MilitiaMan Monday PM "Move To A Market Economy" 12-27-2021

KTFA:

Samson:  The International Coalition : We no longer have combat forces in Iraq

26th December, 2021

The international coalition in Iraq confirmed today, Sunday, that it has no longer had combat forces in the country since the ninth of this December.

In a statement to the Iraqi News Agency (INA), the coalition said: “As of December 9, there are no US or coalition forces serving a combat role in Iraq. We were ahead of the schedule and implemented the commitments made in the dialogue between The United States and Iraq in June 2021.

He added, “The early transition was possible due to the tremendous progress made by the Iraqi security forces, including the Peshmerga, in developing the ability and ability to lead the fight against ISIS terrorist gangs.”

And for the remaining US and coalition forces in Iraq, the primary mission is to advise, assist, and enable the Iraqi Security Forces to sustain the enduring defeat of ISIS.   LINK

MilitiaMan:  Add this to the equation… No combat forces, done early. Kuwait paid in full, early. Digital platforms noted by the CBI, early. Thus, the next move is expected and that is move to a market economy. That will require an international exchange rate.. imo.. ~ MM

Iraq is awaiting a UN decision to remove it from Chapter VII, and a billion dollars will be added to the budget

Saleh expressed his hope that “these funds will go to development, that is, investment projects that employ the workforce and produce income,” noting that “closing the compensation file is the beginning of closing the remnants of Chapter VII. 

And Al-Kazemi’s advisor indicated that “Iraq has imposed about 40 decisions on it because of the Kuwait war from the Security Council and has been completely shackled until the present time, so the end of this file means the issuance of a decision by the UN Security Council that is expected to be the beginning of next year to get Iraq out of the problems of Chapter VII of the United Nations Charter”

“Osama Al-Tamimi confirmed to the Iraqi News Agency (INA), that “Iraq will return to its normal state after it has finished paying its compensation to Kuwait under the relevant Security Council resolutions approved in 1991, including Resolution 687 to pay the Central Bank 44 million dollars, as the item will leave. The seventh and moves to Article VI of the Charter of the United Nations, and the Iraqi banking program is integrated within the international program.”  LINK

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Samson: Babel: Approval of retroactive contract salary financing

27th December, 2021

On Monday, the Governor of Babylon, Hassan Mandeel, announced the approval of the Ministry of Finance to retroactively fund contract salaries.  

Mandeel said in a blog post followed by “Nass” (December 27, 2021), “To the contracts in the departments of Babylon, the approval of the Ministry of Finance has received a letter to finance your salaries with a retroactive effect, and it will be disbursed soon… Our people deserve and the next is better.”    LINK

MilitiaMan:  We saw an article about this topic. They were to pay the 10/21 / 11/21 / 12/21 months consecutively. This week may be the week they close the 2021 books and then on into a new year. They say the NEXT IS BETTER!!! imo ~ MM

MilitiaMan:  A Professional Paper, that outlines the basics and with references to support the work. Some key points that will inevitably be a part of Iraq’s future exchange rate and regime they ultimately use. Whether that be fixed,  managed float or with weakness or strength. The latter is my position that they will take the route of strength that will provide citizens purchasing power.. This paper supports that governments have the tools to be efficient and effective in supporting the value of the currency to increase purchase power. That is something the project to delete the zeros from the exchange aims to do, imo.. ~ MM

Samson:  Who determines the value of the currency? And what are the factors affecting it?

27th December, 2021

Who determines the value of the currency? And what are the factors affecting it?

Man has known about money and used it as a medium of exchange for several centuries, due to the multiplicity of his needs and desires resulting from the economic and social development in life. Paper currency was invented. The value of paper currency does not stem from the ability to convert it into coins (gold and walrus), but rather from the guarantee of the issuing government, while the value of coins comes from the same materials from which they are made, such as gold or silver, whose exchange value was similar to their original value.

The value of the currency refers to the exchange rate of each country, which is determined according to its own currency.

The value of the currency was previously determined according to the gold owned by the country, but in 1971 America stopped linking its currency to the dollar, taking advantage of its economic control over the world, and from that moment most of the world currencies have become resident In US dollars instead of gold, and banks determine the amount of currency in circulation and according to the market need, that is, if the amount of currency printed in the market increases without an increase in the volume of services and production in the country, the value of the currency decreases, and this is called inflation, but if the quantity of services and goods increased and the quantity did not change The currency offered in the market increased the value of the currency or increased its purchasing power.

The exchange rate is defined as the number of units of a particular currency that must be paid to obtain one unit of another currency, or it is the number of foreign exchange units that equal one unit of national currency, in other words, the ratio of the exchange of two currencies, one of the two currencies is considered a commodity and the other currency is considered a price for it.

The importance of the exchange rate is that it represents a link between the local economy and the international economy, and is also a determinant of the competitiveness of the local economy.

There are many methods that countries follow to determine the price of their currency, which is the fixed exchange rate and the flexible exchange rate. 

In the case of the fixed exchange rate method, the government determines the exchange rate for its currency through the central bank, and the price is fixed fixedly, by linking the country’s currency to the currency of another country (the dollar, the euro, or Yen), for example, some Arab Gulf countries link their currency exchange rate to the US dollar, and some other countries link their currency to a basket of currencies such as the State of Kuwait, and therefore the value of the currency is determined through the Central Bank and is not affected by supply and demand.

As for the flexible exchange rate (currency float), in light of this method, the price of currencies in the currency market is determined by supply and demand, meaning if the demand for the currency is high, the value of the currency will increase, and vice versa if the demand is low, the value of the currency will decrease, for example if Iraq’s exports increase To the outside world, those countries will pay the value of those exports in Iraqi dinars, which leads to an increase in demand for it, which leads to a rise in its value and vice versa. Developing countries that depend heavily on imports will depreciate the value of their currency.

It should be noted that the value of the currency does not necessarily reflect the strength of the economy. A country’s currency may be weak, but the economy is strong, for example, the Japanese yen (the value of the Japanese currency is low, in order for exports to global markets to be at a low price, which leads to an increase in demand for it in addition to Low production costs and this leads to attracting foreign investments inside Japan), and the value of the currency in a country may be high and the economy is as modest as the Jordanian dinar.

 In general, countries seek, through the Central Bank, to keep the price of their currency appropriate for international trade.

In addition to the above, the currency exchange rate has three main functions:

A – The standard function, where local producers depend on the exchange rate in order to measure and compare the local prices of a particular commodity with international market prices. 

B: – Developmental function, the exchange rate is used to develop certain exports to certain regions through the promotion of exports. A: – The distributive function, and this function is accomplished through the practice of international trade activities, through which the exchange rate is able to redistribute national income and national wealth among the countries of the world.

The exchange rate is affected by several economic factors, including (interest rate, public budget deficit, foreign exchange reserves, international loans, balance of payments, inflation and the rate of economic growth). As for the non-economic factors that affect the exchange rate, which are turmoil, wars, rumors and news.

Therefore, governments can deal efficiently and effectively with economic and non-economic factors affecting the exchange rate in order to enhance the value of the currency and increase its purchasing power.

Sources…..

1- Hussein, Ali Khairallah, Al-Mousawi, Rahman Hassan Ali, (2021), measuring the relationship between the exchange rate and the volume of external exchange in Iraq for the period 1990-2018, Journal of the University College of Kufa, Volume (6), Issue (2).

2- Al-Guwaijati, Aws Fakhr Al-Din, Al-Hadidi, Ragheed Hussein, (2021), the effect of quantitative tools of monetary policy in determining the exchange rate in Iraq for the period 1990-2019, Tikrit Journal of Administrative and Economic Sciences, Tikrit University, College of Administration and Economics, Volume (17) , issue (55).
3- Al-Mashhadani, Khaled Hammadi, Abdullah, Affa Raha, Nick Amin, (2020), measuring and analyzing the determinants of the parallel exchange rate in Iraq for the period 2003-2018, Tikrit Journal of Administrative and Economic Sciences, Tikrit University, Volume (16), Issue (51).

4- Muhammad, Amr Hisham, Hamid, Ahmed Hafez, (2019), the role of financial discipline in maintaining the stability of the Iraqi dinar exchange rate, Al-Mustansiriya Journal of Arab and International Studies, Issue (64).

5- Mahdi, Sabah Rahim, Abdul-Hassan, Amal, (2019), the effect of the foreign currency sale window on the exchange rate in Iraq for the period 2004-2016, Al-Muthanna Journal of Administrative and Economic Sciences. Volume (9), issue (1).

6- Marzouk, Atef Lafi, Ali, Akram Nehme, (2019), analyzing and measuring the impact of factors that determine the exchange rate in Iraq, Al-Muthanna Journal of Administrative and Economic Sciences, Volume (9), Issue (4).

7- Al-Barwari, Muhammad Salman, Smail, Khadija Qadir, (2011), the impact of exchange rate changes in the general level of materials prices in the city of Erbil for the period 1994-2006, Al-Rafidain Development Journal, University of Mosul. Volume (33), Issue (102).

8- Abbas, Sabah Nouri, (2008), the effect of inflation on the equilibrium exchange rate of the Iraqi dinar for the period 1990-2005, Baghdad College of University Economics. Issue (7).

Researcher
Akram Sami Fayez
MBA  LINK