Friday Morning Iraq Economic News Highlights 6-2-23
Friday Morning Iraq Economic News Highlights 6-2-23
The Dollar Is Heading For The Largest Weekly Decline Since The Beginning Of 2003
2023-06-02 Shafaq News/ The dollar headed for its biggest weekly decline since mid-January on Friday, as a view prevailed among investors that the Federal Reserve will abandon raising interest rates this month, which will reduce the dollar's attractiveness to non-American buyers. The US Senate's passage of a bill to suspend the debt ceiling and avoid a catastrophic default also removed a pillar of support for the dollar, which ironically had been one of the main beneficiaries due to its safe-haven status.
The Australian dollar rose after the increase in the minimum wage raised the central bank's bets on raising interest rates again next week.
The dollar index, which measures the US currency against six others, fell by about 0.8 percent this week, in its biggest weekly loss since mid-January. It was last down 0.1%.
Some weakness in US manufacturing data overnight supported the pause, although jobs numbers continued to rise, with more focus than usual on the monthly non-farm payrolls report later in the day.
Money markets are pricing in an upside potential of around 29%, down from around 70% earlier in the week.
The dollar rose to the positive zone against the yen, after recording the longest series of daily losses against the Japanese currency since last November, with four days of decline. The dollar was last up 0.1% at 138.89 Japanese yen.
The pair tends to track long-term US Treasury yields, which were at 3.61% after falling to their lowest since November 18 overnight.
The euro settled at $1.0769, after hitting a one-week high of $1.07685 on Thursday, when European Central Bank President Christine Lagarde said further policy tightening was necessary.
Meanwhile, the US Senate passed a bill to raise the government's $31.4 trillion debt ceiling on Thursday, preparing it for President Joe Biden's signature before Monday's deadline.
The Australian dollar rose as much as 0.68% to $0.662, the strongest level since May 24. The primary trigger was the announcement by Australia's independent wage-setting body that it will raise the minimum wage by 5.75% from 1 July.
Traders are currently placing a 67% chance that the central bank will raise interest rates by 25 basis points. Even if there is no rally next week, the markets are anticipating a rally by the fall. LINK
What Is The Reason For The Continued Rise In Dollar Prices?.. A Sudanese Advisor Answers
Today, Thursday, the advisor to the Prime Minister for Financial Affairs, Mazhar Muhammad, explained the reasons for the continued high exchange rates of the dollar in the Iraqi markets, while stressing that the foreign currency market and the speculators' high demand for the dollar is still continuing.
Mazhar Muhammad said, in a press interview seen by Taqaddam, that “since the end of October 2022, the foreign transfer policy has witnessed new audit applications imposed by international financial cooperation regarding auditing funds transferred outside the country through the foreign currency sale window in order to finance foreign trade for the private sector.” and other permitted financing purposes.
He added, "For the first time, external transfer procedures are linked to an audit platform that monitors compliance levels in the legal and legitimate disposal of funds transferred in US dollars, in order to investigate the natural and legal persons to whom the transfer is made, or the so-called knowledge of (the last beneficiary)."
Al-Sudani’s advisor explained, “The Central Bank of Iraq issued three important and soft packages during the current year that facilitate foreign dealings in dollars through the international compliance platform. The value of the Iraqi dinar increased by 10% in early February 2023, which all led to a decrease in the value of the dollar to the dinar to about 9 points, after it reached its peak by about 20 points in the first weeks of the beginning of this year.
Muhammad stressed, “The foreign currency market and the speculators’ increased demand for the cash dollar is still continuing, to finance informal trade, and the phenomenon continues to put pressure on the stability of the exchange market, which made the dollar rise to about 12 points again, while the levels of banking compliance are increasing.” continuous".
And the exchange rates of the dollar, in the local markets, continue to rise, despite the many measures taken by the government and the Central Bank, as the exchange rate reached, today, Thursday, 1470 dinars for every US dollar. https://takadum-news.com/archives/167209
Stability Of Dollar Exchange Rates In The Local Markets
Economy |Today, Baghdad today – Baghdad Today, Friday, the exchange rates of the dollar recorded stability in the local markets in the capital, Baghdad.
The (Baghdad Today) correspondent said, "The Al-Harithiya and Al-Kifah stock exchanges are closed today and have stopped buying and selling."
He added, "While the selling price in exchange offices reached 147,000 dinars per 100 dollars, and the purchase price amounted to 146,000 dinars per 100 dollars."
Yesterday, Thursday, the exchange rates of the dollar against the dinar recorded an increase in the local markets in the capital, Baghdad, where "the selling price in exchange offices reached 147,000 dinars per 100 dollars, while the purchase price reached 146,000 dinars per 100 dollars." LINK
The Dollar Is Heading For The Largest Weekly Decline Since The Beginning Of 2003
2023-06-02 Shafaq News/ The dollar headed for its biggest weekly decline since mid-January on Friday, as a view prevailed among investors that the Federal Reserve will abandon raising interest rates this month, which will reduce the dollar's attractiveness to non-American buyers.
The US Senate's passage of a bill to suspend the debt ceiling and avoid a catastrophic default also removed a pillar of support for the dollar, which ironically had been one of the main beneficiaries due to its safe-haven status.
The Australian dollar rose after the increase in the minimum wage raised the central bank's bets on raising interest rates again next week.
The dollar index, which measures the US currency against six others, fell by about 0.8 percent this week, in its biggest weekly loss since mid-January. It was last down 0.1%.
Some weakness in US manufacturing data overnight supported the pause, although jobs numbers continued to rise, with more focus than usual on the monthly non-farm payrolls report later in the day.
Money markets are pricing in an upside potential of around 29%, down from around 70% earlier in the week.
The dollar rose to the positive zone against the yen, after recording the longest series of daily losses against the Japanese currency since last November, with four days of decline. The dollar was last up 0.1% at 138.89 Japanese yen.
The pair tends to track long-term US Treasury yields, which were at 3.61% after falling to their lowest since November 18 overnight.
The euro settled at $1.0769, after hitting a one-week high of $1.07685 on Thursday, when European Central Bank President Christine Lagarde said further policy tightening was necessary.
Meanwhile, the US Senate passed a bill to raise the government's $31.4 trillion debt ceiling on Thursday, preparing it for President Joe Biden's signature before Monday's deadline.
The Australian dollar rose as much as 0.68% to $0.662, the strongest level since May 24. The primary trigger was the announcement by Australia's independent wage-setting body that it will raise the minimum wage by 5.75% from 1 July.
Traders are currently placing a 67% chance that the central bank will raise interest rates by 25 basis points. Even if there is no rally next week, the markets are anticipating a rally by the fall. LINK
An Economist Agrees With The “Pessimism” Of International Criticism About Iraq: The Deficit And Spending Are Worrisome
Economist Durgham Muhammad Ali agreed with the International Monetary Fund's report on the latter's pessimistic view of the Iraqi economy, noting that the deficit is worrisome and the spending is large.
Ali said in a press interview, which I saw, “Progress”; “The percentage and size of the deficit in the general budget for the year 2023 is worrisome, and the volume of operating spending is very high, which would have required the House of Representatives to reconsider the items of operational spending.”
He added, "The House of Representatives should also reconsider estimates of oil resources by reducing expectations of the price of a barrel and expectations of the export ceiling, especially with the pessimistic expectations of global growth and the increasing competition in global markets in light of the cheap Russian supply of oil."
He stressed that "the price of oil, which was estimated in the budget, is considered high, in addition to stopping Kurdistan's exports from exporting, which constitutes a loss for the public budget."
The budget for 2023 talks about the existence of 63 trillion dinars as a deficit, in light of the price of $ 70 per barrel of oil.
And the International Monetary Fund had indicated a pessimistic view of the Iraqi economy, as it indicated that the percentage and size of the budget deficit in the short term, the implementation of the authorities’ financial plans could lead to re-igniting inflation and fluctuations in the foreign exchange market, and in the medium term, the continuation of current policies in light of the presence of some Significant uncertainty about the future path of oil prices Critical risks to macroeconomic stability If there is no significant increase in oil prices, the current fiscal situation may lead to an increase in deficits and intensification of financing pressures in the coming years. https://takadum-news.com/archives/167162
Parliamentary Committee: The Decline In Global Oil Prices May Lead To A Reduction In Iraq's Investment Budget
The Parliamentary Oil Committee warned of the repercussions of the continued decline in world oil prices on the volume of financial revenues for Iraq, while noting the possibility of canceling some investment projects due to the size of the deficit.
A member of the committee, Bassem Al-Gharibawi, said in a press interview seen by Taqaddam, “The Oil Committee, since the government announced the details of the 2023 budget, has warned it against adopting the price of a barrel of oil in the budget at a value of $70 per barrel, and it was more appropriate to adopt realistic prices ranging between 60-65.” Dollars per barrel, given that oil prices are subject to rise and fall, as a result of variable events in the world, most notably the Russian-Ukrainian war, which cast a shadow on oil prices greatly.
And Al-Gharibawi added, "Oil prices may witness a decline during the coming period, especially if calm prevails on both sides of the war conflict between Russia and Ukraine, which in turn will make global prices fall under the category of decline."
He added, "The continued decline in global oil prices will lead to an increase in the budget deficit rate, which amounts to 64 trillion dinars," pointing out that "the government has set its financial accounts according to the aforementioned deficit rate, which means that any drop in oil prices will lead to (confusion) in the work program." Government and financial allocations to ministries and provinces.
Al-Gharibawi added, "Russia's continuation in keeping the rate of its exports as it is without adhering to the decision to cut production from OPEC + will lead to a continued decline in prices, and this is what is expected, which may push Iraq to reduce the investment budget in the event that prices continue to decline," indicating That “the drop of one dollar in global oil prices will be reflected in the budget in a very large way and change a lot of things.” https://takadum-news.com/archives/167220