Samson: After Coming Under Heavy Criticism … The Central Bank Stops The Currency Auction
4th June, 2020
An informed source confirmed that the Central Bank of Iraq management has finally decided to stop the auction of foreign currencies after the Iraqi economy was subjected to severe setbacks due to the Corona pandemic and the drop in oil prices to record levels, and the Central Bank followed a failed monetary policy.
The source, who spoke on condition of anonymity, said to Al-Mustaqila that the central bank governor has been subjected to great pressure in the past few days by many political blocs, the media and economists because of his unjustified insistence to proceed with the foreign currency auction window despite all the losses and risks incurred by the economy Iraqi.
The data published on the website of the Central Bank indicates that the last date for which a currency auction was held was on Thursday, 21/5/2020, when more than $ 180 million was purchased with the participation of more than 30 banks at the auction.
Below is the link for the results of the foreign currency sale window https://cbi.iq/currency_auction/all
DELTA: STOPPING AUCTION….WHERE AND WHEN DID WE HEAR THAT?………..KTFA TEAM YOU ROCK.
LarryH: There we go. In Black and White. Talking about Tic Tok. We have it NOW.
JJimmyJJ: Sooo, the Central Bank has stopped the currency auction. The thing that all of us have been looking for since we first invested has finally happened–officially, in print!
Because this is so momentous, let us review what this means:
* Iraq, by international law and international sanctions, can not use their currency to make international payments unless and until they are Article 8.
* To get around this, they established the US currency auction to allow businesses to exchange dinar for dollars to pay for imports (and to get paid for exports).
* Last year, Iraq stopped allowing the US dollar to be used inside Iraq. They must conduct commerce in Iraqi dinar.
* Thus, as of now, Iraq has no way for private businesses to gain access to hard currency (US dollars) for international commerce. Iraqi’s abroad have no way to send money back to family members.
* Officially, Iraq is now cut off from the international economy.
They were already Article 8 (and just hadn’t publically announced it yet). Since Frank has been yelling this from the rooftops for a year, and we trust him, let’s assume that Iraq has already accepted the demands of Article 8.
Assuming that is the case, why did Iraq just take this public step (after a year of privately conducting business under Article 8) that seems to effectively announce that Iraq is cut off from the world?
BECAUSE, (IMO) THEY ARE GOING TO PUBLICALLY ANNOUNCE THAT THEY ARE ARTICLE 8.
And, once they do that, as part of Article 8 obligations (as Delta has told us many times), they can’t leave their currency at a program rate. They have to play by the rules at that point.
This, IMO, is the smoking gun of all smoking guns. Everything is now over but the shouting.
Will: Thank you for this break down. This is a doozy. Let’s see what the brokers start doing. They’d be crazy to continue selling at a program rate if this is about to flip.
MilitiaMan: By George I think you have it.. lol ~ MM
Now add in the meeting with Alak and the President on financial ongoing’s. Then think about the upcoming meetings to vote on Cabinet, then add in the ISX is “” scheduled to open again on Sunday., then there is the SFA for the 10th – 11th. All the talk about the borders, taxes & tarrifs, fees all being electronic, the contracts adjusting for shipping costs by 07/01/2020 need to be in place by then. Those things need an international rate and pronto!! The convergence is astonishing! imo .. ~ MM
The media office of the Presidency of the Republic, in a statement received by “Gilgamesh Press”, said that “Barham Salih received at the Palace of Baghdad, the Governor of the Central Bank of Iraq, Ali Mohsen Ismail al-Alaq
“The President of the Republic stressed “the importance of following rational financial policies that would achieve the supreme national interest and assist Iraq in overcoming the current crisis and achieving economic stability for citizens” LINK
The President of the Republic emphasizes adopting a balanced monetary policy and working to strengthen the financial situation
JJimmyJJ: Amen, brother. The difference between today and the preceding years is astounding. Before, you’d follow a juicy piece of evidence, but then it would just fade away–nothing would happen with it. Now, those juicy pieces are intertwined with more pieces of evidence, which reinforce still more pieces of intel. If you think of those strands of evidence like blasting cord in a building to be imploded, whereas before all those cords were laying by themselves, now they’re all interconnected, and they’re all attached to the detonator.
MilitiaMan: Yes Sir, AMEN… There is no stopping this now from the looks of it. All has been coming together and shows that all the years of work, now are aligned and ready to go international.. They have published time lines for contractual issues, that will have to be adhered to. I am smiling!!
Warmly welcome Al-Kazemi … Pompeo pledges financial support for Iraq to recover “instantly” link
MilitiaMan: Interesting choice of words. Fairly sure all the things in the news of late support that the USA will be glad to help out and support iraq for trillions or reasons, no burden at all. . I like the way he congratulates him again on his new government… lol ~ MM
DELTA: IT’S COMING ……..GREAT ARTICLE………
Don961: With documents .. Al-Fayyad directs the crowd formations to abandon partisan work and close the headquarters inside the cities
Policy 04/06/2020 10:24 2518 Editor: ha
Baghdad today – Baghdad
The head of the Popular Mobilization Authority, Faleh al-Fayyad, issued generals to all cooperatives, directorates, and formations, including 10 paragraphs, the most prominent of which are the closure of brigade headquarters and cohorts within cities and the abandonment of partisan work.
According to the documents obtained by (Baghdad Today), the cousins include the decision to commit to dismantling any political and non-political ties to the formations of the commission, and to give up all the names that the PMF had previously worked in its battles against ISIS. LINK
MilitiaMan: Looks like it is a STAND DOWN now message!! WOW… This is security at it’s finest. The timing of this is no coincidence. Even within moments effectively ago. Pompeo is telling Iraq that we will support you instantly.. Then this? Nice! Perfect timing before the SFA meeting.. WOW~ ~MM
DELTA: FROM IRAQI TV….”Trends towards changing the policy of the dollar and the exchange rate”
DELTA: GREAT JOB DON………I DID REPORT TO YOU FAMILY LAST WEEK THAT CBI IS COMING OUT WITH NEW RATE….WE ARE FASTER THAN ARTICLE………(smile)
Don961: Conscious / reduce the Iraqi dinar exchange rate … punish people
Hussein al-Asadi June 3, 2020
Iraq is going through extremely sensitive conditions, as the Iraqi economy faces a real challenge after the catastrophic failure to find alternatives to selling crude oil. I confirm here the sale of crude oil and not the oil refining industry and the petrochemical industry.
Iraq is one of the largest oil reserves in the world, as it has 147.2 billion Barrel according to explorations in 2018, or 8.5% of the balance’s global reserves – – and yet he annually imports 3.3 trillion Iraqi dinars in oil products – the annual report of importing Iraq 2018, the Central Statistical Organization 2019 – and he imports energy worth 7 trillion Iraqi dinars – the 2019 budget Iraqi facts: Issue 4529 on 11/11/2019 – all of which can be produced in Iraq, as well as other resources such as agriculture, various industries, trade, tourism, etc.,
With no Sovereign Wealth Fund that provides additional imports and a portfolio to protect the future of generations, especially in times of crisis, Iraq today Asking for aid to pay the salaries of employees and retirees is that what enters the treasury is not equal to a quarter of what Iraq needs to cover salaries only.
The financial budget for the year 2019 was allocated to the salaries of retired civilians and the military (9,316,652,417,000) Iraqi dinars, and the salaries of employees equal (43,404,629,267,000) Iraqi dinars For the year 2019, the amount is (52,721,281,684,000) Iraqi dinars, which means that Iraq needs monthly (4,393,440,140,000) Iraqi dinars, and if we take into consideration that the Iraqi dinar exchange is 1,200 dinars per dollar, it means that Iraq needs monthly to (3,660,000,000) approximately one dollar, while the GDP of Iraq is approximately (1,100,000,000) dollars for the month of March and (1,200,000,000) dollars approximately for the coming months, as Iraq needs (2.5) billion dollars approximately per month to cover monthly salary expenses only, this is regardless of other needs,
And to address This catastrophic failure began to raise some voices in order to reduce the Iraqi dinar exchange rate against the US dollar in order to increase the budget number and reduce the deficit in it, and I find it necessary to clarify some of the terms, so the reader may be surprised by the ignorance of many of those who speak in this field, and perhaps they are among those in important positions of responsibility.
Floating Exchange Rate:
Fixed Exchange Rate:
A specific price will be set against a major global currency (usually the US dollar, but also other major currencies such as the euro, yen, or basket of currencies), in order to maintain On the local exchange rate, the central bank buys and sells its own currency on the foreign exchange market for the currency in which it is linked.
and according to the same logic, it is possible to talk about raising the price of the currency Revaluation in exchange for reducing it, and this is when the exchange rate is subject to the direct management of the government or the central bank as well, and we note that the reduction The price of the currency and its elevation are within one framework which is the fixed exchange of the currency,
but when the exchange rate is subject to the forces of supply and demand (floating the currency) and there is a decline in the value of this currency, depreciation of the currency, the decline is an automatic result of the free interaction between supply and demand in the foreign exchange market without interference Direct from the government or the central bank, according to For the same logic, we can talk about the rise in the value of the currency Appreciation versus its decline, and we note that the rise and fall of the currency price within the currency float.
Since Iraq works within the fixed fixed rate system, we can talk about reducing and raising the exchange rate of the currency, and here I do not want to differentiate between the two systems, each of them has its conditions despite the market economy and its idea that the state should not interfere in economic activities and let the market control itself
It operates a system of floating the currency and its price depends on the iron principle of supply and demand, but the actual conditions of Iraq do not allow for reasons that are too long to be explained.
Countries with a fixed exchange rate resort to reducing the currency exchange rate for economic reasons to improve their balance of trade mainly due to an increase in domestic production versus the importer. The currency reduction makes the difference between the outside and the inside and reduces the importer in front of the exporter, and this assumes that there is internal production It covers the local need and wants to preserve it and export it abroad, but in the Iraqi case, unfortunately, there is no industry, no agriculture, no internal production, it covers the local need as well as being an exporter, as Iraq has nothing to export other than Crude Oil, and I speak here As for the reality of what is there and not what I am calling for, the total imports for the year 2018 for commodities and petroleum products amounted to (37) billion dollars, equivalent to (43.8) trillion Iraqi dinars, and the total imports for the year 2018 for the non-oil commodities (34.1 dollars), i.e. Equivalent (40.5) One trillion Iraqi dinars, and Iraq has no need to reduce the exchange rate, but it is sufficient for it to prevent the import of any material that can be dispensed with.
As for the real effect of the devaluation, it is the direct punishment for the Iraqi people, if we know that 6 million Iraqis receive a salary or aid from the Iraqi government and the number of individuals The Iraqi family is 5 people, we are talking about about 30 million Iraqis who live on what they receive from salaries or aid from the Iraqi government, all of these will be affected by this procedure, because inflation occurs.
Inflation in prices is due to the low purchasing power of the Iraqi dinar, so the family that could have lived in a million dinars An Iraqi after the currency devaluation has become worth 500 thousand dinars, and if she receives a number that is a million, therefore she will live in great distress due to this reduction,
As for the external debtor, it remains the same because in foreign currency the dollar or the like.
Another issue remains here is the confidence of investors and companies in the currency after the devaluation is much less because the stability of the currency is one of the factors that encourage investment and entry in projects as well as problems related to economic feasibility after the devaluation, which is the basis of the intervention of the government or the central bank in fixing the exchange rate or only for work The principle of floating currency from the beginning.
Hence, we believe that those who seek to actually depreciate the currency are punishing the Iraqi people because of the wrong policies and economic failure that brought the country to this situation, as the people in this bear the mistakes of politicians and are punished instead of them. LINK