Iraqi News Thursday AM 11-18-21
Iraqi News Thursday AM 11-18-21
TLM724 Administrator BondLady’s Corner
The Central Bank Of NINA: The Change In The Price Of The Dollar Has Nothing To Do With The Financial Crisis, And The Rise In Oil Prices Will Not Fill The Budget Deficit
Wednesday 17 November 2021 18:06 | economic Number of readings: 931 Baghdad / NINA / - The Central Bank of Iraq resolved the controversy over the return of the dollar exchange rate to its previous position simultaneously.
The Deputy Governor of the Bank, Ihsan Shamran Al-Yasiri, stated, in a statement to the National Iraqi News Agency ( NINA ), that “the change in the dollar exchange rate has been studied by several specialized technical, financial and executive bodies,” noting that “the exchange rate was modified only based on extensive studies between the Ministry of Finance, the executive authority and the monetary authority, which is the central bank, in agreement with important international institutions to clarify the fair price of the dollar.”
He added, "We reached this price of 1450 dinars against the dollar, to which the central bank commission and the bank's commission are added to the public, which means that the price of the financial policy is 1450 dinars against the dollar, the price of the central bank is 1460 and the price of banks is 1470 dinars to the public."
On the repercussions of changing the exchange rate on the financial crisis, the Deputy Governor of the Central Bank stressed that “the financial crisis has nothing to do with changing the exchange rate, and that solving it does not mean a return to reducing the exchange rate of the dollar against the dinar, because the exchange rate is a monetary financial instrument that has nothing to do with the immediate problem.”
Noting that "there has been a delay since 2010 that was supposed to amend the dollar exchange rate, and now it has been modified, as we hope for the return of the activity of economic institutions in light of the current exchange rate."
And regarding the rise in international oil prices and the surplus from the general budget, Al-Yasiri explained that “the surplus from the improvement in international oil prices will help reduce the budget deficit, but I do not think that the rise in oil prices by the end of this year can reach to bridge the deficit,” noting that “part of the The public budget deficit can be financed."
Al-Yasiri pointed out, “There were proposals to use oil price differences in financing projects, governorates, and others, but the opinion of the government, the previous parliament, and the Ministry of Finance was to fill the deficit first rather than expand spending.”/ https://ninanews.com/Website/News/Details?Key=939655
The Governor Of The Central Bank And The Egyptian Ambassador Discuss Ways Of Joint Cooperation In Monetary And Economic Issues
Thursday 18 November 2021 16:03 | economicNumber of readings: 131
Baghdad / NINA / - The Governor of the Central Bank of Iraq, Mustafa Ghaleb Mokhief, received the Egyptian Ambassador to Iraq, Walid Muhammad Ismail.
The two sides discussed ways of joint cooperation between the two countries in monetary and economic issues, including emphasizing the importance of revitalizing Iraqi and Egyptian banking.
The ambassador stressed, "Egypt is keen that Iraq have a leading banking sector," praising the plan adopted by the Central Bank of Iraq's administration to reform the banking sector./ End 8
https://ninanews.com/Website/News/Details?key=939816
The Interest And Inflation Syndromes In The Contemporary Economy
The economic researcher Ali Abdul-Kazim Daadoush
Articles Ali Abdul-Kadhim Dadush * Addressing the phenomenon of inflation (up and down) is the responsibility of the Central Bank, as the Central Bank intervenes in achieving economic stability after it incurs a state of economic fluctuations from stagnation or inflation, and this was reflected in the financial crisis in 2008, as it became stimulated (high) inflation towards the target Target (2%) is the obstacle to getting out of the crisis at that time.
As the economy goes through a phase of overheating, meaning that the actual GDP is greater than the planned, this calls for the central intervention by raising the interest rate at specific and experimentally calculated levels, thus affecting the levels of money supply, while the opposite in the case of deflation ( PGDP > RGDP ) the central bank intervenes by By reducing interest rates to influence the real interest and stimulate the economy towards expansion.
In general, the expansion in the volume of economic activity is usually accompanied by inflationary pressures, through the inverse relationship between interest and investment, and therefore this requires a reduction in the money supply by raising the interest rate by the central bank, which would restrain investors in requesting additional investments. And the opposite happens if the central bank wanted to cut interest rates to motivate investors to increase their investments and get out of the quagmire of economic stagnation.
This process was used by central banks, especially in England and the United States, until the end of the mid-eighties of the last century, after which a group of economists noticed that the state of exit from economic stagnation through the use of an expansionary monetary policy by the monetary authority tool (interest, money supply) , calls for an increase in the demand for money for the purposes of transactions by the public, and this led to the return of the interest rate to its original state - before the reduction - which worked to cancel the expansionary effect of monetary policy, as is the case when using a contractionary monetary policy (increasing interest) to reduce inflation.
As this matter necessitated that the effect on curbing inflation should be through two steps in the same direction and time, which is to change the interest rate and then search for the amount of money (money supply) that can be changed or withdrawn to deal with the inflationary effect, in a more precise sense that the matter requires changing the interest rate from Through open market operations (buying and selling government bonds), which leads to bypassing the effect that cancels out the initial (original) effect before the change in the interest rate occurs.
Here, it should be noted that the rate of interest slowing down inflation must be higher than the level of nominal inflation, as it deals with the real interest that has an impact on the business market.
In Turkey, inflation has reached about (20%), which is an unbridled rise in the price level. Therefore, the process of curbing inflation requires the non-interference of government authorities in the decisions of the Turkish Central Bank, as it is natural for the Turkish Central Bank to use a strict monetary policy and move towards raising the interest rate.
By about more than the inflation rate, at least by about (22%), and then the change in the money supply, and this would limit the volume of investments and thus lower the level of economic activity of the country, but with a closer look, we see that the ruling authority does not want that, This led to conflicting decisions between the two parties (the Turkish president and the former central bank governors, who were later removed),
thus favoring the ruling authority represented by President (Erdogan), who sees in the process of stimulating economic activity (economic growth) at the expense of inflation that connects the economy Therefore, the Turkish government decided to set a planned growth rate of about (10%) to achieveEconomic expansion in 2021.
This has led to the deterioration of the Turkish currency by about a quarter of its value against the dollar this year, and at the same time it was also at the expense of reducing the interest rate twice, the last of which was (16%), which negatively affects Turkish citizens, and leads to additional incentives for the deterioration of the Turkish lira and the trend To exchange it for other currencies (the dollar, for example) or buy gold. The result is that this makes the dollar more attractive and pushes investments to flee emerging markets.
The Turkish government’s justification for all these pressures on the Central Bank of Turkey to reduce the interest rate comes through growth, especially in the export sector and major Turkish companies (private and public), especially since the export sector is directed towards a fertile market for its products, such as the Iraqi market that consumes more than (50%) ) of the volume of Turkish exports in the amount of about 23 billion dollars last October, and this matter has been reflected significantly (negatively) on the reality of the Iraqi economy, which was affected (and still is) by the rise in the phenomenon of imported inflation, as well as the decision to reduce the local currency (the Iraqi dinar) ) against the dollar in 2020.
As for Iraq, curbing the inflation phenomenon by raising the interest rate is not possible at all, for many reasons, including (the dominance of the three government banks by more than (85%) of the volume of money in the banking system (the Iraqi banking sector as a whole). Money is not taken into consideration by the Central Bank of Iraq.
Moreover, the weakness of the flexibility of the production system and its unjustified deterioration, and the lack of diversification of the economy leading to diversification of the export sector and reducing dependence on a single resource (crude oil) led to the ineffectiveness of monetary policy and through Raising the interest rate to curb inflation in Iraq.
* Economic Researcher Sources
1- Al-Dagher, Mahmoud Muhammad: Macroeconomics (theories and policies), Dar Al-Seisban for printing and publishing, first edition, Baghdad, 2018.
2- Anadolu Agency is available at the link:
https://www.aa.com.tr/ar/%D8%AA%D8%B1%D{3%D{A%D8%A7}
Views 147 Date Added 11/18/2021 https://economy-news.net/content.php?id=26815
Dollar Exchange Rates In Local Markets Today
Market Economy News _ Baghdad "Economy News" publishes the dollar exchange rate on the local stock exchange on Thursday, (November 18, 2021), according to the monitoring of specialists.
Baghdad - the stock exchange 147,950
The price in most exchanges Buy 147,500 Sell 148,500
Views 80 Date Added 11/18/2021 https://economy-news.net/content.php?id=26808
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