deeply concerned after many, including state officials, talked about the possibility of floating the local currency. It would be another blow to the Iraqi Dinar after the dollar was already raised in this year’s budget.

According to specialists, the state’s tendency to float the currency would raise the dollar again. That would decrease the confidence in Iraqi Dinar and increase prices in the markets, which will harm large segments of the people, especially the poor, who exceed 30% of the Iraqi population.

However, other experts believe that the financial reality prevents the currency float due to the nature of the rentier economy, the lack of diversity of financing sources, as well as the Central Bank’s active role in supporting the Iraqi Dinar.

Floating the currency is a complete liberalization of the currency exchange rate, with no interference by the Government or the Central Bank, but is automatically excreted in the currency market through the supply and mechanism’s demand that allows the national currency’ exchange rate to be determined against foreign currencies.

“The current price of Iraq’s currency against the U.S. dollar after its devaluation will continue for a long time, and a full currency float may occur in the future”, Finance Minister Ali Allawi stated.

“The Central Bank will work to maintain the current exchange rate level for as long as possible”, he said.

The Central Bank is selling the dollar at its daily auction to finance foreign trade, which currently stands at about 200 million dollars, increasing or decreasing on demand.
The International Monetary Fund (IMF) reported that Iraq’s economy contracted by 11% in 2020, reflecting a slowdown in economic activities.

The IMF expects Iraq’s GDP to return to pre-COVİD-19 pandemic level by 2024.
Iraq is OPEC’s second-largest producer, after Saudi Arabia, and oil revenues account for about 96% of the country’s total public revenues.

“It is not permissible to float the currency in Iraq because the market will collapse in this case. The entry and exit of foreign currency are not only through the market – which is a way out for it – but the government is the one that brings this currency”, Prime Minister’s adviser, Mudhhir Mohammed Salih’s told Shafaq News agency.

He also added, “If the government withdraws, supply will stop, and demand will increase, so the market will collapse. Currency floating is in economies where supply and demand come from the market, and the state intervenes to sell and buy to balance the price with its reserves”.

Salih further elaborated, “The problem in Iraq is that the market is asking and that the state is offering. If the Central Bank does not sell the dollar, the whole supply stops, and there would be no other offer, and even if there is another offer, it will not be enough to meet the demand, so prices will rise because demand will be more than supply”.

“We don’t have free currency trading because there is no real cycle of capital as the state is rentier. The foreign currency in the market’s only source is oil sales, and the state’s main source of dinars to finance the budget is the sale of the dollar”, economist Dhurgham Mohammed Ali told Shafaq News agency.

“The talk of floating the currency is unrealistic, and the finance minister is not concerned with managing the country’s monetary policy because it is the prerogative of the Central Bank. The real value of the Iraqi currency based on its monetary cover can reach 1,000 dinars per dollar, so putting forward the float issue is unrealistic”, he continued.
He also warned, “The formal float of the currency will put it in the hands of party brokers and their banks to manipulate its prices based on their interests”.

For his part, Abdul Rahman Al-Mashhadani, a professor of political economics at the Iraqi University, told Shafaq News agency, “If Iraq decides to float the exchange rate of the dinar, for the time being, it will fall to 3,000 dinars per dollar”.

“The float policy will not work for Iraq because it lacks both industrial and agricultural bases”, he added.

The Central Bank of Iraq has decided to raise the sale price of the dollar to banks and exchange companies to 1,460 dinars – from 1,182 dinars per dollar – to offset the decline in oil revenues caused by the decline in oil prices

Shafaq.com

Al-Kazemi’s advisor determines the mechanisms used to control the dollar price

[Baghdad-Where] The Financial Adviser to the Prime Minister, Mazhar Muhammad Salih, on Wednesday, identified the mechanisms followed by the Central Bank of Iraq to control the exchange rate, while responding to fears of a greater rise in the coming period.

According to the official agency, Saleh said, “The Central Bank of Iraq window for selling and buying foreign currency is a tool for the stability and stability of the exchange rate through daily interventions in the monetary market that mainly aim to withdraw high levels of liquidity in the Iraqi dinar from the market, which is called (the monetary sterilization policy). “.

He added, “Where the desired market demand for foreign currency is met by exchanging the dinar for foreign cash that is in the possession of the monetary authority, because that authority is the monetary issuance authority, that is, it is the one who issued the same dinar and it is concerned with maintaining the stability of its value and purchasing power.”

He continued, “Those excess levels of cash liquidity in dinars are pressing, generating a demand for foreign currency, which means a demand for foreign goods, services and benefits, as foreign currency contributes to financing Iraq’s foreign trade, that is, import trade, which provides the supply of foreign currency and mainly to the market that is in the bank’s possession.

“The Iraqi Central Bank, no one else, through the accumulation of its efficient reserves of foreign currency represented by the very high coverage of the dinar, so the Central Bank undertakes the sale from its window that practices defense of the stability of the exchange rate within its official prescribed limits of 1450 dinars per dollar.”

He pointed out that “based on the foregoing, the daily monetary policy operations that perform their function by controlling the monetary liquidity in dinars and exchanging them at a stable exchange rate (as a nominal fixer of the external value of money), that is to absorb that liquidity after exchanging it in the foreign currency at a fixed rate, it must be reflected in the stability of the exchange rate and from Then the price calm and stability, successively, because the price is the value of the currency, expressed in money.

Alliraqnews.com

The Iraqi government directs to open up to the countries of the world

At this hour from Iraq tonight: The Iraqi government directs to open up to the countries of the world.

Radiosawa.com

UN SHOULD PLAY LARGER ROLE RESOLVING ERBIL-BAGDAD DISPUTES: KURDISTAN REGION PRESIDENT BARZANI

SULAIMANI — Kurdistan Region President Nechirvan Barzani on Monday (April 19) called on the General Assembly of the United Nations to play a more active role in mediating disputes between Iraq’s federal government and the Kurdistan Regional Government (KRG).

For years, Baghdad and Erbil have been at loggerheads over a number of issues, in particular those related to hydrocarbon resources and the implementation of Article 140 of the 2005 Constitution.

The latter governs the status of the so-called “disputed areas,” a multi-ethnic and resource rich belt of territory stretching from Nineveh governorate through Saladin and Kirkuk into Diyala that is claimed by both governments.

Barzani said that Kurdistan Region supports the Iraqi government’s demand for the UN Security Council to increase the role of the United Nations Assistance Mission for Iraq (UNAMI) in managing elections in the country, with an eye to ensuring that this year’s parliamentary polls in October are free and fair.

Barzani also called for additional humanitarian aid for the Kurdistan Region to support the nearly 1 million displaced people living in the Region, about a third of which live in camps.

(NRT Digital Media)

Parliamentary committee raises economic recommendations to the prime minister

Baghdad: The Parliamentary Economy and Investment Committee stressed the importance of the recommendations it submitted to the Prime Minister, considering them important and in the interest of the advancement of the Iraqi economy.

In an interview with Al-Sabah, a budding committee member Nawfal said: “The committee presented a plan for economic recommendations to the Prime Minister in a previous period, and the most important paragraphs were to effectively support the private sector, tighten control over outlets and activate the work of state factories in their mixed capacity with the private sector through The ministries concerned with industry and agriculture with the support of the Ministry of Trade. ”

He stressed that “Iraq possesses sufficient ingredients to revive its economy, but we need a political decision and a real will to activate the industrial, agricultural and productive sectors for the local market.”

And that “the plan begins with making the political decision and the legislative will to preserve the state’s assets, in addition to expediting the operation of state factories and involving them within the investment and partnership plans between the public and private sectors.”

“The Iraqi state is distinguished by many enormous capabilities of natural resources or human capabilities and sufficient expertise to revive the economy in a short and not great period, and despite the losses that Iraq suffered from the stoppage of local production, however, Iraqi production can flourish again,” al-Nashee said.

He added that “the government in its ministry should seek to rebuild the large and strategic Iraqi factories such as iron and steel factories, petrochemicals, textile and food processing factories, and provide the Ministry of Agriculture with agricultural biochemical products instead of importing them from abroad such as (urea) and other products that can be manufactured in the country, whose percentage exceeds 90%.

Alsabaah.iq

A parliamentary committee moving the oil and gas law file

Baghdad: The Parliamentary Oil and Energy Committee opened the Cabinet and the Ministry of Oil for the purpose of expediting the implementation of amendments to the oil and gas law and sending it to Parliament.

Committee member Sadiq Al-Sulaiti said, in an interview with “Al-Sabah”: The oil and gas law is one of the most important stalled laws, and the Parliamentary Oil Committee has addressed the Prime Minister and the Ministry of Oil for the purpose of expediting the necessary amendments to this law and returning it to the House of Representatives for the purpose of advancing its legislation, indicating that “ The law is in the drawers of the government, which is working to complete it, mature it, and treat some of its objectionable paragraphs, and return it to Parliament for the purpose of initiating its approval ».

He added: “This law is the radical solution to the problems between the center and the region, as in every budget it will create a crisis in the mechanism for settling oil receivables, the mechanism for exporting oil and the mechanism for delivering those receivables and other paragraphs that will be subject to political difference, and may be subject to political auctions as well.” Noting that “the issue does not go beyond being technical and mathematical related to revenues and duties and is supposed to be regulated by law,” expressing his hope during the coming period and the remainder of the parliament’s life, that “the government will accelerate the completion of this law and return it to Parliament ».

Alsabaah.iq

Floating the currency leads to the collapse of the market and warnings against its implementation

Sky Press / The Prime Minister’s Adviser for Financial and Economic Affairs, Muhammad Mazhar Saleh, confirmed today, Monday, that it is not permissible to float the currency in Iraq, indicating that this leads to the collapse of the market.

Saleh said that “it is not permissible to float the currency in Iraq because the market will collapse in this case,” indicating that “the entry and exit of hard currency does not enter the market, which is only an exit for it, but the government is the one that brings this hard currency.”

Saleh added, “If the government withdraws its hand, the supply will stop and the demand increases, and thus the market will collapse.”

He pointed out that “the problem in Iraq is that the market is demanding and that the state is offering, and in the event that the Central Bank does not sell the dollar, it means that all the supply has stopped and there is no other offer, and if there is another offer, it is a little offer that is not enough to meet the demand and therefore the prices will rise Because demand will be more than supply. ”

He stressed that “the state is the bidder in Iraq, and therefore if the state tends to float, then this means that there is no supply and thus prices collapse.”

Floating currency is completely liberalizing the exchange rate, so the government or the central bank does not interfere in determining it directly, but rather it is secreted automatically in the currency market through the supply and demand mechanism that allows setting the national currency exchange rate against foreign currencies.

It is noteworthy that some officials talk from time to time on the need to float and liberalize the currency to maintain hard currency reserves at the Central Bank.

Skypressiq.net

Saleh: The Central Bank is working to stabilize the purchasing power of the Dinar

Conscious / Baghdad / h. G… The Advisor to the Prime Minister for Financial Affairs, Mazhar Muhammad Salih, revealed today, Thursday, the efforts of the Central Bank to work to stabilize the purchasing power of the Iraqi dinar.

Saleh said in a statement followed by (the Iraqi Media News Agency / INA) that “the central bank is working to meet the desired demand of foreign currency by market forces through the window of monetary policy operations or the so-called auction for the purposes of financing foreign trade for the private sector as well as providing a safe level of Cash dollar ”.

He pointed out, “The central bank pushed towards the fixed exchange rate with clarity, transparency and ability, with the supply tools in order to lead to stability in price levels, stability of price expectations, a higher degree of certainty in looking at the levels of price stability and reduced transaction risks for market makers and dealers in it.”

He explained that “the monetary policy of the Central Bank seeks to achieve its goals and achieve its objectives under its law in force and its quantitative and price tools aimed at stabilizing the purchasing power of the dinar.”

Al-iraqinews.com

More than a million dollars and gold bars were found in the rubble of the ancient region of Nineveh

The information / Baghdad .. On Friday, the Nineveh Investigation Court announced that it had seized large sums of money and valuable assets that were seized under the rubble of a house in Al-Shahwani area in Mosul for the purpose of handing them over to the Central Bank.

The Media Center of the Supreme Judicial Council stated in a statement received by the information, that “the court announced that an amount of one million six hundred thousand US dollars, gold and silver coins, bullion, and gold collectibles were found in the old“ Al-Shahwani ”area, while one of the excavators was removing the ruins of the old area’s role.

The statement added that “the aforementioned funds and materials were hidden in plastic barrels and nylon bags and were buried three meters deep under the ground.” It is likely that “these funds were used by ISIS gangs to finance their terrorist operations during their retreat to the right side of the Old City.”

He confirmed that “the judge of the Nineveh Investigation Court decided to withhold the seizures in preparation for handing them over to the Central Bank.” Ended 25

Almaalomah.org

Adjustment to the exchange rate

The Central Bank of Iraq explained in a statement, the reason for the decline in the exchange rate of the dollar in the parallel market – especially in February – from the official selling rate after the change of price by the Bank at the end of December 2020, and explained the central decline in what it called the “shock of the domestic market” which needed a period of adjustment to the adjustments that occurred between traders (wholesale, retail, singular) and wholesale settlements with banks, where imports declined to levels severe, and then lower demand for foreign currency.

However, this interpretation, based on the market mechanism, did not take into account the impact of the political space on this mechanism, as the apprehension of many of the public, including many traders and speculators, continued to escalate at other times and decline, according to statements and promises about influencing the central decision and the intention to undo it in favor of slogans, which were employed to win positions, without taking into account the nature of the variable that requires preparing for the flow of foreign investment and establishing an investment climate, led by allied capital of globalization capital in the region, which requires action on several axes.

In order to achieve this trend, the exchange rate did not rise in order to achieve this trend, the exchange rate in the parallel market did not rise, until after the approval of the budget, and to ensure that the relevant authorities are continuing their policy irreversibly, to create a competitive environment that protects the local product from the low prices of goods produced in the countries of geographical neighboring and preparing for monetary stability, encourages foreign capital to enter the Iraqi arena in a secure, legal and stable monetary atmosphere.

But adjusting to the exchange rate will not take its attractive form of investment, except by liberalizing the exchange rate and creating monetary stability in an atmosphere of free exchange and trading to ensure the movement of capital to and from within Iraq, without any effect on the difference in the value of the exchange rate with the other one (currency).

To ensure investment accounts in feasibility studies developed by investors, they are keen in financial feasibility studies to ensure that the price in the parallel market does not change during the life of the project to achieve the feasibility of the establishment of the project, as well as the importance of competitiveness to protect the local product, which is likely to adopt the method of “managed float” in the next step in conjunction with the increase of central reserves, which will contribute to giving more freedom of maneuver to those in charge of monetary policy, and ensuring adjustment to parallel market fluctuations to reach for stability.

Alsabaah.iq