TNT:

Tishwash:  Australia expresses its desire to "bridge cooperation" with Iraq

Today, Thursday, Australia expressed its desire to build bridges of cooperation with Iraq.

The media office of the Prime Minister, Muhammad Shia Al-Sudani, said in a statement received by (Baghdad Today), that the latter received today the Australian envoy, Nick Warner, to discuss ways to develop joint cooperation between Iraq and Australia in several fields.

The statement quoted Al-Sudani as saying, "Iraq is looking forward to more development cooperation and establishing partnerships in the economic, cultural and investment fields, and in the field of facing climate challenges."

For his part, the Australian envoy expressed his country's desire "to build bridges of cooperation with Iraq in various fields, in a way that enhances the interests of the two countries in development and prosperity    link

CandyKisses:  Arab Parliament Union Conference Opens in Baghdad

Baghdad Today - Baghdad

.Baghdad Today- Under the auspices of the Arab Parliamentary Union, the work of the preparatory and consultative committees for the thirty-fourth conference of the Union, "Arab Support for Promoting Iraq's Stability and Sovereignty", will begin in Baghdad, today, Thursday, in preparation for the official meetings that will be hosted by the government palace in the center of the capital on February 25 and 26

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Tishwash: Adoption of the Chinese yuan with Beijing... anticipation of the consequences of the Iraqi decision and a warning against “devious attempts”

In a remarkable statement , the Central Bank of Iraq announced, on Wednesday, a plan to allow trade with China in Chinese yuan instead of dollars, in an apparent attempt to improve access to foreign currency and reduce dependence on the dollar, as the government says, while observers warn of "attempts twisted" that smugglers might exploit.

The bank said in its statement, "The financing of foreign trade from China will be organized directly and in the Chinese yuan currency through two options. The first is strengthening the balances of Iraqi banks that have accounts with Chinese banks in the Chinese yuan currency. Chinese yuan through our accounts with JPMorgan and the Development Bank of Singapore.

He said that facilities for financial transfers will be provided to the United States and Europe, using the same mechanism later.

However, the third point in the statement, which indicates that the documents required to apply for external financial transfers will consist of “a commercial (invoice) list only, or the initial documents of credit, provided that the customer later provides the bank with evidence of the entry of the goods.”

Salem al-Asadi, an economist and businessman, says that this mechanism "can be easily circumvented."

And he adds to the "Al-Hurra" website that the bank "seems to be opening an outlet for the same old practices that relied on forged import receipts to smuggle currency after the US compliance instructions closed this outlet."

The imposition of compliance instructions by the US Federal Bank and the US Treasury led to a crisis in providing dollars in Iraq, which greatly affected the market, which relies almost entirely on the dollar in its trading.

On Saturday, US Secretary of State Anthony Blinken confirmed his country's readiness to support Iraq's efforts to achieve stability and growth in the country's economy, including by combating corruption and money laundering.

Blinken's assurances came during his meeting with the Iraqi Prime Minister, Muhammad Shia' al-Sudani, on the sidelines of the Security Conference in Munich.

Iraq is witnessing a financial crisis related to the shortage of foreign currencies in the local markets, which led to a decrease in the price of the Iraqi dinar in the parallel market, despite the increase in its official value at the Central Bank.

The compliance instructions aim to counter the risk of currency smuggling from Iraq, a practice that usually takes place by presenting receipts for the purchase of counterfeit goods to the bank and obtaining the dollar at the official subsidized rate, then taking the dollar out of Iraq and selling it at its original price.

Washington believes that Iran, which is under sanctions that limit its access to dollars, is the beneficiary of this process.

The economic advisor to the Iraqi government, Mazhar Muhammad Salih, said that this is the first time that imports from China are financed in yuan, as Iraqi imports from China were financed in US dollars only.

The move is the latest sign of the yuan's growing role on the international stage as China gradually opens up its financial markets and some countries look to diversify their exposure to the currency.

Saleh told Al-Hurra that the move is logical because of "the superiority of trade between Iraq and China compared to other countries in the world."

He revealed that "import and export trade of goods and services exceeds $53 billion annually, as China is Iraq's first trading partner."

He continued, "Because the Central Bank of Iraq is diversifying its reserves in foreign currency, including the Chinese yuan, it will undoubtedly feed Iraqi bank accounts with Chinese correspondent banks in the Chinese yuan currency for the purposes of meeting the requirements of Iraqi imports from China and paying their dues in Chinese currency."

Saleh says, "The second package launched by the Central Bank (Wednesday) regarding external transfer instructions will help bring exchange rates in the parallel market closer to the official rate, perhaps by more than 50 percent, immediately, and with the submission of compliance documents provided by Iraqi banks on behalf of their customers." From importing merchants and the increasing launch of facilitated external transfer packages, especially that of assistance to small trades, the exchange rate gap will undoubtedly close in the coming days at an accelerated rate.

And he played down concerns about the expected smuggling operations by saying that "international compliance standards through the central bank platform will regulate the financing of trade exchange with China similar to financing in dollars in terms of identifying the last beneficiary."   link

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Tishwash:  Iraq Pivots to Yuan for China Imports in Defense of Own Currency (bloomberg)

Iraq is planning to pay for private-sector imports from China in yuan, injecting foreign currency into the financial system to help ease pressure on the dinar.

The central bank will provide yuan to local lenders for dealings with Chinese counterparts, according to a statement published Wednesday. It will also supply the Chinese currency to final beneficiaries directly via some of the central bank’s own accounts.

OPEC’s second-biggest producer is joining the Middle East’s leading economies, such as Saudi Arabia and the United Arab Emirates, in exploring non-oil trade ties using currencies other than the dollar. The central bank said in the statement that it later aims to facilitate money transfers to the US and Europe in the same manner as with China.

The measures won’t extend to Iraq’s oil trade, said Mudher Saleh, the prime minister’s financial adviser. “This is covering the imports of the private sector,” he said.

China, which has been pushing the yuan’s use in transactions with major energy and commodity exporters, was Iraq’s main source of imports after Turkey last year, according to data compiled by Bloomberg.

Steadying the Currency

In Iraq, the steps mark the latest effort by authorities to stabilize the national currency after revaluing it earlier this month to 1,300 per dollar from 1,460. The move helped shore up the dinar’s parallel exchange rate but without narrowing the spread completely. 

On Wednesday, the dollar was available on the unofficial market at about 1,530 dinars, from a peak around 1,700 earlier this year.

Iraq has experienced dollar shortages after coming under pressure from the US to limit the flow of money into neighboring Iran, with the New York Federal Reserve last November imposing tighter controls on dollar transactions by Iraqi commercial banks. 

As a result, transfer approvals slowed and ultimately led traders to buy dollars from exchange bureaus. Iraq’s foreign currency reserve of $103 billion is held at the US Federal Reserve.  link

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