"Tidbits From TNT" Tuesday Morning 8-17-2021

TNT:

Tishwash:  Afghani Currency Falls to Record as Central Banker Roils Markets

Central bank was told there won’t be more dollar shipments

 Acting Governor Ahmady wrote on Twitter he has left country

Afghanistan’s currency extended losses to a record low as the departure of the acting central bank governor added to political turmoil weighing investor sentiment.

The Afghani fell as much as 4.6% on Tuesday to 86.0625 per dollar, a fourth day of decline, according to data compiled by Bloomberg. The central bank was told there would be no more dollar shipments on Friday, which curtailed its ability to supply currency and led to more panic, acting Governor Ajmal Ahmady wrote in a Twitter thread.

Ahmady boarded a military plane at Kabul airport, where thousands sought to leave as the Taliban’s rapid territorial advance led to the collapse of the government. There was no evacuation plan, and President Ashraf Ghani’s departure without creating a transitional government contributed to the chaos, Ahmady wrote.

“Currency spiked from a stable 81 to almost 100 then back to 86,” the central banker wrote. “I held meetings on Saturday to reassure banks and money exchangers to calm them down.”

On Sunday, the governor left the central bank and went to the airport where he saw other government leaders. More than 300 passengers were packed into his flight, though it had no fuel or pilot, he wrote.

“It did not have to end this way. I am disgusted by the lack of any planning by Afghan leadership,” he wrote.

The turmoil in Afghanistan spilled over into markets in Pakistan.

Sovereign dollar bonds due 2031 for Pakistan dropped 1.8 cents on Monday, the biggest decline since the government priced the notes in March. Pakistani dollar bonds were the biggest losers in Asia on Monday, according to a Bloomberg Barclays index. The notes rose 0.4 cents on the dollar on Tuesday to 100.9 cents.

Investors are concerned over any impact on law and order in Pakistan, and whether “global forces will try to isolate Pakistan” due to its alleged support of the Taliban, said Abdul Kadir Hussain, the head of fixed-income asset management at Dubai-based Arqaam Capital.

Here is some of what analysts and economists are saying:

Samiullah Tariq, head of research at Kuwait Investment Company Pvt

The future of the Afghan currency would depend upon the future economic direction, monetary policy and fiscal policy

“One thing is clear that with a favorable regime in Afghanistan, Pakistan will benefit economically and diplomatically”

Piotr Matys, senior FX analyst at InTouch Capital Markets Ltd.

“A broader contagion from the latest dramatic developments in Afghanistan should be relatively limited”

Afghan assets could prove attractive to opportunistic foreign investors who may assume that Afghanistan could potentially become a far more stable country going forward

Nation may also benefit from China expressing interest to rebuild it and potentially include it in its “One Belt, One Road” initiative

“Democracy is not often the top priority for international investors who appreciate stability and predictability in politics, even if provided by authoritarian regimes”

A. A. H. Soomro, managing director at KASB Securities Pvt

There could be some pressure on the Pakistani rupee if a drop in Afghanistan’s currency prompted the wealthy part of its populace to try get U.S. dollars from Pakistan

“Of course, it’s too early to predict any economic policy of Taliban at the moment”

Charles Robertson, chief economist at Renaissance Capital

“The market has been selling Pakistan Eurobonds and equities, due to spillover risk. But I suspect the trade should be the reverse”

“The Taliban victory now makes Pakistan the most helpful interlocutor for the U.S. in Afghanistan”

Jehanzaib Zafar, Hamza Kamal, analysts at AKD Securities Ltd

“Major regional powers in the region like China, Iran and Pakistan have all showed a willingness to work with the new setup in Afghanistan and help maintain peace”

“The integrated economic interests of major powers in the region will help bring these players closer and work together and potentially bring peace and economic prosperity”

“The fall of Kabul in the hands of Taliban may not turn out to be as negative as feared earlier”

“Though still early at this point, a stable and peaceful Afghanistan will have positive spillover effects for Pakistan and the region at large”   link

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Tishwash:   The Governor of the Central Bank confirms the provision of the necessary infrastructure to advance the reality of financial inclusion

The Governor of the Central Bank of Iraq , Mustafa Ghaleb Mokhief, confirmed, on Tuesday, the provision of the necessary infrastructure to advance the reality of financial inclusion, especially the best payment systems in the world, which represent the cornerstone of financial inclusion. 

The Governor of the Central Bank, while presiding over the meeting of the Supreme Committee for Financial Inclusion in Iraq, said that financial inclusion is of interest to all countries, not only in Iraq, especially since its goals are multiple, foremost of which is the inclusion of all segments of society with banking services, which is no longer a secondary issue but a daily necessity.

The attendees stressed the importance of the committee's role in spreading financial inclusion, its economic and social dimensions, and other important aspects.

He explained that the Central Bank of Iraq has provided the necessary infrastructure to advance the reality of financial inclusion, foremost of which is the best payment systems in the world, which represent the cornerstone of financial inclusion, noting that the need to draw an integrated vision for financial inclusion was discussed.

After that, a presentation was presented to prepare the preparation of the national strategy for financial inclusion, which included the most prominent steps and objectives undertaken by the Central Bank of Iraq so far in order to achieve the goal sought by the framework of this committee.
The members of the committee presented their interventions on the importance of the participation of their institutions in this committee and expressed their willingness to provide support as far as promoting financial inclusion is concerned.  link

Tishwash:   Adopting financial rules achieves economic stability

The strong link between volatile oil revenues and increased spending may involve risks that impose unsustainable future obligations in the event that oil prices are exposed to a negative shock, which prompts the government to make financial adjustments that are costly and then undermines the development objective in fiscal policy, which requires the adoption of financial rules for assistance In isolating fiscal policy from these pressures.

Member of the Iraqi Economists Association d. Ikram Abdel Aziz explained that {in order to find the appropriate financial base that is suitable for application in countries rich in natural resources, the International Monetary Fund has called for adopting the hypothesis that government public spending should be regular and described as a general trend line that mediates the fluctuations of various revenues resulting from price changes, and that is from Through the establishment of funds in which financial assets are deposited in years characterized by high export returns, in order to be used in unfavorable later years in which the terms of international trade exchange are disrupted. 

financial sustainability

Academic Dr. Imad Al-Ani said that {for financial sustainability and curbing the financial deficit and the ability to meet future obligations, it is necessary to follow rules that guarantee financial sustainability and curb the deficit}, pointing out that {these rules are the first of the financial balance rule, as this rule aims to reduce the deficit The general budget to a certain level, by rationalizing public spending and raising its efficiency, and the experience of the European Union is the best example, as the Union has set a maximum budget deficit not exceeding 3%. 

Economic growth 

He added that {the other rule is called the debt rule, and this rule aims to determine a safe limit for the public debt, which society cannot bear without negative effects on stability and economic growth, and IMF experts believe that the ratio of public debt to GDP should not exceed 60%, However, this ratio cannot be relied upon in determining an ideal ratio for the public debt, especially since this ratio varies from country to country  

public expenditure

In the same context, the expert in economic affairs, Muhammad Shehab, stated, “The public spending rule is one of the important financial rules, because it puts an end to total spending or current spending in terms of absolute value or growth rates or as a percentage of GDP with a period of time that often ranges between ( 3-5 years, which can be employed on appropriate growth as a required operational tool. 

He continued, "There is also a revenue base, as it sets the upper and lower limits for expected revenues in order to reduce excessive tax burdens and improve revenue collection as a proportion of GDP."  link

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Tishwash:  Iraqi President: Our foreign policy is based on strengthening regional security and stability

Iraqi President Barham Salih affirmed that Iraq is moving towards a foreign policy based on strengthening regional security and stability, and that Iraq's security and sovereignty are based on the security and peace of the region, noting that the region needs understandings to ease its tensions .

And the presidential office said - in a statement carried by the Iraqi News Agency (INA) - that President Saleh received at the Peace Palace in Baghdad, the Ambassador of the Russian Federation to Baghdad, Elbrus Kutrashev, and they discussed ways to develop bilateral relations and the importance of strengthening cooperation in the field of security and defense .

The office indicated that during the meeting, trade, economic and cultural cooperation was reviewed in a way that achieves the common interests of the two friendly peoples, in addition to regional developments in the region .

In the same context, Iraqi President Barham Salih stressed that international solidarity is necessary to confront global challenges, foremost of which is the fight against terrorism and extremism .

Salih said that "Iraq is looking forward to strengthening its political, economic and trade relations," stressing "the importance of international and regional solidarity in order to confront various global challenges, foremost of which is combating terrorism and extremism, easing tensions and establishing peace in the region   link

Mot:  My name is Alice Smith and I was sitting in the waiting room for my first appointment with a new dentist. I noticed his diploma, which had his full name.

Suddenly, I remembered a tall, handsome, dark-haired boy with the same name had been in my high school class some 30-odd years ago. Could he be the same guy that I had a secret crush on, way back then?

Upon seeing him, however, I quickly discarded any such thought. This balding, gray-haired man with the deeply lined face was way too old to have been my classmate.

After he examined my teeth, I asked him if he had attended Morgan Park High school.

'Yes. Yes, I did.' he gleamed with pride.

'When did you graduate?' I asked.

He answered, 'In 1967. Why do you ask?'

'You were in my class!' I exclaimed.

He looked at me closely. Then, that ugly, old, bald, wrinkled, fat, gray-haired man asked, 'What did you teach?'

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Mot: --- ooooh.... ooooh.... ooooh Deer!!!