TNT:
Tishwash: Economist: Conflicting statements about the dollar confuse markets and investments
The professor of economics at the University of Basra, Nabil Al-Marsoumi, warned against conflicting statements regarding the dollar, indicating that it confuses markets and investments.
Al-Marsoumi said in his blog post, followed by “Nass” (November 11, 2022), “The Prime Minister says that setting the exchange rate is one of the tasks of the Central Bank of Iraq exclusively, and the Governor of the Central Bank says that the price of the dollar against the dinar will remain fixed for several years, then he returns to deny his statement, and in return, collectors The signatures threaten not to pass the budget in Parliament in the event of not returning to the old exchange rate.”
He added, “In the midst of these conflicting statements and in light of the state of uncertainty, the currency market is currently suffering from great confusion that has negatively impacted economic life and entered it into the tunnel of stagnation, as everyone is watching exchange rate developments and postponing their purchases and investments, and it seems that the situation will continue like this for several months until a law is approved.” 2023 budget. link
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Tishwash: Central Bank Governor: We were keen to facilitate the procedures for opening the first branch of a private bank abroad
The Governor of the Central Bank, Mustafa Ghaleb, confirmed that the bank was keen to support the “Development Bank” and facilitate the procedures for opening the bank’s branch in the Emirate of Dubai.
Ghaleb said in an interview with “Economy News”, that the Development Bank “opened branches inside Iraq and spread in almost all governorates, and worked to provide international requirements and standards for launching to the regional region, and its first step was the UAE.”
Ghalib added, “We were keen to support this bank and facilitate all procedures for it, and we communicated with the UAE Central Bank, who were keen with us to provide these requirements and complete the fundamental procedures to open this branch.”
He continued, “We, as the management of the Central Bank of Iraq, were keen to attend the opening of this branch, as it is the first private sector bank to open a branch outside Iraq to strengthen economic relations between the two countries link
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Tishwash: Iraq’s market turmoil: calls to change the price of the dinar are political bids
A Member of political parties called for raising the value of the local currency against the dollar and returning the Iraqi dinar to the price it was more than two years ago, while other parties called for a slight decrease in the dollar, which would lead to a structural change in the balance of the local market on the one hand, And relieve part of the suffering of the citizen.
The Central Bank of Iraq had earlier reduced the value of the local currency by raising the dollar exchange rate to 1450 dinars, after it was within 1200 dinars, in a move aimed at compensating for the decline in oil revenues, and Iraq’s need for cash to cover expenses and salaries.
And the former Iraqi Prime Minister, Nuri al-Maliki, called for the need to reduce the dollar exchange rate to pay harm to the citizen and strengthen the national economy.
Al-Maliki said in a statement last week that decreasing the price of the dinar and not addressing the effects on the citizen causes a difficult economic and living crisis that must be addressed, noting that the government must address this file by developing a well-studied and integrated plan.
Al-Maliki suggested that the exchange rate be 1375 dinars instead of 1450 dinars per dollar, an alternative solution between the old price and the current price.
However, the current Iraqi Prime Minister, Muhammad Shia Al-Sudani, confirmed in his recent statements that the decision to change the exchange rate of the dinar against the dollar is exclusively the prerogative of the Central Bank, and the government is committed to implementing what he sees, after he had promised before taking office to return the exchange rate to the previous rate.
The position of the Central Bank
An official in the Central Bank of Iraq commented on Al-Maliki’s proposal to reduce the exchange rate of the dollar against the Iraqi dinar to 1375 dinars against the dollar, saying: The Central Bank does not intend to change the exchange rate of the dollar against the dinar, during the next stage at the near or long level And any manipulation of this price will have negative consequences on the Iraqi economic situation.
And the official, whose identity was not revealed to local newspapers, indicated that the Central Bank will keep the current exchange rate as it is without any manipulation, and this matter was resolved and the new government was informed of this decision, according to an economic vision that supports the Iraqi economy at the near and long level.
For his part, the Governor of the Central Bank, Mustafa Mikhaif, said earlier that the Central Bank has no intention to reduce or change the dollar exchange rate, stressing that his country is still in the early stages of reaping the positive effects of changing the exchange rate, and there are some negative indicators that it is working to address. during the coming period.
Economic warnings
As well, specialists in financial and economic affairs warned of the danger of changing the dollar’s exchange rate against the dinar, because of the damages that greatly affect the national economy.
The researcher in economic affairs, Ali Awad, stressed that the frequent change of the exchange rate is one of the main motives for speculating on the currency and heading towards real and in-kind assets to preserve value, which increases the price of these assets at the expense of saving and investment in the productive sectors of the economy.
Awad stressed to Al-Araby Al-Jadeed that changing the exchange rate under political pressure may lose the central bank’s independence, weaken the credibility of monetary policy and its role in achieving monetary and financial stability for the country, and is a negative indicator of investment and the international classification of the Iraqi economy.
The researcher added in the economic affairs, that changing the exchange rate of the dollar against the dinar, will lead to striking economic and financial stability and create winners and losers in the market, and may lead to a lack of confidence in foreign investment in the Iraqi economy, in addition to losing the confidence of companies and individuals in the banking system, which disrupts the movement of Deposits and loans are putting pressure on the Iraqi banking system.
He also continued, that decreasing the exchange rate of the dollar increases the burden of the internal public debt on the budget and the economy, and with the rise in global production costs and the doubling of transportation and insurance costs as a result of the Ukrainian-Russian war and the repercussions of the Corona pandemic that preceded it, all of this increases the reality of the rise in prices of imported goods and materials.
Awwad stressed the need to correct the economic situation, to reduce the inflation rate and confront unemployment and poverty, instead of suddenly changing the dollar’s exchange rate against the dinar again, as it has very great economic and financial risks.
Political bidding
In turn, the Iraqi financial expert, Abdul Rahman Al-Sheikhly, said that the Central Bank is the only entity authorized to change the exchange rate in accordance with Article 16 of the Central Bank Law, which granted it to deal in dollars exclusively and determine the nature, form and mechanisms of exchange.
Al-Sheikhly indicated to Al-Araby Al-Jadeed that calls for changing the exchange rate are part of the political bidding at the expense of the simple citizen.
The Iraqi financial expert, Abdul Rahman Al-Sheikhly, said that the Central Bank is the only body authorized to change the exchange rate
The Iraqi financial expert stressed that there are practical and scientific steps that must be worked on and provided, in order to achieve an economic balance in Iraq before working on changing the exchange rate, foremost of which is the development of Iraqi industries, and work to export some Iraqi products to bring in the largest amount of hard currencies at cheap prices.
Al-Sheikhly added that among the factors that must be available, is to find outlets to finance the budget outside the oil rent, by controlling the border crossings and limiting the rampant corruption in those outlets, as well as using the automation of tax and customs fulfillment with professionalism and modern means, and a return to the control system. To import through the Ministry of Planning to determine the materials allowed to be imported from outside the country, and to support and protect the local industry.
Al-Sheikhly stressed the importance of reducing government spending and establishing a base to reduce waste and flight of funds abroad, limiting dealing in the local currency, and that the central bank reserves of the dinar with hard currencies and gold, and the government’s support for citizens by increasing the number of beneficiaries of the social welfare system and raising the percentage of salaries, at least equal to They were not affected by the reduction, which is more than 22 percent of the purchasing power of the dinar. link
