TNT:

Tishwash:  and they are going to Iraq next 

A new blow to the dollar.. Russia and Iran deal fully in local currencies (1/30)

Within the framework of Russia's attempt to find alternatives to financial exchanges away from the US dollar system, in light of the imposition of unprecedented sanctions on the Russian Federation following the invasion of Ukraine.  

The Central Bank of Russia and the Central Bank of Iran signed an agreement on cooperation in the field of facilitating financial and banking transactions between the two countries.  

complete system  

According to the Central Bank of Russia's statement, the Financial Message System under the supervision of the Central Bank of Russia "SBFS" and the Message System for Electronic Payments under the supervision of the Central Bank of Iran "SEBAM" are now linked.  

 "A direct connection has been established between the banks of Iran and Russia, and according to the agreement on joint activities of the Iranian and Russian central banks...  

 There will be a direct connection to Russian banks.  

 Connecting the Iranian banking network directly with 106 foreign non-Russian banks.  

 The importance of agreement  

 The representative of the Russian Central Bank, the signatory of the agreement, Vladislav Gridshin, said that the great advantage of this agreement is that Western sanctions cannot affect it, and that our financial institutions will be in contact on a larger scale with other financial institutions and organizations in Iran after the signing of the agreement today.  

"This agreement is related to financial messages and money transfers, which will greatly help businessmen in the two countries," Gerdshin added.  

Full tie  

The Director of International Affairs of the Central Bank of Iran, Mohsen Karimi, said that the signing of the agreement today is the first measure to be implemented in practice, and from now on, the financial exchanges of all Iranian banks and all Russian banks will be linked together.  

Karimi added, "This agreement aims to facilitate and implement banking relations to facilitate trade exchanges and the work of merchants and businessmen between countries."  

Not subject to penalties  

The new system enables the exchange of all banking messages, including transfers, guarantees, letters of credit, etc.  

The new system relies on internal networks away from SWIFT, so this agreement cannot be suspended or sanctioned.   link

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Sunday Night: 

RVAlready:  From what I just heard, if I understood correctly, all sales and use of the US dollar in Iraq end tomorrow. I doubt this stops all of the black market tomorrow. But it stops all official use of the dollar. This should allow an international RV tomorrow. We will see what happens.

Yada:  Agreed and awesome rvalready. That is how the value of the dinar floats and eventually increases in value. Just love how this is playing out.

RVAlready:  They will not show their hand early. Hedge funds would dump billions or trillions of dollars, ruining our rates…Banks would give priority to billion or trillion dollar hedge funds, and no priority to us.

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CandyKisses:    Al-Mandalawi to Al-Alaq: Financial stability must return to the markets soon

Baghdad - Mawazine News

First Deputy Speaker of Parliament Mohsen Al-Mandalawi On Monday, financial stability - especially the dollar exchange rate - must return to markets Iraqi soon.

During his meeting with the Governor of the Central Bank, Al-Mandalawi stressed Al-Alaq, according to a statement by his office received by Mawazine News, on the need to "commit Legal procedures for financial transfers, and the protection of the Iraqi economy from previous violations."

He also stressed "the need to apply global measures. Follow-up transfers and the work of private banks and exchange companies, and prosecute all abuses according to the Iraqi laws in force in application of the obligations of the Central Bank of Iraq."

According to the statement, Al-Mandalawi listened to "an extensive explanation from Relationship on the financial and supervisory plan that the Central Bank of Iraq will work on to control Dollar exchange rates, preventing financial speculation, and following up on suspicious purchases of hard currency, which is intended to harm the national economy." 

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Tiswhash:  The crisis of the rise in the dollar exchange rate between the weak establishment of a fixed exchange rate system and the application of federal procedures 

 After the significant rise in the exchange rate of the dollar against the dinar since the end of last year until recently, the Iraqi economy is suffering from a significant decline in the value of the Iraqi dinar against the dollar, and a rise in the prices of foodstuffs and commodities, as a result of the recent fluctuation shock in the exchange rate of the dollar against the dinar in the parallel market, on the Despite the Central Bank’s announcement of the sale at the official price of 1460 dinars per dollar, and that the price rise is an accidental result, not substantial, and will disappear with the alignment of the banking system’s movement with the requirements of the Fed’s strict policy towards import banking activity.

The continuation of the rapid rise of the dollar exchange rate in the parallel market in less than two months and its rapid movement through several thresholds, reaching the threshold of 1680 dinars per dollar, shows that the dollar exchange rate suffers at an unprecedented rate of great fluctuation as a result of the high domestic demand for it against the dinar, which is a result of The decrease in the flexibility of the dollar supply in the foreign currency sale window of the Central Bank of Iraq due to the application of the American Federal Bank’s procedures for auditing dollar transfers through the new platform of the Central Bank, which played a major role in reducing the volume of central sales of dollars, which caused a decrease in the effectiveness of the window to maintain the actual exchange rate within the target.

Therefore, in light of the low ability of the fixed exchange rate system to establish the target exchange rate, the dinar is in a real crisis, due to the erosion of its real value, which reveals to us the weak performance of the economic decision-maker towards the international variable, for many reasons that cannot be mentioned, and therefore the weak ability of The monetary authority’s tools to absorb the shock of dollar demand and maintain the actual exchange rate rates within or close to the target, contributed to deepening the gap between the effectiveness of monetary policy tools and the requirements of strict measures from the international SWIFT system towards the movement of the import dollar and its subjection to audit restrictions, the repercussions of which appeared through new increases in The actual dollar exchange rate.

This was quickly reflected in the level of the index of food and consumer prices towards an increase and recording signs of economic recession, which puts the government in front of a major test, especially since it announced its intention soon to reduce the exchange rate of the dollar against the dinar. In addition, the great fluctuation in the exchange rate of the dollar plays a negative role on the stability of the Iraqi economy in all parts of the aggregate activity, especially the aggregate demand in both its consumer and investment parts, and at the public and private levels.

        From the foregoing, the ineffectiveness of macro policy measures in facing the shock of the dollar’s ​​rise can be seen through two main axes:

The first axis is short-term and related to monetary and fiscal policy through:

Compensating for the low flexibility of the window supply of the dollar through innovative mechanisms to reduce the demand for it in the parallel market.

Containing what is possible from the phenomenon of money laundering in banking activity, in a way that reduces the exaggeration of foreign transfers.

Coordination between government policy and monetary policy to unify the overall effort towards achieving the target exchange rate through rationalizing government spending and then tightening control over the monetary mass and trying to compress it within the horizon of the general objective of macroeconomic policy.

 Carrying out real reforms in the financial and monetary sector to raise the flexibility of banking performance according to the SWIFT system.

Move politically and diplomatically towards conducting real negotiations between the Iraqi government and the American side to prevent the crisis from consolidating and try to dismantle it with effective negotiating ability to obtain exceptions from the federal government or reach solutions or provide guarantees that give more flexibility by granting some exemptions from some controls or providing facilities in order to strengthen the system Fixed exchange.

The second axis is long-term: it relates to economic reform policies in the macroeconomic structure and an attempt to get out of the rentier sin by compensating for the acute shortage in public and private investment by following internal investment policies based on the development of the real sector to diversify the sources of total income, including the decrease in import demand for the dollar for consumption purposes in exchange for growth The demand for the dollar for investment purposes, which in turn can raise the growth of internal capital accumulation to formulate an industrial policy and a trade policy aimed at raising the value of the non-oil GDP through policies that attract foreign investment to supply the internal investment movement with the basic requirements for the growth of the non-oil productive sector.

Therefore, the Iraqi government must face this crisis objectively, seriously, and as soon as possible, because of this crisis's great effects on the level of social well-being for many segments of society that are directly affected by inflation, and because it represents a real indicator of the performance and effectiveness of the country's macroeconomic policy and its reflection in The balance and stability of the financial and monetary market and its direct impact on the map of investment and financing for local and foreign companies in many real productive and service sectors   link

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