BondLady’s Corner Wednesday Afternoon

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Some of them are negative.. 4 effects of the decline of the euro on the Iraqi economy

Money and business  The economic expert, Nabil Al-Marsoumi, outlined, on Wednesday, the effects of the decline of the European euro and the rise of the dollar on the Iraqi economy.

Al-Marsoumi said in a Facebook post that “the euro was par with the dollar after the euro was equivalent to 1.6 dollars in 2008, which is an indication of the inability of the euro to withstand the energy crisis and the crisis of supply chains, and also did not clearly withstand the Ukrainian crisis that afflicted many European countries.” Politically and economically, he warned that “the disadvantages will be more in the coming period with the approach of winter and the increase in demand for energy products.”

As for the impact of the euro’s decline on Iraq, the expert explained that “the decline of the euro will not negatively affect the Iraqi dinar, which is linked to the US dollar, but the return on cash reserves, mostly denominated in dollars and invested in some of them in US treasury bonds, will increase, as the returns on US two-year bonds rose to 3.111%. The 10-year Treasury bond yield was 3.088 percent .

Al-Marsawy personified a third effect, which is that the decline “will give Iraq the advantage of importing European goods, which will become cheaper after the drop in the euro exchange rate due to the pricing of Iraqi oil in dollars,” stressing that the continuation of the dollar’s rise may lead to a decline in global demand for oil and then a drop in its prices, which will negatively affect the Iraq’s oil revenues.

Views 105   Added 07/13/2022 – 3:09 PM   Update 07/13/2022 – 6:04 PM

Our Economy And Stagflation In The Global Economy

Samir Al-Nusairi   Most of the world’s countries have been suffering for nearly two months from a new economic crisis that is the most severe and harmful to the economies of countries from the previous crises that swept the world previously, the last of which was the closure crisis due to the Corona pandemic .

Yes, it is a crisis (stagflation) due to food shortages, high prices, the Russian-Ukrainian war, the economic conflicts between America and China, the struggle to control oil prices, and the attempts of the affected countries to find plans and deals to control this rise that occurred during the past twelve months .

Through our follow-up, observation and analysis of the movement of the global economy, we note that most countries of the world have increased inflation rates and exceeded one rank and ranged between (5-15%) as it is now, for example in Iraq and most Arab and developing countries.

It is expected that these percentages will rise during the next six months because the major affected countries From the stagflation crisis, its central banks will take difficult decisions in order to control the prices of their local currencies from declining and maintain their foreign monetary reserves at safe rates, thus reducing stagflation and maintaining relatively stable prices and balanced economic growth with the current prevailing economic conditions .

Therefore, I think that the solution to achieve the above goals is that most central banks will be forced to raise the interest rate with a tiger that is commensurate with their economic situation .

Therefore, the matter was estimated by Iraq’s economic situation, although we have not reached stagflation at the moment, and the dollar that enters is still higher than the dollar that exits because of the financial abundance due to the high oil prices, but this will not last long, especially since the major economic countries will do the impossible in order to restore oil prices to the rates.

The target is in light of its interests, and thus Iraq will suffer from a new stifling economic crisis, especially as the country suffers from turmoil, political closure, a temporary government with limited powers and the absence of a general budget, and for the purpose of the Central Bank exercising its role in reducing inflation and controlling the general level of prices and maintaining the exchange rate of the dinar within its target limits And controlling the interest rate and maintaining its foreign cash reserves within the required rates, as well as controlling the money supply.

Certainly, all of these aspects are among the objectives of the Central Bank and the concerns of its board of directors during the next stage for the purpose of avoiding the harm that Currently threatening the world . May God protect Iraq, its people and its economy .

Views 192  Added 07/13/2022 – 2:05 PM   Update 07/13/2022 – 6:06 PM

Al-Kazemi’s Advisor Presents His Vision To Protect Iraq’s Economy From Oil Price Fluctuations

Money and business  Economy News / Baghdad  Today, Wednesday, the financial advisor to the Prime Minister, Mazhar Muhammad Salih, identified two factors that may stand behind the possibility of a recession in the global economy in the coming months, and as he explained the impact of this in Iraq, he proposed a solution to protect the Iraqi energy market from the fluctuations in prices of crude oil markets.

Saleh told the Iraqi News Agency, “There are two factors for the possibility of the global economy heading towards economic stagnation in the coming months, as the first factor is the strict monetary policy of the strongest economy in the world, which is the economy of the United States, which will lead to the policies of raising interest rates undertaken by the US Federal Reserve to combat inflation.

In the general level of prices in the United States, the increase in investment costs and a decline in growth in real sectors, which leads to a possibly slow decline in inflation growth, but will lead to a greater deterioration in the level of employment, higher unemployment rates and lower rates of growth in GDP.

He added, “There is an objective link between high rates of economic growth and high demand for energy resources, which will contribute to the stagnation of derived demand for crude oil in the global market,” noting that “the same will apply to the economies of the eurozone by following strict monetary policies to confront the frightening European inflation.” Currently”.

He pointed out that “the second factor is the development of trends in the Chinese economy, which represents the second largest economy in the world, which has entered the phase of the Cold War with the West, which means that the growth of the Chinese economy will be indirectly affected by the global recession and various forms of economic boycott due to tension in economic relations.”

The international community and its exposure to some Western commercial and technological isolation, as well as the inevitability of the Chinese economy being affected by the conditions of recession in global demand.

He noted that “China’s imports of Russian crude oil are currently the highest among the sources of supply, and they are discounted in value by 40% per barrel, which means abandoning part of its imports from other currently high-priced oil markets from outside Russia.”

He pointed out that “the aforementioned factors will undoubtedly lose the growth momentum in demand for oil energy resources in the world, which will cause some (glut) in the oil supply markets, which are highly elastic or deflationary demand factors that directly contribute to the further deterioration of prices.

The oil-exporting countries in OPEC and others, the potential glut in the oil market may cause price damage to the economy of Russia, the second oil producer in the world, whose daily production is estimated at about 11 million barrels of crude oil, most of which goes to export, to face a severe oil price war.”

He continued: “There is no doubt that Iraq, whose economy depends on crude oil exports, will be affected by the price drops (if they occur) and will undoubtedly cause a decrease in the country’s financial returns, so a mechanism must be applied that is to go as an accelerated future view towards employing the accumulation of financial surpluses that are currently obtained and directing their spending with priority.

To finance large investments in the refining sectors of giant refineries and petrochemical plants to export petroleum products, whose added value rises to between 5-7 times compared to a barrel of exported crude oil.

He continued: “Therefore, it is necessary to adopt a policy of accelerated transformation from the policy of exporting crude oil to exporting oil products, in a manner that ensures the stability of the limits of Iraq’s financial and economic sustainability from the fluctuations of oil markets during the next ten years.”

He concluded by saying: “Thus, protecting the Iraqi energy market from fears of future crude oil market price fluctuations can only be achieved by raising the added value of the crude oil itself, by adopting the policy of manufacturing oil derivatives immediately by investing in (giant refineries with various products and few losses). ) as agreed upon by all energy experts in Iraq.

Views 235   Added 07/13/2022 – 2:00 PM  Update 07/13/2022 – 6:06 PM

Oil Below $100

Economie| 09:34 – 07/13/2022  BAGHDAD – Mawazine News: Oil prices fell on Wednesday, after consecutive declines, to reach less than $100 a barrel for the first time since April, while traders looked forward to US inflation data that could weaken the market. The dollar rose to its highest level, while China still It is fighting Corona, all of which are weakening the market.

Brent crude futures were down 2 cents, or 0.02 percent, at $99.47 a barrel at 04:45 GMT, and US West Texas Intermediate crude was down 18 cents, or 0.19%, at $95.66.

Investors have sold off oil positions on fears that sharp increases in interest rates to stem inflation will trigger an economic slowdown that will hurt oil demand. Prices fell more than 7% on Tuesday in choppy trading.

Another concern is that higher US interest rates in response to rising inflation will push the dollar higher, and also undermine oil prices.

The renewed travel restrictions for COVID-19 in China also affected the market. Many cities in the world’s second-largest economy have adopted new restrictions, from business closures to broader lockdowns, in an effort to curb new infections from one of the highly contagious sub-variables of the virus.

The dollar index, which measures the currency against a basket of six peers, also rose earlier today to 108.56, its highest level since October 2002.

Oil is generally priced in US dollars, so a stronger dollar makes the commodity more expensive for holders of other currencies, putting Downward pressure on demand and its dollar price.

Meanwhile, markets are closely watching US President Joe Biden’s visit to the Middle East, where he is expected to ask Saudi Arabia and other Gulf producers to increase oil production to help stabilize prices.


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