Iraqi News Early Wednesday AM 3-2-22
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Exchange Rate Game In Iraq: How Speculators Grossed Millions Of Dollars In 48 Hours Schem
Report iraq U.S. dollar 2022-02-27 06:49 Shafaq News/ In a short period of only 48 hours, currency speculators pocketed millions of dollars after disseminating rumors that the Iraqi government is seeking to change the exchange rate of the U.S. dollars in the 2022 budget.
Iraqis rushed to the exchange joints scattered everywhere throughout the country to convert their dinars to a safer dollar, only for the rate to rebound immediately after the Central Bank of Iraq (C.B.I.) debunked these rumors.
In December 2020, the Central Bank of Iraq set the new rate for the dinar, which is pegged to the U.S. dollar, at 1,450 Iraqi dinars when selling to the Iraqi Finance Ministry.
The dinar will be sold to the public at 1,470 and to other banks at 1,460.
The new rates represented a dramatic reduction from the previous official rate of 1,182 IQD. It is the first reduction in exchange rates that the Iraqi government has made in decades.
As a result, according to specialists, annual inflation in Iraq has skyrocketed, with all prices of materials and goods in the Iraqi market rising significantly, igniting a wave of discontent among the public and experts equally.
Kick-off: al-Sadr’s call and Allawi’s rejection
“The tweets of Sadrist leader Muqtada al-Sadr and his insistence on hosting the finance minister and the governor of C.B.I. created a feeling that the exchange rate change would take place within hours.
The majority rushed to sell consequently.
However, the absence of buyers contributed to a reducing the dollar’s purchase rate,” economist Dhurgham Mohammed Ali told Shafaq News agency.
“The statements of the C.B.I. governor, who confirmed that there was no change in the exchange rate, have raised the value of the dollar again,” Ali said, indicating that speculators have exploited the supply-demand game to make profits.
In a Feb. 17 tweet, the leader of the Sadrist movement, Muqtada al-Sadr, lamented the smuggling of foreign exchange out of the country and the 2020 devaluation of the Iraqi dinar, among other issues.
He also called on lawmakers to question the head of the C.B.I. governor, Mustafa Ghalib Makhif, and Finance Minister, Ali Abdul-Amir Allawi.
The day after, First Deputy Speaker Hakem Al-Zameli, a Sadrist MP, summoned Allawi and Makhif to the parliament. Allawi promptly dismissed the summons in a strongly-worded letter to Prime Minister Mustafa al-Kadhimi on the same day.
The finance minister essentially argued that his summoning per a “tweet” by Sadr was a protocol violation. Ghalib showed up in the legislature on Feb. 19.
Following the government-parliamentary escalation, the dollar fell in the local markets, catalyzed by rumors that the government intended to lower the devaluation reverse, leading citizens to sell their dollars at rates below 141,000 dinars to 100, down from 148,000 dinars.
“Government inability to address the situation”
“The government did not address the downsides of the devaluation properly.
It left the citizens vulnerable to the subsequent surge of the commodity prices while reaping the devaluation benefits,” financial expert Hilal al-Tahhan told Shafaq News agency, “the government pursued the ‘shock therapy’ to address the issues facing the state’s economy.”
“Over the past few weeks, speculators fueled the rumors about reversing the devaluation to boost their gains by buying at lower prices and yielding when the prices surge again,” he said.
The Summons Sparked Fear
“The Iraqi market is volatile. There is no order and law restrains for currency traders,” Firas al-Hamdani, president of the Baghdad Chamber of Commerce, told Shafaq News agency.
“Confusion started after summoning the governor and the minister of finance. However, the absence of the latter stirred panic of a further drop of dollar exchange rates against the dinar among some traders and companies,” al-Hamdani said.
“Those who understand the Iraqi economy and the budget are aware that the exchange rate is fixed in the 2021 budget. Therefore, it cannot be changed,” al-Hammadani added.
Ministry Blames Traders
Iraq’s Ministry of Finance downplayed the impact of the national currency devaluation on the foodstuff and basic commodity prices in the Iraqi markets, hinting at a greater role for other factors that are often overlooked.
An infographic shared by the ministry said that logistic and transportation costs, in addition to the rise of metals and primary material prices, contributed to the prices surge.
The ministry said that the rise of foodstuff in the global market drove its prices in the domestic market up.
Prices are under control
“The monetary policy of the Iraqi state does not suffer from significant price pressures despite the dinar’s low exchange rate,” PM’s financial adviser, Mudhhir Mohammad Saleh told Shafaq News Agency.
“C.B.I.’s s job is to fight the sharp and strong inflationary forces,” Saleh clarified, “the bank is building good reserves and injecting stability into the economy.”
Dollar prices remain captive to C.B.I. specialists and officials in assessing the country’s financial situation, as long as the dollar is not subject to flotation.
Al-Kazemi’s Advisor: The State’s Loss Will Be Great By Adjusting The Exchange Rate
Political Yesterday, 20:59 Today, Tuesday, the financial advisor to the Prime Minister, Mazhar Muhammad Salih, identified two directions for resolving the exchange rate crisis, while explaining the extent to which the currency market was affected by conflicting statements.
Saleh said, to the Iraqi News Agency (INA), that “the currency market is inevitably affected by information, as is the bond sale market, which is considered a free market with duelists and an information market,” noting that “sometimes there are false information that disturbs the market, or it may be truthful that leads to an exchange of information.” Buying and selling very quickly.
He added, “It is not possible to deviate from the contexts of the Ministry of Finance, but if the exchange rate is modified, it will have a benefit and a loss, and the state’s loss will be greater because it has achieved revenues in the form of an inflation tax at a rate of 20%, and if the value of the dinar is raised, the value of the increase will be lost by public finance, especially And it relies on 93% of the value of its revenues that depend on oil, as it is a key player in managing the budget,” stressing that “the government must address the effects of this, especially on the poor.”
He pointed out that “there must be two directions to solve the crisis, the first is to re-evaluate the dinar and raise it alone, and it seems that there is no tendency on the part of the Ministry of Finance, but it must use the compensatory tendency such as taxes and customs duties, expand the base of social benefit and improve the food ration of the poor,” pointing to that ”
He continued, “Among the solutions is also maintaining the prices of fuel and food and consumer goods in the markets to compensate for the income,” stressing that “the market is stable at a low exchange rate and there is a high price difference, but inflation is still within the single decimal place, according to a statement by the Ministry of Planning.”
And he warned, that “if inflation exceeds two ranks, it will become a danger,” noting that “the biggest solution to treating inflation is interfering with the exchange rate.” https://www.ina.iq/150168–.html
After Paying It In Full, An Economist Offers Ways To Benefit From Iraq’s Surplus Debt
Economic Last update 02/27/2022 | 7:54 pm information / special On Sunday, economic analyst Basil Al-Obaidi presented economic ways to benefit from the money that Iraq was paying as international debt, the most important of which was the Kuwaiti debt.
Al-Obaidi told the “Information” agency, “The real economic ways to benefit from the sums of money that Iraq was paying as international debts, which amount to more than four billion dollars annually, is to put them in two funds, either the Special Fund for Development and Investment, or put it in the Generations Fund to ensure that it is not lost in government expenditures.”“.
He added, “After Iraq pays all international debts annually in addition to the interests and fees that it was paying on the will of its account at the United Nations, it is assumed by the Iraqi government and by a decision of the House of Representatives stipulating that the amount should not be entered into the budgets.”
Al-Obaidi explained that “the international debt ratio represented more than seven percent of the monthly oil revenues,” noting that “putting money in the financial budget leads to inflated expenditures and disbursing funds without knowing the ways to use them.” https://almaalomah.me/2022/02/27/584611/
Economist: Popular Pressure May Lead To An Adjustment In The Dollar Exchange Rate
Economic 2022/02/27 | 11:17 AM Information / Baghdad.. The researcher in economic affairs, Nabil Jabbar Al-Ali, expected, on Sunday, that popular pressure on measures to change the exchange rate would result within an acceptable monetary range, to contribute to reducing pressure on individuals’ incomes due to the increase in inflation.
Al-Ali said in a statement to “Information” that “the consumer price inflation pushed him to resentment even more, calling on the political forces to amend the exchange rate, especially after the rise in oil prices, exceeding $95.”
He added that “the issue of exchange formed a kind of political competition between Shiite political forces, in particular, to try to please the Iraqi people and win their affection.”
He pointed out that “the continuous popular pressure may result in an adjustment of the dollar exchange rate to its previous era, despite the reservations of Finance Minister Ali Allawi to reduce the exchange rate.”
The First Deputy Speaker of the House of Representatives, Hakim Al-Zamili, announced that more than 100 deputies signed on hosting the Minister of Finance, while noting that the high exchange rate did not benefit the state. finished / 25 h https://almaalomah.me/2022/02/27/584480/
Khashan: State Revenues Are Transferred To Local And Foreign Banks And Go To The Pockets Of The Corrupt
Economic Last update 02/03/2022 | The Information/Baghdad… The independent representative, Basem Khashan, explained that the revenues are transferred to the pockets of the corrupt through local and foreign banks, pointing out that the people cannot be deceived by the idea of distributing part of the revenues and ignore their demands to provide the most important requirements such as electricity, schools and decent living.
Khashan told Al-Maalouma, “The state’s revenues are transferred to local and foreign banks and go into the pockets of the corrupt, as these banks, especially local ones, work in foreign currencies.”
He added that “the citizen does not seek oil revenues and does not demand that they be put in his own pocket.
Rather, the general public needs to provide services, infrastructure, electricity, schools and other service projects that guarantee a decent living.”
And he indicated that “presenting ideas related to distributing part of the sums to the citizens would not be a good idea, as the shortfall and failure by the government cannot be compensated by distributing part of the revenues to the citizen.” finished 25 https://almaalomah.me/2022/03/02/585094/
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