Wednesday Morning Iraq Economic News Highlights 2-8-23
Wednesday Morning Iraq Economic News Highlights 2-8-23
Raising The Value Of The Iraqi Dinar Against The Dollar By 10%, And An American Adherence To The Demand To Close The Smuggling Outlets To Iran
February 7, 2023 Baghdad - (AFP) - Washington – Zaman The Iraqi authorities decided to raise the official exchange rate of the dinar against the dollar by 10 percent, a measure aimed at To combat the devaluation of the currency, which accompanied the adoption of stricter regulations regarding financial transfers outside the country.
While the Iraqi Foreign Minister Fouad Hussein arrives in Washington authorized by his government to discuss the financial file of Iraq M P. The Federal Bank and the issue of foreign remittances, and sources in the US administration told the correspondent of "Azaman" that President Biden promised the Iraqi prime minister, in a phone call a few days ago, to support Iraq, but there are international obligations They must abide by it, including controlling the border crossings, preventing smuggling and cutting off all means of that with the punishing Iran From Washington in addition to internal reforms.
For two months, the Iraqi dinar has been fluctuating sharply, losing on some days 15 % of its value against dollar, sparking sporadic demonstrations by Iraqis worried about losing their purchasing power.
To confront this spiral, the Central Bank of Iraq proposed in recent days to raise the value of the national currency by about 10 %. And the exchange rate was raised from about 1470 dinars to 1300 dinars per dollar.
And the Council of Ministers approved on Tuesday the decision of the Board of Directors of the Central Bank to amend the exchange rate of the dollar against the dinar, which It reaches 1,300 dinars for one dollar, according to a press release issued by the media office of Prime Minister Muhammad Peanut chia.
The measure immediately had repercussions on the foreign exchange market, as the rate fell to below 1,500 dinars For the dollar, after it had reached 1,700 dinars on certain days. The Iraqi economist, Bariq Chopper, said it was a "temporary" improvement. In response to a question by Agence France-Presse, he indicated a decrease in market demand because “dollar buyers Now they are waiting to buy the dollar at a cheaper price and directly from the Central Bank.
However, he believes that resolving the crisis requires "radical solutions", such as better control over the remittance and transfer market And a complete shift to letters of credit.” Analysts and officials attribute the depreciation of the dinar to the regime's compliance Iraqi banker of international money transfer regulations.
Iraqi banks must now manage these transfers through the electronic platform SWIFT, which is synonymous with more monitoring strictness of transactions, in particular by the US Federal Reserve, which rejects any transfer deemed suspicious .
But the authorities have admitted that the old system allowed for many abuses, with some users getting dollars from the system The central bank, through official channels, to carry out money laundering operations abroad or capital flight.
Deprived of official channels, these users returned to the parallel market, causing an increase in demand. The Prime Minister recently admitted fraudulent transfers of dollars from Iraq to foreign countries. LINK
The Citizen Is Waiting For A Breakthrough In Commodity Prices After Raising The Value Of The Dinar Against The Dollar
February 7, 2023 Baghdad / Obelisk: Observers warn that decreasing the exchange rate of the dollar will not be accompanied by a reduction in market prices except by working on effective treatments that prove the exchange rate of the dollar, just as failure to approve the budget will lose the decision to reduce the price of the dollar, its effects in favor of the citizen.
And the rapporteur of the Parliamentary Finance Committee for the fourth session, Ahmed Al-Saffar, said in an interview with Al-Sabah newspaper that “the problem that will face the budget (the price of a barrel of oil) on which the budget is prepared and built, and in light of the fluctuation of oil prices between high and low, puts the legislator in front of a problem over any price.” The budget will be approved, in addition to the problem of the dollar exchange rate.
Al-Saffar warned that if the budget is approved and money is pumped into the market through public expenditures while maintaining the same ineffective procedures, this “will amplify and exacerbate the problem of the exchange rate, given that an increase in the amount of cash in circulation leads to greater demand.” On the dollar, which in turn leads to more increases if the necessary measures are not taken by offering the dollar.
And the expert in economic affairs, Jaafar Baqir Alloush, says, “The delay in approving the budget is related to the crisis of the rise in the exchange rate of the dollar in the parallel market,” explaining that “the relationship lies in the extent to which expenditures match the gap in the exchange rate and an attempt to bridge it by increasing expenditures directed to support foreign trade.” And this was announced in the official state speech.
He noted that the exchange rate is not linked to the budget, “on the contrary, it is the budget that is affected by the exchange rate of the dollar.” With regard to the volume of estimated expenditures in the budget (200 trillion dinars) compared to the exchange rate, Alloush explained that it is “a price equation that helps increase the mass Dinar cash directed to restrict aggregate demand (of this size) with limited dollar revenues, and thus will contribute to raising the value of the dollar against the Iraqi dinar.
And the economist, Nabil Al-Marsoumi, stated that “the launch of the budget will lead to spending in both its consumer and investment parts, which will lead to spending additional funds, which will generate inflation in money and government spending, and this leads to an increase in dollar-financed imports, and the pressure on the hard currency will increase.” “If the exchange market does not stabilize in Iraq, it is possible that approving the budget will lead to a rise in the exchange rate and at higher levels than it is now.”
And in the event that the decline in the exchange rate of the US dollar against the Iraqi dinar is accompanied by the stability of commodity prices downward, this will stop the high cost of living and reassure the Iraqi citizen, and this requires monitoring the stability of the exchange rate in the local market and taking steps that maintain the balance.
And in the obelisk’s communication with economic analysts, the high price is linked to the exchange rate, and it should not be left according to the mood of traders and currency speculators.
Al-Alaq: A New Package To Control Dollar Fluctuations Will Start In The Middle Of This Month
February 7, 2023 Baghdad - Qusay Munther The Governor of the Central Bank, Ali Al-Alaq, revealed the launch of a second package that will be issued in the middle of this month to control the exchange rate of the currency.
A statement received by (Al-Zaman) yesterday said that (Al-Alaq met with the heads of councils, general managers, and delegates of government and private banks, to put the necessary arrangements for the first package of measures to control the exchange rate into effect, and to clarify and simplify the procedures to achieve smoothness and speed in executing dollar purchase requests), and Al-Alaq confirmed ( The bank's ability to meet all legitimate requests), and he indicated that (a second important package will be issued in the middle of this month).
Cash Sale
Pointing out (there are no restrictions, internal or external, on the external transfer or cash sale of the dollar, in compliance with the International Monetary Fund agreement, which was ratified by the House of Representatives in 2008). Noting that (the new system does not aim to restrict the response to legitimate requests, as much as it aims to provide protection for the banking and financial system from illegal or suspicious operations, and supports the application of the law on combating money laundering and terrorist financing and related instructions, and also promotes the openness of the banking sector abroad, which was forbidden long decades).
He continued, "The exchange rate is related to the lives of citizens and their purchasing capabilities, which should ensure its stability at the targeted levels is a high priority, and that the efforts of the relevant concerned parties join forces to prevent harm to citizens," calling for "not limiting requests to external transfers and cash in Baghdad, And take immediate measures to receive the bank branches in the provinces of those requests.
And he indicated that “the Central Bank has begun to open new external channels and outlets to facilitate the conduct of external transfers and avoid the role of unqualified intermediaries to do so.”
And he went on to say that (the bank will take strict punitive measures against the violators authorized by it), and praised (the role of some banks in adhering to everything that achieves the desired goals), and the statement went on to say that (the governor listened to the proposals of the conferees, and directed the central departments to take the necessary measures In this regard, it was decided to form a joint operations room between the bank and the banks, to follow up the implementation of the first package of procedures, monitor phenomena, results and obstacles, and make appropriate recommendations in this regard.
And the Prime Minister, Muhammad Shia'a al-Sudani, had confirmed that the treatments presented by the Central Bank come within the process of financial and banking reform.
Yesterday's statement indicated that (the coordination framework held a meeting in Haider Al-Abadi's office in the presence of Al-Sudani, where developments in the political and security scene were discussed, in addition to discussing the federal budget file that the Council of Ministers intends to submit to the House of Representatives for approval).
On its basis, the federal budget was drawn up and the extent of its compatibility with the government program, in addition to the dialogues that the bank conducted with the US Federal Bank in Istanbul, and the reform packages it issued), indicating that (the treatments presented by the bank come within the process of financial and banking reform). The statement pointed out that (the meeting witnessed a discussion of government measures to reduce the effects of exchange rate fluctuations on the poor and marginalized segments, as well as the upcoming visit of the Iraqi delegation to Washington headed by the Minister of Foreign Affairs to complement the Istanbul meetings).
In addition, the Federal Intelligence and Investigation Agency ousted 7 suspects in possession of more than one and a half billion dinars in Nineveh Governorate.
Currency Smuggling
A statement received by Al-Zaman yesterday said that (to follow up on smuggling and speculation in dollar prices, the agency's detachments intensified their measures to prevent currency smuggling, as a joint force embarked on separate duties that included several areas and land roads used to transfer money in Nineveh Governorate), stressing that (after conducting inspections And the audit arrested seven suspects in possession of one billion and 654 million dinars, which were used to make financial transfers informally, which were smuggled to the northern governorates). LINK
The Dollar, The Central Bank, And The Owner - Salah Al-Din Al-Janabi
February 3, 2023 The Dollar, the Central Bank, and the Owner - Salah al-Din al-Janabi
The rate of rise is accelerating, and this leads to an acceleration of poverty and the inability of the citizen to pay his daily expenses, in addition to his inability to cover his family and other obligations, which is sold from the dollar in the parallel market with a large difference from the exchange rate (purchase) and enters the pockets of speculators, beneficiaries, corrupt and even merchants who buy dollars at the price Officials sell goods at the parallel price, briefly and clearly, all parties benefit from the price difference, and the only one affected is the owner (the citizen),
so all future measures must be to transfer all these profits to the citizen through a set of procedures that start with selling dollars in government banks only (covering all The citizen’s need for dollars) and directing private banks to exercise their role in development similar to their counterparts in the countries of the world and obligating merchants who buy dollars at the official price to sell their goods at the official price and it does not end with activating electronic transactions in all public and private facilities. LINK
After Resolving The Dollar Crisis.. Kurdish Demands To Expedite Approving The Budget
2023-02-08 Shafaq News / On Wednesday, Kurdish citizens called for resolving the outstanding differences regarding approving the federal budget for the current year, especially after taking guarantees from the United States of America regarding the stability of the dollar price.
Kamran Ahmed (owner of a store that sells sanitary materials) saw, during his interview with Shafaq News agency, that approving the federal budget will contribute significantly to increasing the market movement here in Kurdistan, as well as in the central and southern regions of Iraq.
Ahmed added, "The approval of the budget will provide job opportunities for the unemployed in the central and southern regions, as well as will move the stalled projects, and at that time there will be a movement of the economy in those areas, and this movement will reflect positively on Kurdistan, by increasing and revitalizing the tourism movement in Sulaymaniyah and the rest of the regions of the region, thanks to Improving the economic reality in the central and southern regions of the country.
14% of the budget
In turn, Luqman Kakai told the agency, "The approval of the budget in agreement with the regional government will guarantee a legal share of no less than 14%, and these funds will move the economy here as well as restore life to many stalled projects after the region's budget was cut by successive Baghdad governments since 2014.
Kakai called on the Kurdish forces to "unify discourse and visions and go to Baghdad with a delegation representing all the Kurdish forces to demand the region's share of the federal budget in accordance with the Iraqi constitution."
Goods' prices
For his part, citizen Farhad Akram noted that "approving the budget at a new exchange rate for the dollar will contribute to reducing the prices of basic and luxury goods by no less than 30% from their current price, and this stability does not take place until after approving the budget and adopting a new exchange rate for the dollar."
On the other hand, the spokesman for the dollar market in Sulaymaniyah, Jabbar Goran, stated that "the exchange rate of the dollar against the Iraqi dinar will be 135 thousand dinars for every 100 US dollars in the Kurdistan region and Iraq."
Goran said, in a press conference, attended by the agency, that "the reason for the dollar's rise in Iraq was political, but now the central bank has received full guarantees from the United States, which caused the dollar's price to decline."
He added, "Submitting the Iraqi budget bill for the year 2023 at a price of (130) thousand dinars for every (100) dollars means the stability of the exchange rate in the market, but until the budget is approved, the value of the dollar will fluctuate."
Goran expressed regret that citizens suffered losses as a result of the dollar's fluctuation, while a number of banks and politicians made "huge profits," while urging citizens "not to buy dollars unless they need them so as not to cause confusion in the market." LINK
The Central Bank Of Iraq Allocates A Hotline To Receive Complaints About The Dollar
Economy News-Baghdad The bank mentioned this in a statement issued today, Wednesday, and indicated that complaints and inquiries will be received during official working hours, from eight thirty in the morning until seven in the evening.
And the Central Bank of Iraq announced that it will start selling the dollar at the new official price, starting today, Wednesday.
Yesterday, Tuesday, the Council of Ministers approved the decision of the Board of Directors of the Central Bank of Iraq to adjust the exchange rate of the dollar against the dinar, equivalent to 1,300 dinars per dollar.
And a statement by the bank stated, “It will start selling the dollar at the new official price, starting tomorrow, Wednesday, corresponding to 2/8/2023, and it will continue its procedures and steps until the dollar exchange rate stabilizes according to the official exchange rate.”