More News, Rumors and Opinions Saturday PM 10-7-2023
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Tishwash: Iraq is set to fuel de-dollarization by banning the buck from being used in cash transactions, report says
Iraq is set to become the latest country to join the de-dollarization drive, according to Reuters.
Iraq is about to become the latest country to join the de-dollarization drive, per Reuters.
The greenback will be banned from being used in cash transactions and withdrawals from January 1, the outlet reported.
Several countries, including China and Russia, have made efforts to fuel the de-dollarization movement this year.
Iraq will ban the US dollar from the start of next year as the global movement against the greenback gathers pace, one of the country's top financial policymakers told Reuters.
People won't be able to withdraw cash in dollars or use the greenback in transactions from January 1, 2024, Iraqi central bank director-general of investment and remittances Mazen Ahmed said in an interview with the outlet.
The country will ban the buck in a bid to stamp out crime, he said, with over $5 billion worth of the cash that the central bank imports from New York reportedly used in illegal activities.
"You want to transfer? Transfer. You want a card in dollars? Here you go, you can use the card inside Iraq at the official rate, or if you want to withdraw cash, you can at the official rate in dinars," Ahmed told Reuters. "But don't talk to me about cash dollars anymore."
The local currency, the Iraqi dinar, currently exchanges at a rate of around 1,300 dinar per dollar.
Iraq isn't the only country engaged in de-dollarization – a movement where countries try to reduce their reliance on the greenback, often in a bid to undermine its dominant role in international trade.
China and Russia are spearheading the effort to wean the world off the buck.
Beijing has asked Middle Eastern suppliers to accept its own currency, the yuan, rather than the dollar – while Vladimir Putin has forbidden any "unfriendly" countries from settling trades using any currency other than the ruble.
The two countries have also repeatedly pledged – alongside other members of the BRICS group – to launch a new currency that they hope one day could unseat the dollar as the dominant international reserve. link
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Tishwash: The euro is the key to resolving the dollar crisis in Iraq
The euro is ranked second in the world after the US dollar, as it is considered one of the strong currencies in international trade. The euro is also the second most traded currency in the world after the US dollar, and the British pound is ranked fourth.
The Central Bank of Iraq is supposed to take the first step by diversifying its financial assets and increasing the share of the euro, in addition to the pound sterling, at the expense of the US dollar, as the Central Bank of Iraq’s foreign currency reserve is estimated at approximately 113 billion dollars.
The Central Bank of Iraq keeping a portion of its reserves in euros will not have any negative impact on the value of the Iraqi dinar, but it will preserve its value. An example of this is the Kuwaiti dinar, which is denominated against a basket of foreign currencies such as the dollar, euro, and pound sterling.
The Central Bank of Iraq could have pumped the euro currency into the currency sale window auction, after the strict measures imposed by the US Federal Reserve Bank and the US Department of the Treasury on the Central Bank of Iraq by selling the US dollar currency, with the aim of preventing the smuggling of the dollar into Iran, and therefore The goal of selling the euro in the currency selling window is to avoid the restrictions imposed on the Central Bank of Iraq by the US Treasury, and also to reduce the demand for the US dollar with the aim of reducing the gap between the official rate and the exchange rate in the parallel market.
The Central Bank of Iraq was supposed to establish its own platform, as this platform specializes in selling the euro and the pound sterling, and it can also be sold to citizens in cash, just as the euro is a global currency that the Iraqi merchant can deal with normally and smoothly in any country. It excluded Iran, so some foreign imports could be covered through euros instead of dollars.
Although I am against the idea of giving each citizen 3,000 US dollars to travel and smuggling hard currency out of the country, but at the same time, if the Central Bank of Iraq continues this policy, I suggest giving citizens the euro as well to travel outside the country in order to reduce the demand for the dollar. American.
Hoarded money:
In order to be realistic, unfortunately, there is a large percentage of the Iraqi people who save their money in the US dollar currency at the expense of the Iraqi dinar, and therefore it is very important to instill a culture of saving or trading in the euro instead of the US dollar among the citizens, in order to reduce the demand for the dollar by the citizens. Those who save their money in US dollars, and this will also aim to withdraw the dinar block from the funds hoarded by citizens, because the Iraqi government has a scarcity of the Iraqi dinar due to the explosive budget, specifically in operational expenses, and it is expected that there will be a deficit in the coming period in paying employees’ salaries. By the Iraqi government, because the dinar block at the Central Bank of Iraq is unable to cover operating expenses, which forces the Central Bank of Iraq to print the dinar, and this in itself is considered a great danger to the value of the Iraqi dinar and the high rate of inflation, and thus its consequences will be serious and negative forIraqi economy.
Euro is an investment currency:
The euro is considered an investment currency because it generally moves in an upward direction in the long term, as it rose from the end of last year from levels of 0.96 cents to 1.12 US dollars two months ago, meaning an increase of approximately more than 15%, and the euro currency is currently in the process of a deep correction as it has declined. To a level of approximately 1.04 US dollars several days ago, and now it is reeling at levels of 1.05 US dollars, and perhaps the rise will resume or the correction will be completed to levels close to the parity point with the dollar, and this in itself is considered an appropriate opportunity for the Central Bank of Iraq to buy the euro currency at a value of 10. One billion euros at the very least, and I personally saved part of my money in the euro currency, and it is expected that the euro currency will target levels of 1.15 US dollars and more during the first quarter of next year.
In the event that the Central Bank of Iraq sells part of the currency sale window auction in euro currency, a month worth two billion euros, that is, selling 100
Suppose that the Central Bank of Iraq pumped the euro currency into the markets when it was at a price of 0.96 cents at the end of last year, at the time when the dollar crisis began in Iraq, which resulted in reducing the gap between the official rate and the exchange rate in the parallel market very significantly, and at the same time achieved... Citizens who bought the euro at the time gained an estimated 15% profit.
Also, at the same time, the Central Bank of Iraq could have invested in the euro if it had kept part of its euro currency reserves, assuming 10 billion euros and sold it when it reached $1.12. It would also have achieved profits of an estimated 15%, or about 1.5 billion.
The question here is: Is the Central Bank of Iraq able to transfer part of its assets from the US dollar to the euro?
Or will he be a prisoner of the directions of the US Treasury and the policy of the US Federal Reserve? link
Courtesy of Dinar Guru https://www.dinarguru.com/
Frank26 Sudani went and told all the contractors he signed with, they can come into Iraq without any restrictions. That's Article VIII...You are a sovereign country. You can do whatever the hell you want to do with your currency and exchange rate.
Militia Man Article: "Specialist: The government is obligated to present its vision for next year’s budget in the middle of this month" The government still being unable to implement the budget for the years 2023, 20224 and 2025 are amid secrecy and strict instructions to officials and advisors not to talk about the issue of the current or upcoming budget. Think about all of this. They are keeping what we are looking for tight to the chest. Rightfully so.. I love this!
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WARNING: The Economy May Not Survive This
George Gammon: 10-7-2023