Sunday Morning Iraq Economic News Highlights 12-18-22
Newspapers Continue To Follow The Rise In The Exchange Rate Of The Dollar And Talk About Measures Taken By The House Of Representatives After The End Of Its Legislative Recess
Saturday 17 December 2022 Baghdad / NINA / – The newspapers published in Baghdad today, Saturday, the seventeenth of December, continued the issue of the rise in the exchange rate of the dollar, and talked about procedures for the House of Representatives in this regard after the end of its legislative recess.
Al-Zaman newspaper said: “The government has renewed its commitment to maintaining the stability of the local market, by supporting the stability of the exchange rate of the dollar against the dinar, confirming support for the central bank’s steps in this regard.”
It quoted a government statement: “The rise in the exchange rate is temporary as a result of changing the mechanism by which the foreign currency sale window operates in the Central Bank, and we assure citizens that the financial situation of Iraq is in its best condition .”
She referred to the government’s call on all dealers, including investors and merchants, to cooperate with banks and the central bank by working in accordance with the commercial contexts in force globally, and importing under documentary credits, as it provides a guarantee for the importer, preserves his rights, insures the imported goods, and enables him to benefit from banking facilities to cover the value of goods. Accreditation.
Economic expert Taha Al-Dhaif said, according to the newspaper: “There are measures capable of reducing the exchange rate of the dollar and its stability, including the payment of salaries of retirees in dollars and at the official exchange rate set by the Central Bank , and experimenting with that for a period of two months, so there is no loss for the state or for the retirees, which will contribute to the recovery of local markets.” according to supply and demand.
The economist emphasized the limitation of selling dollars by the Central Bank, which amounted to $266 million per day under the justification of opening documentary credits for commodity import purposes, indicating:
“This process aims to smuggle currency and money laundering, because the corresponding imports are often worthless.” Its harm is more than its benefit and without its real prices, which affected even adulterated and expired medicines whose new dates have been reinstalled on their covers, in addition to the poor quality of their origins.”
He called for a review of the $10 million that is sold to every private bank per week at the official price, since these banks are used to selling them to exchange companies at the market price and making profits from the official price difference.
As for Al-Sabah newspaper, published by the Iraqi Media Network, it said: “After the end of the legislative recess, Parliament heads to interrogate the Prime Minister and the Governor of the Central Bank after the end of the legislative recess in the House of Representatives, in the event that the measures taken fail to restore the exchange rate to its normal state, although expectations indicate the end of the rise in the exchange rate of the dollar against the Iraqi dinar this week.
A member of the Parliamentary Legal Committee, Raed Al-Maliki, said in an interview with Al-Sabah: “The government has begun work to restore the exchange rate by taking some measures,” noting: “Parliament, by virtue of its oversight work , has monitored the government’s work, and two points or two violations have been diagnosed so far.The failure in fiscal policy and the exchange rate, a failure that demonstrated the government’s inability to control the issue of the exchange rate and fiscal and monetary policy.
He added, “Parliament is monitoring the government’s actions during this period, and will await the results of these measures until the end of the legislative recess,” waving a demand to interrogate the prime minister and the governor of the central bank, if no results are reached in this regard and the exchange rate returns to its previous state.
A member of the Finance Committee, Jamal Cougar, explained in an interview with Al-Sabah that the US Federal Bank’s pressure on the Central Bank of Iraq increased the dollar’s exchange rate, as some banks participating in the currency auction were excluded, and the bills of other banks participating in the currency auction were excluded.
Cougar expects that the exchange rate will stabilize after completing the government’s procedures to reduce the exchange rate, and as soon as everyone knows the need to submit accurate bills, and upon submission, the issue will be resolved, indicating that “during the next week or its end, we will witness a decline in the exchange rate,” stressing that: “it is impossible to stop the sale of foreign currency, since the country’s resources are based on it.”/
A Parliamentarian Reveals The Date Of The Decline In The Dollar Exchange Rate
Baghdad Today – Baghdad Economist Nabil Al-Marsoumi linked on Saturday the rise in the dollar exchange rate to the growth of Iraqi-Chinese relations and the recent US warning about them.
Al-Marsoomi wrote on his Facebook page followed by (Baghdad Today) that “the rise in the exchange rate of the dollar against the dinar by 4% in the parallel market is linked to the establishment of the electronic platform between the Central Bank of Iraq and the US Federal Bank, to conduct real external transfer requests, but it led to a decrease in the total sale of dollars in the Central Bank of Iraq, for the purposes of enhancing balances abroad (remittances, credits), to less than half, which led to restricting the supply of dollars and rejecting 30% of the funds transferred from Iraq to the world external”.
He pointed out that “this matter led to an increase in demand for dollar remittances and then a rise in the dollar exchange rate, and it is remarkable that the activation of this electronic platform and the rise in the dollar came a few days after the US Pentagon warned countries in the Middle East, including Iraq, because of its extensive relations with China.”
Last Thursday, the Central Bank of Iraq attributed the rise in dollar exchange rates in local markets during the previous days to the construction of an electronic platform that meets the requests of banks through it.
A statement by the Central Bank quoted an authorized source as saying that “the slight rise in the dollar exchange rate in the local markets during the previous days is due to some factors, including the construction of an electronic platform through which banks raise the requests of their customers,” noting that “the bank began months ago to build that platform in coordination with international bodies for the purpose of governing and organizing the operations of the window of buying and selling foreign currency and ensuring the effectiveness of control over it, as a specialized international company was assigned to build it and link banks with the Central Bank from During it.
“The platform requires providing information about customers requesting transfers, beneficiaries, correspondent banks, etc.,” he said, explaining that “due to the novelty of using this platform, many errors are being discovered, which requires the bank to re-upload them. These procedures take additional time to accept the application and pass it through the global financial system.”
The source said, according to the statement, that “in this regard, the reserves of the Central Bank and the solvency of the state in general are in excellent condition and at their best levels in decades, and that the current supply of foreign currency is not linked to resources, but to administrative and audit procedures, which will be exceeded in the coming days in addition to that.”
He stressed that “the Central Bank has taken a number of measures to expand the foreign exchange supply to meet the public’s demand for cash dollars, and the window management has been directed to meet the requests of banks for the coming days faster by implementing double requests and a preferential rate has been given for the implementation of documentary credits, and for the purpose of covering domestic demand,” according to a statement received by Baghdad Today.
A member of the Finance Committee, Jamal Kojar, had revealed on Friday, the reasons for the fluctuation and rise in dollar prices in the local markets, noting that “after 42 banks were participating in the auction of the sale of currency in the Central Bank, 7 banks were excluded from the auction due to US pressure on the Central Bank of Iraq due to corruption and money laundering.” LINK
Economist Links The Rise Of The Dollar Against The Dinar To The Growth Of Iraqi-Chinese Relations
Economist Nabil Al-Marsoumi linked on Saturday the rise in the dollar exchange rate to the growth of Iraqi-Chinese relations and the recent US warning about them.
Al-Marsoomi wrote on his Facebook page followed by (Baghdad Today) that “the rise in the exchange rate of the dollar against the dinar by 4% in the parallel market is linked to the establishment of the electronic platform between the Central Bank of Iraq and the US Federal Bank, to conduct real external transfer requests,
but it led to a decrease in the total sale of dollars in the Central Bank of Iraq, for the purposes of enhancing balances abroad (remittances, credits), to less than half, which led to restricting the supply of dollars and rejecting 30% of the funds transferred from Iraq to the world external”.
He pointed out that “this matter led to an increase in demand for dollar remittances and then a rise in the dollar exchange rate, and it is remarkable that the activation of this electronic platform and the rise in the dollar came a few days after the US Pentagon warned countries in the Middle East, including Iraq, because of its extensive relations with China.”
Last Thursday, the Central Bank of Iraq attributed the rise in dollar exchange rates in local markets during the previous days to the construction of an electronic platform that meets the requests of banks through it.
A statement by the Central Bank quoted an authorized source as saying that “the slight rise in the dollar exchange rate in the local markets during the previous days is due to some factors, including the construction of an electronic platform through which banks raise the requests of their customers,”
noting that “the bank began months ago to build that platform in coordination with international bodies for the purpose of governing and organizing the operations of the window of buying and selling foreign currency and ensuring the effectiveness of control over it, as a specialized international company was assigned to build it and link banks with the Central Bank from During it.
“The platform requires providing information about customers requesting transfers, beneficiaries, correspondent banks, etc.,” he said, explaining that “due to the novelty of using this platform, many errors are being discovered, which requires the bank to re-upload them. These procedures take additional time to accept the application and pass it through the global financial system.”
The source said, according to the statement, that “in this regard, the reserves of the Central Bank and the solvency of the state in general are in excellent condition and at their best levels in decades, and that the current supply of foreign currency is not linked to resources, but to administrative and audit procedures, which will be exceeded in the coming days in addition to that.”
He stressed that “the Central Bank has taken a number of measures to expand the foreign exchange supply to meet the public’s demand for cash dollars, and the window management has been directed to meet the requests of banks for the coming days faster by implementing double requests and a preferential rate has been given for the implementation of documentary credits, and for the purpose of covering domestic demand,” according to a statement received by Baghdad Today.
A member of the Finance Committee, Jamal Kojar, had revealed on Friday, the reasons for the fluctuation and rise in dollar prices in the local markets, noting that “after 42 banks were participating in the auction of the sale of currency in the Central Bank, 7 banks were excluded from the auction due to US pressure on the Central Bank of Iraq due to corruption and money laundering.” LINK
The Effectiveness Of Monetary Policy Between Anti-Money Laundering Measures And The Threat Of The Fixed Exchange System
Dr.. Haitham Hamid Mutlaq Al-Mansour Monetary policy is the main macroeconomic arm through which the overall monetary balance is controlled by the central bank formulating its operational objectives to achieve price stability, through its quantitative and qualitative tools, to pass its control measures on commercial banks by reducing the money supply and reducing inflationary pressures, and continuing to Maintaining the stability of low inflation levels, through the fixed exchange rate system.
And due to the importance of the fixed exchange rate system that has been followed by the monetary authority in Iraq for many years, the directly related parties must work to protect this system from its low effectiveness, as it constitutes an objective guarantee in the reality of the rentier economy to maintain real income levels when planned and within the level of safety. required by the government.
And whoever tracks the current economic facts, it is noted at the level of monetary policy in Iraq, and after the response of the supervisory role of the Central Bank to international requirements in managing the exchange rate of the dollar and combating money laundering and financing terrorism,
including the ban on the activity of some banks from dealing in dollars, as they are internationally condemned for the suspicious operations they run to smuggle the currency , and money laundering, and then preventing these banks from dealing in dollars has led to a sharp decline in the supply of dollars, after the Central Bank was selling more than 280 billion dollars, it now sells about 75 million dollars,
most of these sales go in the form of transfers abroad to finance trade Foreign affairs, while the selling price of the dollar transferred to bank accounts abroad, in addition to the cash sale, reached 1460 dinars per dollar. It was reflected in the high demand for the dollar for import purposes, which made the market exchange rate rise clearly.
Turning to the fixed exchange rate system, the decrease in the supply of the dollar resulted in an alarming rise in the exchange rates of the dollar, as the exchange rate of one dollar exceeded the limits of 1460 to 1500 dinars, but seriously indicates a decline in decisiveness in monetary policy measures towards inflation rates resulting from the continuous rises since More than two weeks in the local markets (despite the rise in the balance of foreign reserves to the threshold of 90 billion dollars),
so that the exchange rate of the US dollar rose to more than 0150 Iraqi dinars, with a price difference of 3 dollars, or approximately 5000 dinars per hundred dollars from the price of The official exchange in which the dollar is sold to commercial banks.
The real fears could come that the continued rise in demand for the dollar will raise the level of the dollar exchange rate threshold and move it from 1460 to 1500, and thus the level of inflation will move to other stages that may lead to difficulty returning to the 1460 threshold, especially in light of media statements close to a decision Central that the price of 1460 is no longer commensurate with the market.
There is no doubt that the rise in the exchange rate of the dollar and its fluctuation in the direction of the rise, are reflected realistically and directly on the prices of commodities and basic and luxury materials, and in the midst of the increasing fears of the Iraqi consumer about the continued reflection of the sharpness of the continuous rises in the exchange rate of the dollar on the real value of money,
especially for those with limited and middle-income as well For vulnerable groups, which constitutes a real obstacle to the stability of the standard of living, and the significant impact of the aforementioned increases on inflation levels and its negative impact on the performance of the private investment sector is evident through the fluctuation in investor expectations and the prevailing atmosphere of uncertainty arising from the continuous announcement of the central bank about the reduction,
and the lack of response to prices The exchange of policy measures in the markets, which raises a real question about the extent of the effectiveness of these measures and the extent to which they touch the reality and the suffering witnessed by the various social segments as a result of the apparent decrease in the value of money.
Turning to the inflation targeting policy, it is inferred from the above-mentioned effects, the low performance of the inflation targeting policy through the fixed exchange system in a way that does not guarantee financial stability in the Iraqi markets, including the difference in the value of the Iraqi dinar and its decline to new, lower limits, which will threaten the stability of real income and financial and macro balance, which It requires the Central Bank to enter into more effective measures to return to the limits that prevailed in the past year, at least 146-147.
Therefore, to maintain the effectiveness of monetary policy in its direction of curbing inflation and to achieve its strategic goal of low and stable inflation, two pivotal steps can be identified:
1- The central bank should take a short-term strategy commensurate with the recent supervisory role and limit its effects on the reality of local exchange rates and the general level of prices, in order to achieve low and stable inflation, by regulating the money supply by following a deflationary policy that seeks to absorb liquidity and spare the country the risks of an increasing rise in the general level. prices by increasing the supply of dollars through the window.
2- Inventing and implementing new mechanisms that contribute to compensating for the decrease in the Central Bank’s dollar sales. 441 views Added 12/17/2022 – 10:30 AM Updated 12/18/2022 – 12:55 PM https://economy-news.net/content.php?id=31381
Iraq Increases Its Holdings Of US Bonds To Nearly $38 Billion
2022-12-18 00:05 Shafaq News/ The US Treasury Department announced, on Sunday, that Iraq increased its holdings of US bonds to more than one billion dollars during the month of October.
And the treasury stated in its latest table, seen by Shafaq News agency, that “Iraq’s possession of US Treasury bonds for the month of October of the year 2022 increased by 1.063 billion dollars, to reach 37.968 billion dollars, after it was 36.905 billion dollars last September,” indicating that ” These bonds increased by 86.27% over the same month last year 2021, when Iraq’s possession of bonds amounted to $20.4 billion.
And she added, “Iraqi bonds, including long-term guarantees of $26.363 billion and short-term guarantees of $11.605 billion,” noting that “these bonds represent 0.51% of the world’s bonds.”
In the Arab world, Saudi Arabia comes at the forefront of the countries with the most possession, amounting to 121.095 billion dollars, and the UAE comes second with 53.935 billion dollars, then Kuwait comes third with 50.285 billion dollars, and then Iraq fourth, and the Sultanate of Oman fifth with 6.948 billion dollars, then Morocco with 3.761 billion dollars.
The treasury indicated that “the most holders of US bonds are Japan with 1.078.241 trillion dollars, followed by China with 909.554 billion dollars, followed by the United Kingdom with 638.539 billion dollars, and then comes Belgium with 327.294 billion dollars.” LINK
