Tivon, MilitiaMan, Petra and more Monday Afternoon 7-4-2022
KTFA:
Samson: A parliamentary bloc moves to lower the dollar exchange rate
4th July, 2022
Today, Monday, Jawad Al-Ghazali, a member of the State of Law coalition, revealed a move by his bloc to reduce the dollar exchange rate.
Al-Ghazali told "Mawazine News", "The lawmakers have collected their signatures regarding reconsidering or modifying the dollar exchange rate to its previous era."
He explained, "This step (comes) due to the rise in commodity prices in the markets and the harm of citizens, and this step will be towards a gradual reduction of the exchange rate, not completely, so that it will be dealt with smoothly without losses." LINK
Tivon: Well this is what we were waiting on. I wonder what the starting rate will be? Internally they can gradually reduce the rate of the USD. Externally raising the IQD rate in the open market is another story. Are both being done in conjunction until parity is complete. Just gauging the situation as however they choose to go about it. The EFSL is definitely going to benefit. But they are so hush hush about it. IMO
*********
Samson: Baghdad and Washington are discussing "inactive" clauses within the framework agreement
4th July, 2022
The Iraqi Ministry of Planning discussed today, Monday, with the American ambassador in Baghdad, "inactive" clauses within the framework agreement.
The ministry said in a statement received by Shafaq News Agency, that its Minister, Khaled Battal Al-Najm, met today, the US Ambassador to Iraq, Elena Romanowski, and her accompanying delegation.
The statement quoted the minister as confirming during the meeting the depth of the bilateral relations between the two countries and the joint endeavor to develop these relations at all levels, to achieve the interests of the peoples of the two countries. ages and stability.
According to the statement, during the meeting, which was attended by the Director General of International Cooperation in the Ministry of Planning, Saher Abdel-Kazim, they discussed aspects of joint cooperation, by activating the items that have not been activated so far within the framework agreement signed between the two countries.
For her part, Romanowsky welcomed the development of the level of cooperation between Washington and Baghdad, expressing her country's readiness to provide more support to Iraq in various fields, according to the statement. LINK
Pete2001: Samson, thanks for all you do .... this article talks about "activating the items that have not been activated so far within the framework agreement signed between the two countries."
Maybe we shouldn't walk past this article?? Forgotten what the framework agreement says....was it signed back in 2003...does it have clause regarding currency reinstatement?? Maybe Frank, MM, Petra or Tivon if important might pick up on and discuss??
**************
Pete2001: Tivon, is the framework agreement between US and Iraq figure in to any of this?? Thanks
Tivon: The "Strategic Framework Agreement" I remember back in 2011 when they were talking about activating This. I know reconstruction and infrastructure plans were in talks that are apart of the agreement. Because this was a deal that was signed off on in 2008.
And the most recent meeting before the current one taking place was in 2016 when they once again mentioned how this agreement was supposed to help with liberated areas and stability in the region.
Currency was never mentioned. But we know the EFSL is also supposed to establish stability in the markets and address reconstruction as well. So they have quite a few things going on. It's like they bring up the S.F.A at every four year interval. They were supposed to activate this three times prior to this meeting. I mean whatever floats their boat at this stage because at this point either one will work. But the reduction in the price in the USD seems to be something that will precede the SFA/EFSL. IMO
************
MarcK: IMO, it won’t be 1200, if it was, that would have been done a long time ago. The new small category notes are ready, game on
Tivon: Not according to the many articles....🤭. Aside from that they might as well put the new ATM machines back in the warehouse. They serve no purpose. Gold & Oil Reserves? Forget about it. HCL? Stop dreaming. Don't even bring up the trade agreements. IMO
MilitiaMan: Or even bring up the 10s of millions $USD they CBI spent in new currency issuance in 2018 per CBI accounting sheets. I have not recalled seeing one article stating 1,200 as a key placement for the currency. Have they used previous era? LINK ~ MM
Previous ERA sure they did., a few times as noted in easy to find FA thread data. Just as recent articles on stamps, coins, etc.. Coins don't' work with a program rate. LINK~ MM
-----------------------------------------------------------------------------------------
"Is still awaiting the completion of the draft financial budget for the year 2022, hoping to include what the citizen aspires to, at a time when calls are rising for calls to restore the exchange rate of the dinar against the dollar to its previous era."
GoldenBoy: Imo, going back to 1200 is great! Then they can delete the zeros and you have 1 to 1!
Tivon: Gradually and internally reducing the USD price in the country until it reaches 1:1 will probably be the marker to reinstate on the international markets. This makes sense to me.
But other alternatives could be at play. At least it's out there now. I am just wondering how long until equal value is reached within their markets before they decide to release it on the global markets. I am watching for othe factors because we still have no solid info on the EFSL being published in the Gazette.
Even though Mazhar Muhammad Saleh stated it entered into force. A couple of days later I read that ministries still have not received any funding from the EFSL. Why? Because in order for them to allocate any funding to those 300,000 families that law has to officially be in the Gazette. IMO
Goldenboy: Remember Tivon, they are working with two sets of books. For all we know, they could already be at parity imo.
~~~~~~~~~~
Tivon: Well if this is the case it implies that the shock policy they have in place for the rate change can support a instant increase within seconds. If that is the case that would also allude to Mazhar Muhammad Saleh talking with a forked tongue as to them needing to monitor the market before they feel comfortable with reducing the USD rate.
Because he's concerned with doing this prematurely even though they may have abundant reserves to support against any inflation. It seems as though he could be playing up a storyline for something that has not real rooted logic if the two sets of books have already established parity and they are just waiting for the EFSL to be officially in the Gazette or the dissolution of parliament. Not sure but something is afoot in that regard. IMO
~~~~~~~~~~~
PETRA: Thank you Tivon for your narratives and insight. If I may, I would like to add to your commentary on a few key issues. IMF compliance under Article 8 requires a single currency practice..aka...IQD only for international trade and transfer.
The impact of the change, IMO, cannot be gradual as then at what point is the IQD more attractive to the USD? We are not only awaiting a rate but also Article 8 "FULL" compliance specifically to their currency play.
So, not sure a gradual rate will work as people need a reason to change and "Shock and Awe" may be what is necessary to get people to change from USD to IQD.
So in essence, a gradual approach will deter the immediate future growth required to get the wheels of change turning in Iraq. All IMO.....Thanks Tivon!!
~~~~~~~~~~
MilitiaMan: Very good point as well Petra. The wheels of the Iraq Economic bus must go round and round. The playing field is imo about level now. Not much left to be exposed except the CBI showing us a new exchange rate to make those wheels spin freely around the world.. imo.. ~ MM
Popeye7: Imo, great commentary gentlemen... Something does have to give, and by the looks of it, very, very, very soon... The pressure cooker in Iraq is reaching a level where if they let it go too far, it will prove to be counterproductive, and destroy the progress that has been made... Thanks so much for taking the time to provide your insight, and commentary... Petra, your last post summed it up quite well... This is not going to be gradual... By taking this much time to build up their reserves to ensure they could maximize the dinar's potency as they intend to go full steam ahead, and at full throttle... Thanks again MM, Petra, and Tivon... God bless, and have a great day KTFA...