Chat Room – Excerpts & Highlights
rcookie says():Zebari coordinate with the International Monetary Fund for the disbursement of $ 18 billion for Iraq
logo jumhuriya Zebari coordinate with the International Monetary Fund for the disbursement of $ 18 billion for Iraq
Fri, 09 Sep 2016 12:39:51 # Algmehorah_uz We arrived Iraqi Finance Minister, Hoshyar Zebari, a Jordanian capital Amman, the head of a delegation to begin negotiations with the International Monetary Fund, on Friday, in order to get a loan worth about $ 18 billion, according to an official statement from the Ministry of Finance,
Iraq had concluded in May / May last, an agreement with the International Monetary Fund in Amman, to grant the Fund a loan for Iraq worth $ 5.3 billion with an interest rate of up to 1.5%, Iraq took a share initial value of about $ 600 million last July.
The Finance Ministry said in its statement, said he “took place during the last period technical talks between the government delegation of the Finance and Planning and oil ministries and the Central Bank with the International Monetary Fund experts to review Iraq’s obligations under Stand-By program with the International Monetary Fund.”
Adding, “The International Monetary Fund shall conform to this program over a three-year credit facility of 4.5 billion dollars to Iraq to fill the financial gap and the budget deficit as a result of the financial and economic crisis in the country, and will be the sum of the amounts that the program will be provided by the IMF and the World Bank and the donor countries and financial institutions universal, about $ 18 billion to support the economy and financial Iraq. ”
The Iraqi government acknowledged the end of last month, the country’s budget for next year by 102 trillion dinars (about US $ 85 billion), to begin a new phase of internal and external negotiations to bridge the fiscal deficit which stood at 30% of the total budget.
slh5282 says():I listended to the call from the 7th and understand we dont have confirmation on the Mastercard issue but wherre are these guys getting the rate of 1305/1. or 1.305=1
rcookie says():THAT WAS BROUGHT INTO THE ROOM….AND IS UNCONFIRMED…
slh5282 says():thank you rcookie.. I agree.. that is the statement you guys made on the call.
rcookie says():09/09/2016 14:38 America publishes an additional 460 military in Iraq
US Colonel John Dorian, spokesman for the Alliance of Washington in Iraq, announced an increase in the number of US military personnel in the country increased by 460 military under the pretext of the war on the organization of “Daesh” terrorist.
The media quoted for Dorian as saying, “The number of US military personnel in Iraq rose in a week from 4000 to 4460 military” without that explains the mission of the reinforcements.
The United States is leading in nearly two years alliance spectacularly illegal under the pretext of fighting al “Daesh” The terrorist did not achieve little on the ground, but shares in the stretch extremist organization in large areas of Iraq and Syrian territory while inflicted blows Russian Air, which began on the thirtieth of a weapon results last September a military operation at the request of the Syrian government to support the Syrian Arab army’s efforts in the fight against terrorism heavy losses the terrorist organization has limited abilities dramatically.
Agencies
rcookie says():Iraq receives $ 3 billion from the World Bank
logo jumhuriya Iraq receives $ 3 billion from the World Bank
Fri, 09 Sep 2016 10:45:15 # Algmehorah_uz Financial advisor to the Prime Minister Haider al-Abadi said today that the World Bank has done a decision on lending to Iraq by about three billion dollars in the end of this year.
He said the appearance of Mohammed Saleh in a statement Friday, which involved meetings of Iraq with the IMF mission in the Jordanian capital Amman, said that “the World Bank mission made the vision of funding for economic development in Iraq for the soft loan of about three billion dollars paid in stages, very low interest rate and duration repayment of long-term. ”
He said the appearance, that this comes in “the framework of a program for financing development in Iraq.”
He added, that “the World Bank between the activities targeted by the loan, is the support of the federal budget in line with the economic reform paths and a document of reform launched by the Prime Minister.”
He stressed that “the loan will be spent over three years to coincide with the reformist trends in the activities of government reform and modernization of management, payment systems and a network of social security and the fight against corruption and other things.”
Adviser to Prime Minister predicted that “the implementation of the loan to Iraq by the World Bank end of the year 2016”.
The Committee on the economy and parliamentary investment promised, on May 16 last in 2016, the demands of the International Monetary Fund of Iraq to agree to lend him “do not constitute conditions” but a vision to address the economic crisis being includes a reduction in spending and focus on productive sectors to enhance budgetary resources.
rcookie says():AND REMEMBER THEY ARE GETTING JUST SHY OF 11 BILLION BEFORE END OF 2016…
Pablo says to rcookie():Weren’t they supposed to finish their economic reforms before getting another penny?
subgirl says to rcookie():Amazing! WOW! Adviser to Prime Minister predicted that “the implementation of the loan to Iraq by the World Bank end of the year 2016”. NICE 🙂
rcookie says():Attorney-Abbadi demands of the Japanese ambassador to his country to open a consulate in Basra
Political Since 09/09/2016 12:06 am (Baghdad time)
Baghdad balances News Called on the Commission on oil and energy parliamentary member Zaher al-Abadi, Japan opened a consulate in Basra, revealed the intention of the Japanese ambassador to visit the province to pursue productive projects on which has been borrowing from the Japanese government in the coming period.
A statement from the Vice-Abadi issued after a meeting with the Japanese ambassador resident in Baghdad and got it / balances News /, that he had discussed with the ambassador several issues that serve the two countries including the Japanese loan to support the industrial sector, particularly including support for fertilizers and plant Hartha thermal loan, “noting that” these loans contributed in the revitalization of the industrial sector and in various areas to support the Iraqi economy. ”
He said al-Abadi, that “a request from the Japanese ambassador to open a consulate in the province and stimulate community relations between peoples, and that sends a request to Tokyo for consideration and special support for civil society organizations and the opening of a scientific and cultural horizons through cooperation with Iraqi universities, especially the University of Basra,” referring to the importance of sending fellowships missions scholarships to Japan for the exchange of scientific expertise. ”
Abadi said that “there is a recent visit to the Japanese ambassador to the province of Basra to follow up on productive projects on which has been borrowing from the Japanese government and see the success of these projects and in particular the Hartha plant and plant fertilizers as well as other projects in the subsidized loan the port sector,”
pointing out that “this visit confirms Japan’s support for the Iraqi industry and, in particular, chemical fertilizers, which political parties tried to close it by reasons illogical plant, but will continue its production despite all the national circumstances “.anthy 29 / d 24
rcookie says(8:10 AM): Parliamentary Integrity: Jubouri Fatlawi Sastjoban Abadi and the dismissal Zebari “inevitable”
Political Since 09/09/2016 13:39 pm (Baghdad time)
Baghdad balances News Said the Parliamentary Integrity Committee member Adel Nouri, on Friday, the MPs Haitham al-Jubouri and Hanan al promising to question the prime minister Haider al-Abadi file, indicating that the withdrawal of confidence from Finance Minister Hoshyar Zebari will go after the Eid and his dismissal “inevitable.”
Nouri said L / balance News /, that “the list of respondents will include Prime Minister Haider al-Abadi and Foreign Minister Ibrahim al-Jaafari and Health Minister Hamoud Adila and we have adequate process of interrogation files.”
He added, “The MPs Jubouri Fatlawi promising to question the prime minister Haider al-Abadi file and in case of retreat I will continue being questioned,” he said, adding that he “had many and sufficient files to it, notably the financial irregularities and the side of security and political failure and the level of foreign relations and other files.”
He pointed out that “the interrogation and withdraw confidence from the al-Abadi obviates for questioning other executives because he represents the entire government.”
As for the sacking Zebari stressed that “paragraph withdraw confidence from it will go after the feast that the issue of his dismissal inevitable and we will resort to the secret ballot so that the MP is free to choose away from the pressure of the mass.”
He continued, “The House of Representatives had been liberated from the constraints of the political blocs and freer to express their decisions in the parliament after the April 14 revolution witnessed by the parliament during a sit-in a lot of Representatives,” .anthy 29 / D 24
rcookie says():IRAQ
Parliamentary Security: To investigate the armament contracts since 2003
September 8, 2016 The former Iraqi Defense Minister Abdul-Qader al-Obeidi
According to the Security and Defense Committee member of the parliamentary Iskandar and berries Thursday that the Committee in the process of opening files, all armament contracts, entered into by the Iraqi government since 2003 until now.
It comes this review, according to what he said and Tut “Radio Sawa” on the background of the decision taken by the Commission in meetings held two days ago to assess the work of the military and security institutions and improve its performance, where the Commission will conduct a series of visits to security departments in order to expose corruption files.
He said that initially and berries will review the armament contracts in the period was a witness in his own “shortcomings and corruption,” he said, referring to former Defense Minister Abdul-Qader al-Obeidi.
He and berries to condemn al-Obeidi in corruption cases will lead to address the US government, al-Obeidi lived in the territory now, in order to hand him over to Iraq to direct the trial.
Source: Radio Sawa
DIGIman1 says():that otta stir up a few more corruption cases….
DIGIman1 says(): I’ve got to sit down and work out where I stand.
rcookie says():THIS IS BIG!!!!!!!!!!!!!!…….
rcookie says():Chamber of Commerce Federation calls for theestablishment of a sovereign fund to support loss-making state-owned companies
09-09-2016 It called the Union of Chambers of Commerce, on Friday, to establish a sovereign fund with a capital of no less than 200 billion dinars to support loss-making state-owned companies and rehabilitated to make them productive and profitable.
The head of the Federation of Chambers of Commerce Jaafar al-Hamdani said in a statement “the economy News” received a copy of it, that “some state-owned companies, particularly within ministries of industry and minerals, agriculture and trade suffered a great loss as a result of the entry of imported goods made production lines and delay its work,” they returned to it, “reflected negatively the reality of the Iraqi economic and gross domestic product. ”
He said al-Hamdani, that “the best way to advance these companies establish a sovereign financial fund With a substantial capital not less than 200 billion dinars, can be increased through the contribution of the government and the private sector, to support those companies and enable them to rehabilitate its production lines and updated, and the import of raw materials that you need.”
He said al-Hamdani, that “the existence of such a fund should be accompanied by legal legislation to ensure its success, including tariffs and protect the product and the consumer law, as well as having real control to support this proposal and ensure its implementation.”
LINK http://www.dinarupdates.com/showthread.php?40655-Chamber-of-Commerce-Federation-calls-for-establish-of-sovereign-fund-to-support-SOE-s&p=161183#post161183
larrykn says to rcookie():is this them changing from state owned companies to private owned companies?
subgirl says to rcookie(now that is security for the investors/companies WOW! that is HUGE! 🙂
rcookie says to larrykn():Parliamentary Services is pushing legislation that laws dealing with financial crisis58 Show Last update:
Thursday, September 8, 2016 – 11:37 Parliamentary Services is pushing legislation that laws dealing with financial crisis
Confirmed by the Commission services and reconstruction parliamentary Tamimi morning, the country’s need of economic legislation outweigh the 500 legislation contribute to supplement and evaluate Alarac.orjeht Tamimi budget, in a statement, «the continuing economic and financial challenges in front of Iraq and the poor investment climate, which leads to osteoporosis in the construction and reconstruction of the country».
Tamimi added that «there are concerns by investors because of the volume of transactions that can not do not mind the costs and the amount of time», pointing out that «all of this because of financial and administrative corruption in government departments without exception».
Tamimi that «legislator in Iraq from 2004 laws up to the day of the 50 did not exceed the law of the total 600 law and noted that one of the reasons for slowdown in economic growth in Iraq.»
rcookie says():Iraq opens issuing passports system for his community in Los Angeles, US
Friday 09-09-2016 | 3:06:15 Twilight News / Foreign Ministry announced on Friday for the opening of the system for issuing passports for the Iraqi community in one of the large US states.
The ministry said in a statement today, “it was after the great efforts Consular Department of the Foreign Ministry and in cooperation with the Ministry of Interior and Iraqi employees of the consulate in Los Angeles opening of the issuance of the passport system in the Iraqi consulate in Los Angeles, the US.”
The statement pointed out that this system “this important service to the thousands of Iraqis who live west of the United States of America will provide.”
Clay says to rcookie(): wow they are truely on the move
subgirl says to clay(): (y)love that!!!
clay says to subgirl):me too next global currency
subgirl says to rcookie():that is huge too!
subgirl says to clay():this morning’s news is pretty big!
clay says to subgirl():it sure is especially for a Friday
subgirl says to clay():yes that is true! lol it is their holy day!
clay says to subgirl():yep
larrykn says():now that they put Parliment on hold till the 20th I feel they will get other things done till then
larrykn says():they are surely not slowing down 🙂
subgirl says to larrykn():(y) I agree.! they are NOT slowing down! they are continuing on… This WILL get done!
rcookie says():The Importance of Exchange Rates in the Global Economy
What is an Exchange Rate?
An exchange rate is the price of a country’s currency relative to other currencies. In other words, it is the rate at which one currency can be converted into another currency. For example, on January 1, 2015, one U.S. dollar could be exchanged for 0.83 euros (€), 120 Japanese yen (¥), or 0.64 British pounds (£).4 Exchange rates are expressed in terms of dollars per foreign currency, or expressed in terms of foreign currency per dollar.
The exchange rate between dollars and euros on January 1, 2015, can be quoted as 1.21 dollars per euro ($/€) or, equivalently, 0.83 euros per dollar (€/$).
rcookie says():Consumers use exchange rates to calculate the cost of goods produced in other countries. For example, U.S. consumers use exchange rates to calculate how much a bottle of French or Australian wine costs in U.S. dollars. Likewise, French and Australian consumers use exchange rates to calculate how much a bottle of U.S. wine costs in euros or Australian dollars.
rcookie says():How much a currency is worth in relation to another currency is determined by the supply and demand for currencies in the foreign exchange market (the market in which foreign currencies are traded). The foreign exchange market is substantial, and has expanded in recent years. Trading in foreign exchange markets averaged $5.3 trillion per day in April 2013, up from $3.3 trillion in April 2007.5
rcookie says():The relative demand for currencies reflects the underlying demand for goods and assets denominated in that currency, and large international capital flows can have a strong influence on the demand for various currencies. The government, typically the central bank, can use policies to shape the supply of its currency in international capital markets.
rcookie says():Different Measures of Exchange Rates
rcookie says():Nominal vs. real exchange rate: The nominal exchange rate is the rate at which two currencies can be exchanged, or how much one currency is worth in terms of another currency. The real exchange rate measures the value of a country’s goods against those of another country. Essentially, the real exchange rate adjusts the nominal exchange rate for differences in prices (and rates of inflation) across countries.
rcookie says():Bilateral vs. effective exchange rate: The bilateral exchange rate is the value of one currency in terms of another currency. The effective exchange rate is the value of a currency against a weighted average of several currencies (a “basket” of foreign currencies). The basket can be weighted in different ways, such as by share of world trade or GDP. The Bank for International Settlements (BIS), for example, publishes data on effective exchange rates.6
rcookie says():Impact on International Trade and Investment
International Trade
Exchange rates affect the price of every export leaving a country and every import entering a country. As a result, changes in the exchange rate can impact trade flows.
When the value of a country’s currency falls, or depreciates, relative to another currency, its exports become less expensive to foreigners and imports from overseas become more expensive to domestic consumers.7 These changes in relative prices can cause the level of exports to rise and the level of imports to fall.8
For example, if the dollar depreciates against the British pound, U.S. exports become cheaper to UK consumers, and imports from the UK become more expensive to U.S. consumers. As a result, U.S. exports to the UK may rise, and U.S. imports from the UK may fall.
rcookie says():Likewise, when the value of a currency rises, or appreciates, the country’s exports become more expensive to foreigners and imports become less expensive to domestic consumers. This can cause exports to fall and imports to rise.
For example, if the dollar appreciates against the Australian dollar, U.S. exports become more expensive to Australian consumers, and imports from Australia become less expensive to U.S. consumers. Changes in prices may cause U.S. exports to Australia to fall and U.S. imports from Australia to rise.
rcookie says():International Investment
Exchange rates impact international investment in two ways. First, exchange rates determine the value of existing overseas investments. When a currency depreciates, the value of investments denominated in that currency falls for overseas investors. Likewise, when a currency appreciates, the value of investments denominated in that currency rises for overseas investors.
For example, if a U.S. investor holds a German government bond denominated in euros, and the euro depreciates, the value of the bond in U.S. dollars falls, making the investment worth less to the U.S. investor. In contrast, if the euro appreciates, the value of the German bond in U.S. dollars rises, and the investment is worth more to the U.S. investor.
rcookie says():second, exchange rates impact the flow of investment across borders. Changes in the value of a currency today can shape investors’ future expectations about the value of the currency, which can have substantial impacts on capital flows.
If investors expect a currency to depreciate, overseas investors may be reluctant to invest in assets denominated in that currency and may want to sell assets denominated in the currency, in fear that their investments will become less valuable over time.
Likewise, if a currency is expected to rise over time, assets denominated in that currency become more attractive to overseas investors. For example, a depreciating euro may deter U.S. investment in the Eurozone, while an appreciating euro may increase U.S. investment in the Eurozone.9
rcookie says():Types of Exchange Rate Policies
There are two major types of exchange rate policies. First, some governments “float” their currencies. This means they allow the price of their currency to fluctuate depending on supply and demand for currencies in foreign exchange markets. Governments with floating exchange rates do not take policy actions to influence the value of their currencies.
Second, some countries “fix” or “peg” their exchange rate. This means they fix the value of their currency to another currency (such as the U.S. dollar or euro), a group (or “basket”) of currencies, or a commodity, such as gold.
The government (typically the central bank) then uses various policies to control the supply and demand for the currency in foreign exchange markets to maintain the set price for the currency.
Often, central banks maintain exchange rate pegs by buying and selling currency in foreign exchange markets, or “intervening” in foreign exchange markets.
rcookie says():There are pros and cons to having a floating or fixed exchange rate. Fixed exchange rates provide more certainty in international transactions, but they can make it more difficult for the economy to adjust to economic shocks and can make the currency more susceptible to speculative attacks.
Floating exchange rates introduce more unpredictability in international transactions and may deter international trade and investment, but make it easier for the economy to adjust to changes in economic conditions.
In order to take advantage of the benefits of both fixed and floating exchange rates, many countries do not adopt a purely fixed or floating exchange rate, but choose a hybrid policy: they let the currency’s value fluctuate but take action to keep the exchange rate from deviating too far from a target value or zone.
degree to which they float or peg varies. The optimal choice for any given country will depend on its characteristics, including its size and interconnectedness to the country to which it would peg its currency.
rcookie says():Between the end of World War II and the early 1970s, most countries, including the United States, had fixed exchange rates.
10 In the early 1970s, when international capital flows increased, the United States abandoned its peg to gold and floated the dollar. Other countries’ currencies were pegged to the dollar, and after the dollar floated, some other countries decided to float their currencies as well.
In 2014, 34% of countries had floating currencies.
11 This includes several major currencies, such as the U.S. dollar, the euro, the Japanese yen, and the British pound, whose economies together account for half of global GDP.
12 Many countries use policies to manage the value of their currencies, although some manage it more than others. This includes many small countries, such as Panama and Hong Kong, as well as a few larger economies, such as China and Saudi Arabia.
In 2014, 43.5% of countries used a “soft” peg, which let the exchange rate fluctuate within a desired range, and 13.1% of countries used a “hard” peg, which anchors the currency’s value more strictly, including the formal adoption of a foreign currency to use as a domestic currency (for example, Ecuador has adopted the U.S. dollar as its national currency).
13 No large country uses a hard peg. Figure 1 depicts the exchange rate policies adopted by different countries.
rcookie says(): 10 Exchange rates were, in theory, fixed but “adjustable,” meaning that countries could adjust their exchange rates to correct a “fundamental disequilibrium” in their exchange rate. In practice, it was rare for a country to adjust its exchange rate outside of a narrow band.
11 IMF, Annual Report on Exchange Arrangements and Exchange Restrictions, 2014. Exchange rate data on how the exchange rate policies work in practice (the “de facto” exchange rate policy), which may or may not match the official description of the policy (the “de jure” exchange rate policy).
Countries that are members of a currency union (where multiple countries may adopt use of the same currency, including the Eurozone, the East Caribbean Currency Union, the West African Economic and Monetary Union, and the Central African Economic Community) are coded according to how the currency is managed.
For example, the euro is a floating currency, and individual members of the Eurozone for this purpose are counted as having adopted floating exchange rates.
12 IMF, World Economic Outlook Database, October 2014.13 13% use other managed arrangements that do not fall neatly into a “soft” peg or “hard” peg category, sometimesbecause the government changes exchange rate policies frequently.
rcookie says():Exchange Rate Misalignments
Many economists believe that exchange rate levels can differ from the underlying “fundamental” or “equilibrium” value of the exchange rate. When an actual exchange rate differs from its fundamental or equilibrium value, the currency is said to be misaligned. More specifically, when the actual exchange rate is too high, the currency is said to be overvalued; when the actual rate is too low, the currency is said to be undervalued.
Considerable debate exists about what the fundamental or equilibrium value of a currency is and how to define or calculate currency misalignment.14 For example, some economists believe that a currency is misaligned when the exchange rate set by the government, or the official rate, differs from what would be set by the market if the currency were allowed to float.
By this reasoning, governments that take policy actions to sustain an exchange rate peg, such as intervening in currency markets, most likely have misaligned currencies. Additionally, this view suggests that floating currencies, by definition, cannot be misaligned, since their values are determined by market forces.
rcookie says():For other economists, a currency can be misaligned even if it is a floating rate. This is the case if the exchange rate differs from its long-term equilibrium value, which is based on economic fundamentals and eliminates short-term factors that can cause the exchange rate to fluctuate.
Defining or estimating an equilibrium exchange rate is not a straightforward process and is complex. Economists disagree on the factors that determine an equilibrium exchange rate, and whether the concept is a valid one, particularly when applied to countries with floating exchange rates.
Economists have developed a number of models for calculating differences between actual exchange rates and equilibrium exchange rates. Estimates of whether a currency is misaligned, and if so, by how much, can vary widely depending on the model used.15
rcookie says(): THIS IS FROM THE CONGRESSIONAL RESEARCH SERVICE “Current Debates over Exchange Rates: Overview and Issues for Congress” FROM SEPTEMBER 17, 2015…..
rcookie says():Addressing Disagreements over Exchange Rates
Government policies that impact exchange rates have been a source of contention among countries. Various avenues have been developed or explored over the years to address specific currency disputes, both at the multilateral level and through U.S. law, with varying degrees of impact.
On the multilateral front, countries have made commitments to refrain from manipulating their exchange rates to gain an unfair trade advantage through the International Monetary Fund (IMF).
Additionally, some argue that commitments made in the context of the World Trade Organization (WTO) are relevant to disagreements over exchange rates, although this view is disputed. Exchange rate issues have also been addressed in the past through less formal channels of international economic coordination among small groups of developed economies.
rcookie says():In addition to these multilateral forums, the United States has also adopted legislation to address unfair exchange rate policies pursued by other countries.
In 1988, Congress enacted legislation to address currency manipulation by other countries. Congress has also included provisions on exchange rates in previous TPA legislation.Exchange rate issues have been a key source of discussion at recent G-7 and G-20 meetings, but little formal or concrete action has occurred beyond these discussions.
52 Neither the IMF nor the U.S. Treasury Department has found any country to be manipulating its exchange rate in recent years.
rcookie says():Forums to Potentially Address Disagreements
International Monetary Fund
With a nearly universal membership of 188 countries, the IMF is focused on promoting international monetary stability
53 The IMF has engaged on the exchange rate policies of its member countries as part of its mandate, arguably motivated by the experience of competitive devaluations in the 1930s.
54 Its role on exchange rates has evolved over time.
55 Currently, IMF member countries have agreed to several obligations on exchange rates in the IMF’s Articles of Agreement, the document that lays out the rules governing the IMF and establishes a “code of conduct” for IMF member countries.
56 The Articles state that countries can use whatever exchange rate system they wish—fixed or floating—so long as they follow certain guidelines; that countries should seek, in their foreign exchange and monetary policies, to promote orderly economic growth and financial stability; and that the IMF should engage in “firm” surveillance over the exchange rate policies of its members.
57 The Articles also state that IMF member countries are to “avoid manipulating exchange rates or the international monetary system in order to prevent effective balance of payments adjustment or to gain an unfair advantage over other members.”
58 An IMF Decision, issued in 1977 and updated in 2007 and 2012, provides further guidance that, among other things, “a member will only be considered to be manipulating exchange rates in order to gain an unfair competitive advantage over other members if the Fund determines both that: (a) the member is engaged in these policies for the purposes of securing fundamental exchange rate misalignment in the form of an undervalued exchange rate; and (b) the purpose of securing such misalignment is to increase net exports.”
59 If a member country were to be found to be in violation of its obligations to the IMF, under the rules laid out in the Articles, it could be punished through restrictions on its access to IMF funding, suspension of its voting rights at the IMF, or, ultimately, expulsion from the IMF.
60To date, the IMF has never publicly cited a member country for currency manipulation.
61 Some argue that the IMF’s definition of currency “manipulation” has made it tough to go after “currency manipulators.” They argue that it requires the IMF to determine or demonstrate that policies shaping the exchange rate level have been for the express purpose of increasing net exports, and that “intent” is hard to establish.
62 Even if the IMF could demonstrate a country is manipulating its exchange rate under its definition of the term, some analysts also argue that, in practice, the IMF does not have a credible mechanism for dealing with currency manipulation, particularly countries that are not reliant on IMF financing.
63 They argue that it is extremely unlikely the IMF would actually strip violators of their IMF voting rights or expel them from the institution.
rcookie says():World Trade Organization
With 159 member countries, the WTO is the principal international organization governing world trade. It was established in 1995 as a successor institution to the General Agreement on Tariffs and Trade (GATT), a post-World War II institution intended to liberalize and promote nondiscrimination in trade among countries.
Unique among the major international trade and finance organizations, the WTO has a mechanism for enforcing its rules through a dispute settlement process.
Given the relationship between exchange rates and trade, some have argued that the World Trade Organization (WTO) has a role to play in responding to currency disputes. Some analysts and lawyers have examined whether WTO provisions allow for recourse against countries that are unfairly undervaluing its currency.
64 One aspect of the debate is whether WTO agreement on export subsidies applies to countries with undervalued currencies.
The WTO Agreement on Subsidies and Countervailing Measures specifies that countries may not provide subsidies to help promote their national exports, and countries are entitled to levy countervailing duties on imported products that receive subsidies from their national government.
65 Some economists maintain that an undervalued currency lowers a firm’s cost of production relative to world prices and therefore helps encourage exports. Some argue, then, that an undervalued currency should count as an export subsidy.
It is not clear, however, whether intentional undervaluation of a country’s currency is an export subsidy under the WTO’s specific definition of the term, and thus is eligible for recourse through countervailing duties under WTO agreements.
For example, the subsidy must be, among other things, specific to an industry and not provided generally to all producers. There is debate over whether intentional undervaluation of a currency is “industry specific” because it applies to everyone.
rcookie says():Another aspect of the debate relates to a provision in the GATT (the WTO agreement on international trade in goods), which states that member countries “shall not, by exchange action, frustrate intent of the provisions” of the agreement.
66 Some analysts argue that policies to undervalue a currency are protectionist policies, and thus should count as an exchange rate action that frustrates the intent of the GATT.
Others argue that the language is too vague to apply to undervalued currencies.
67 Specifically, they argue that the language was written to apply to an international system of exchange rates that no longer exists (the system of fixed exchange rates, combined with capital controls, that prevailed from the end of World War II to the early 1970s).No dispute over exchange rates has been brought before the WTO,
68 and whether currency disputes fall under the WTO’s jurisdiction remains a contested
issue. larrykn says():I like talking about the WTO 🙂
rcookie says():Conclusion
69 Exchange rates are important prices in the global economy, and changes in exchange rates have potentially substantial implications for international trade and investment flows across countries. Following the global financial crisis of 2008-2009, tensions among countries over exchange rate policies arguably broadened.
Some policymakers and analysts have expressed concerns that some governments are pursuing exchange rate policies to gain a trade advantage, as many countries grapple with economic recession or slow growth and high unemployment following the financial crisis.
Concerns have focused on both government interventions in currency markets in a number of other countries, including China and Switzerland, and expansionary monetary policies in some developed economies.
On the other hand, some economists argue that the effects of exchange rate policies are nuanced, creating winners and losers, and that it is hard to make generalized claims about the negative effects of “currency wars.”
Members concerned about the competitiveness of the United States may want to weigh the pros and cons of taking action on exchange rate disputes. If policymakers do want to take action, a number of policy options are available.
Some Members of Congress have proposed legislation to address currency undervaluation by other countries and proposed addressing currency issues in on-going trade negotiations, particularly in the context of the proposed TPP and any renewal of TPA.
Members could also urge the Administration to press the issue more forcefully at international institutions, such as the IMF or WTO, or more informal forums for international cooperation, including the G-7 or the G-20.
To date, the most formal response to current tensions over exchange rates has been through discussions at G-7 and G-20 meetings. Although frameworks have been set up for addressing currency “manipulation” at the IMF and through U.S. law, neither the IMF nor the U.S. Treasury Department has taken formal action on current disputes over exchange rates.
There are debates about why formal action has not been taken at these institutions. One general complicating factor in addressing currency disputes is that estimating a currency’s “fundamental” or “true” value is extremely complex and subject to debate among economists.
rcookie says():WE NOW RETURN YOU BTO YOUR REGULARLY SCHEDULED PROGRAMMING……YOU ARE FREE TO WALK ABOUT THE CABIN………
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