Iraqi Economic News & Points to Ponder Tuesday Afternoon  9-12-23

The Dollar Crushes The Dinar And The Central Bank Continues To “Pump Hard Currency”

TUESDAY, SEPTEMBER 12, 2023, KARAR AL-ASSADI   Central Bank sales at auction on Tuesday amounted to more than $200 million, while the dollar continues to crush the Iraqi dinar in local markets.

Today, during its auction for buying and selling the US dollar, the Central Bank sold 201 million, 395 thousand and 261 dollars, which the bank covered at a base exchange rate of 1,305 dinars per dollar for documentary credits and international settlements for electronic cards, at a price of 1,310 dinars per dollar for external transfers, and at a price of 1,310 dinars per dollar in cash. (131,000 dinars per 100 dollars).

Most of the dollar sales went to strengthen balances abroad in the form of (remittances, credits), amounting to 137 million 225 thousand and 261 dollars, while cash sales amounted to 64 million and 100 thousand dollars.

The number of banks that purchased cash dollars reached 10 banks, while the number of banks that responded to requests to enhance balances abroad reached 17 banks, while the total number of exchange and brokerage companies participating in the auction was 145 companies.

The Dollar Crushes The Dinar

The exchange rates of the US dollar against the Iraqi dinar rose today in the markets of Baghdad and the rest of the provinces.

Prices in the main Kifah and Harithiya stock exchanges in Baghdad recorded 155,500 dinars for 100 dollars, while  selling prices in exchange shops in local markets in Baghdad reached 156,500 dinars for every 100 dollars, while purchase prices reached 154,500 dinars for every 100 dollars.

Citizen And Government

The government has repeatedly confirmed, through Iraqi Prime Minister Muhammad Shiaa Al-Sudani, that the exchange rate will decline immediately after the approval of the country's general budget, which was also confirmed by many government officials over the past months, but that has not happened yet.

While the rise in the exchange rate of the dollar against the Iraqi dinar raised concerns among official and popular circles in Iraq, after the US Federal Bank set strict regulatory conditions requiring the currency selling window to display lists of dollars sold that include the names of the people and beneficiaries to indicate the Federal Bank’s position on the safety of the purchasing process for the party presented.

The request is not linked to entities subject to international embargoes or sanctions by the US Federal Reserve.

Representative Raed Al-Maliki says, “The solutions proposed by the government regarding exchange rates did not contribute to addressing the root of the problem, and it was expected that the government’s determination of the exchange rate was what determined the price, and what happened in the budget was the approval of the price, but in the market the price was different and a gap occurred.” .

Al-Maliki points out that "the real cause of the problem, which will solve the exchange rate crisis, is related to trade, as a large part of Iraqi trade and imports are not covered by dollars, and the reason for this is that they occur unofficially, through unofficial outlets, and countries that refuse to deal with the United States of America."

He asserts, "The continued lack of state control over trade and the continuation of informal trade, which takes place without knowledge and passes through official ports, has deprived Iraq of many revenues related to the economic situation."

Currency Bank

A Western website specialized in Iraqi economic affairs stated that what is happening in Iraq is the “largest difference” between market prices and the official “window” price of the Central Bank of Iraq. He also urged the Central Bank to activate the steps of selling foreign currency at official prices to citizens through purchases with electronic cards, opening sales outlets for travelers or patients outside Iraq, or financing foreign trade, in accordance with fundamentalist contexts and international standards for opening documentary credits and remittances.

The Finance Committee hosted the Governor of the Central Bank, Ali Al-Alaq, on July 24, 2023, to discuss the banking sector, the high exchange rates of the dinar against the dollar, and the reasons for the sanctions imposed on a number of Iraqi banks.

The relationship between “there is optimism in the process of reforming the economic reality and money management, and the process of controlling the exchange rate,” adding: “We hope to achieve economic stability and improve performance,” pointing out that there is a problem related to the presence of sanctions imposed on some banks, which leads to challenges that must be faced. There is a need to find sufficient measures to control the labor market and the exchange rate.

Specialists have confirmed that opening outlets to sell the dollar on a monthly basis to every citizen does not have any positives. Rather, this matter will lead to an increase in currency smuggling operations and an increase in black transfers, and this matter will raise the dollar more in the market, as the citizen will sell the dollar to speculators, with the aim of making black transfers, and for this reason There is no such government approach.

From time to time, “proposals and demands” come out to sell the dollar directly to all citizens, to eliminate the dollar crisis and its rise in the parallel market, which is rejected by experts.

Smuggling

The government took a decision last February to raise the value of the Iraqi dinar against the dollar after its price reached 1,470 dinars per dollar at the end of 2020. It was implemented by the previous government to fill the deficit in expenses and salaries due to the decline in oil prices in global markets. While the Ministry of Interior prevented merchants and citizens from dealing in dollars in markets and shops, and limited transactions to the Iraqi dinar.

Economic specialists point out that the market requires many measures to maintain currency stability, most notably preventing smuggling.

It seems that the economic and security solutions to the rise in the price of the dollar in the parallel market inside Iraq did not achieve any significant results, but rather complicated the scene and led, in part, to an increase in prices in the Iraqi markets.   https://non14.net/public/160107

A Hand Has Been Placed On The “Reason” For The Rise In Dollar Prices, And An Expert Warns A Group Against “Burning With Fire”

2023-09-12 Shafaq News/ Economist and former general director at the Central Bank, Mahmoud Dagher, revealed on Tuesday that the rise in the dollar is due to the leakage of currency to punished entities.

Dagher said in an interview with Shafaq News Agency, “There is no dollar crisis, but rather a crisis of merchant dollars in cash that leaks to cover trade with punished entities, and it represents only less than 10 percent of the central bank’s sales. The dollar is stable in financing imports to Iraq at 1,320 dinars to one dollar.” ".

He added, "The cash problem does not represent a large volume, and therefore the demand for it is a demand for the purpose of continuing imports from punished entities. This is a mistake committed by these merchants, so let them bear the price increase."

He pointed out that "the poor Iraqi citizen has nothing to do with the dollar, as inflation is low, and the person who has a salary has nothing to do with the dollar. When he wants to travel, for example, he has a card that he puts the required amounts on, and he goes out and takes dollars for purposes of living and shopping, so he does not need cash dollars."

He continued, "Those who need cash dollars are those who deal with sanctioned entities or speculators," noting that "these will suffer the fire of this rise until they abandon this type of trade or find another outlet until they return to the right path."

He stated that "the central bank is not responsible for what happens to the cash dollar, but rather speculators and importers from the sanctioned entities, who represent a small amount of the bank's total sales."

The dollar is witnessing a gradual rise against the Iraqi dinar during these days, recording 155,000 dinars against 100 dollars on Tuesday morning on the Al-Kifah Stock Exchange.   LINK

An Upcoming Round Of Negotiations Regarding The Oil And Gas Law

Time: 09/12/2023   Read: 806 times   {Politics: Al-Furat News} Member of the Parliamentary Finance Committee, Moin Al-Kadhimi, revealed today, Tuesday, an upcoming round of negotiations between Baghdad and Erbil regarding the oil and gas law.

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Al-Kazemi said {to Al-Furat News}: “There is an upcoming round of negotiations on the oil and gas law from joint committees in Baghdad, Erbil, and the oil-producing governorates to agree on the final draft of the law.”

He explained, "The Ministry of Oil presented the draft law, but it requires, in addition to the professional and specialized side, a political decision from the blocs to be convinced to submit the draft law to the House of Representatives for the first and second reading and approval, to end the chronic crisis between the center, the region, and the center over the previous years."

It is noteworthy that on August 2, Prime Minister Muhammad Shiaa Al-Sudani held a meeting to discuss the draft oil and gas law, which witnessed a review of the latest drafts of the draft law, its details and clauses.

Blocked Laws

Al-Kadhimi referred to “the package of laws that the government sent to the House of Representatives and set a schedule for their approval,” stressing “the seriousness of the parliamentary committees in continuing to pass them, even those that are disputed, including the Mental Health Law.”

He stated that "the mental health law includes an article that refers to global health concepts and instructions, and there are fears of attempts to penetrate the traditions of Iraqi society, and it was rejected by most representatives. Accordingly, there is a strict decision to amend these articles, and so on if we reach the Domestic Violence or Child and Family Law."  

Al-Kadhimi stressed, “The desire of the coordination framework to conform the laws in accordance with social norms, even the general amnesty law, on the condition that it does not include terrorists and those whose hands are stained with the blood of Iraqis,” adding, “There is a clear majority within the House of Representatives and an unprecedented comfort and harmony to proceed with passing laws that affect the life of the citizen.”

Yesterday, Monday, the House of Representatives completed the first reading of the draft mental health law submitted by the Health and Environment Committee to improve the level and quality of mental health services in Iraq and their compatibility with international standards by developing treatment methods, respecting the rights of mentally ill patients, developing the efficiency of workers in the field of mental health, and activating the role of health institutions. Psychological and granting incentives to encourage work in psychiatry.    LINK

Points to Ponder From Albert Einstein:

The intellect has little to do on the road to discovery -- There comes a leap in Consciousness, call it intuition or what you will -- and the solution comes to you and you don't know how or why - Albert Einstein

“Imagination is more important than knowledge - For while knowledge defines all we currently know and understand, imagination leads us to all we might yet discover and create.” - Albert Einstein

"Great spirits have always found violent opposition from mediocre minds. The latter cannot understand it when a man does not thoughtlessly submit to hereditary prejudices but honestly and courageously uses his intelligence"  Albert Einstein