Clare: Where are the Iraqi oil revenues deposited? Sudanese advisor answers
Today, Sunday, the financial advisor to the Prime Minister, Mazhar Muhammad Salih, clarified regarding depositing the revenues1/ obtained for Iraq from the sale of oil.
Saleh said, “(Externally) and according to Security Council Resolution 1483 in May 2003, the revenues of the Ministry of Finance from crude oil, gas, exported derivatives, and other funds are deposited in the Federal Reserve Bank in New York, all of which are deposited in an account called DFI or its current alternative, Iraq/2, which is held by The Central Bank of Iraq, on behalf of the state, to deduct the compensation for the Kuwait war, which ended more than a year ago, from crude oil, derivatives, and gas (if any). Iraq/1“.
And he added, “As a result, the protection of the United Nations previously and the protection of the United States over Iraq’s funds according to the presidential executive order annually is issued on the funds of the Central Bank of Iraq deposited in the US Federal Reserve in the United States in particular, (internal) all the aforementioned and other funds belonging to the Ministry of Finance are recorded in an account Internal in dinars 600/300 for settlement purposes. LINK
Clare: Hamoudi: The dollar crisis is our chance to end financial tutelage
The head of the Islamic Supreme Council of Iraq, Hammam Hamoudi, confirmed today, Sunday, that the dollar crisis is an opportunity for Iraq to liberate itself from financial tutelage.
Hammoudi said in a statement received by Alsumaria news, “The dollar crisis is an opportunity for Iraq to liberate from financial tutelage, calling for rationing imports, involving national banks in development, investing savings and balances in vital projects, and betting on the national product, praising the government’s measures to address the crisis by expanding sales outlets.” currency, and what is related to preserving food prices and increasing the ration for those covered by care.
He stressed that “any renaissance that we aspire to will not be achieved without the role of the people and their cooperation with the government, as they are required to play a real role in follow-up, oversight, and constructive criticism, and not stand by in the face of any imbalance or tampering, and at the same time support any positive effort that serves their interests and future.”
He urged the cadres of the Supreme Council to “activate their role in follow-up and oversight, and to harness all their activities and capabilities for service and social efforts, with a pure intention of God,” noting that “Iraq It cannot be compared to other countries, because it is a country rich in its natural resources, human resources and scientific competencies, and its people have a strong will and self-esteem. That is why we made our motto “Live on Dignity” because we are optimistic that the next stage is transitional towards a better reality. LINK
Clare: The rise of the dollar.. The Federation of Iraqi Industries proposes 3 solutions to address the imbalance
The Federation of Iraqi Industries confirmed today, Sunday, that the high exchange rate of the dollar against the Iraqi dinar “paralyzed the local industry”, proposing three “real” solutions to address the imbalance.
The head of the union, Adel Akab, told Shafaq News agency, “The rise in the price of the dollar caused problems for the Iraqi industry, because the price of the local product is fixed, and it cannot be changed in the face of the rise in the prices of raw materials, transportation and other accompanying details as a result of the rise in the dollar.”
Akab added, “The street, the citizen, and the industrialist are calling for the stability and stability of prices, so that they can settle their financial affairs, after the confusion in the exchange rate paralyzed the Iraqi industry and all aspects of life.”
He pointed out that “the real solutions lie in the industry, as it is able to absorb the masses of the unemployed, in addition to strengthening the Iraqi dinar, and not relying on oil, which in the event of a drop in its prices, there will be great repercussions on the lives of citizens.”
Akkab continued, “Tomorrow there will be a meeting with the Prime Minister’s advisor to develop some solutions to address the imbalance we have.”
Earlier, the Iraqi Finance Minister, Taif Sami, revealed that the draft federal budget law for the year 2023 included a fixed exchange rate for the dollar at 1450,000 dinars. LINK
Clare: Abdul Hassan Al-Shammari to / NINA /: I do not worry about the stability of the local currency, with the large reserves of the dollar and gold
The economic expert, Abdul Hassan Al-Shammari, confirmed that he is not concerned about the stability of the local currency, with the large reserves of the dollar and gold.
He told the National Iraqi News Agency ( NINA ) that what happened during the last period of the rise in the dollar against the local currency was caused by a lack of supply and an increase in demand for it.
Al-Shammari added that external factors stand behind this rise, including Iraq’s payment of dues to Iran in the national currency, which is around 3-5 trillion dinars.
He explained that these sums were pumped into the Iraqi market in one way or another to buy dollars in light of Iran’s need for foreign currency more than the Iraqi dinar to revitalize its tired economic situation.
Al-Shammari stressed that with these factors in addition to others, there is no fear or concern for the Iraqi dinar in light of the presence of large reserves of dollars and gold, in addition to that the continuous flow of foreign currency from the export of oil in particular. LINK
The Kurdistan Democratic Party announced today, Sunday, an agreement to legislate the oil and gas law, while noting that the law will solve one of the most prominent outstanding problems between Baghdad and Erbil.
“Both Kurdish parties have their interests, and the dispute between them is a very natural issue, provided that the differences do not affect the interests of the Kurdistan region,” said Majid Shankali, a representative of the party, in a statement.
He added, “The best way is the dialogue, to reach a formula of understanding between the two parties, and go to Baghdad unified to resolve contentious points, especially the region’s share of the budget,” noting that “everyone agrees on the oil and gas law, and it will be legislated during the coming period.” LINK
Paulette: Huuuuuge…….WE always believed the Kurds would never agree until the last minute……Waiting for it to be legislated
KandG: Hi Paulette – MANY over MANY years, including Frank of course, have said when this bad boy gets signed – we have a rate VERY soon after. Thanks for your post!! IMO
Clare: What is meant by currency float? What are its advantages and disadvantages?
The floating currency is intended to leave the value of a country’s currency to supply and demand when compared to another currency. There are millions of traders around the world buying and selling currencies, which helps determine their value for others.
The floating exchange rate is determined by these daily interactions between traders. If investors By buying the US dollar heavily, it is likely that its value will rise against other currencies, and this means that more dollars will be needed to purchase the same number of goods from abroad.
The author, Mohamed Abdel-Khaleq, an economic analyst,
how does the currency floating system work?
The basis of the currency floating system is supply and demand. If the supply is greater than the demand, the value of the currency will decrease. On the contrary, if the demand is greater than the supply, its value will increase.
In the short term, the float can be affected by factors such as speculation, natural disasters, and political news, for example: elections can often lead to periods of negative sentiment if an extremist party has a chance to grab power.
As for the long term, it is inclined A floating exchange rate in the forex trading market indicates volatility based on economic performance For the country and its balance of trade, if the economy is performing poorly it tends to see less investment from abroad, this means that less demand is made for the currency and thus exert negative pressure on its value.
The trade balance is the net of what a country exports and imports, so if a country imports more than it exports it has a net flow of its currency, this is because it demands more goods from other countries than those countries demand from them domestically, in return, the country sends more of its currency to abroad, thus increasing the market supply and decreasing its value.
Theoretically, a flotation mechanism can help countries recover from recession. This is because their currency tends to weaken as a result of poor economic performance. In turn, exports become more competitive because they are cheaper in the international market. This can help provide a boost to local exporters. At the same time, imports become more expensive. This may make goods more expensive in the short term but has the potential to boost alternative domestic suppliers who become relatively cheaper.
Advantages of floating the exchange rate
- Stability in the trade balance
The trade balance is the difference between what a country imports and what it exports. It may also be known as “net imports”. This is an important economic aspect because it is a component of a country’s economic output.
A floating exchange rate allows for more stability in this region as the currency is volatile. When a currency depreciates it means that exports become cheaper to the rest of the world. This provides a boost to the balance of trade between countries as they can export more because they are relatively cheaper than their competitors.
By contrast, when a country sells a large number of goods abroad and has a positive trade balance, its currency is likely to strengthen, meaning that other countries will start to find it more expensive to import from that country. In turn, countries may look where Another about cheaper goods, which negatively affects the exchange rate.
- Stability of inflation
One of the main drawbacks of a fixed exchange rate is that countries will naturally “import” higher prices, so the benefit of floating is that hyperinflationary countries will experience a depreciation of their currency, and this will then help offset the inflationary effect on other countries.
- Decrease in foreign exchange reserves
By working under a system of floating exchange rate, the central bank in the country no longer needs large reserve currencies to stabilize the exchange rate, under the system of fixed exchange rate central banks need a wide range of currencies, and this means that if Needed to strengthen its currency it will sell foreign reserves thus increasing other supply in the market and lowering the value.
Instead, under a system of floating exchange rates, that same money can be used in a way that benefits the broader economy.
under a fixed rate system shall operate central banks For different countries in line with each other, for example: if a country raises interest rates to deal with inflation other central banks will need to respond, this is because what happens in one country is likely to affect monetary conditions in another country.
When currencies are linked to the dollar, changes in the value of the dollar will have an impact on the value of other currencies. In contrast, these countries are subject to the feelings of the US Federal Reserve Bank and its monetary policy. By contrast, floating the exchange rate allows countries to decide on their monetary policy. Without focusing only on other countries.
- Fewer speculative attacks
When a currency is artificially forced to stay at a fixed level, there is often bubbles in market activity. Investors know that a currency is undervalued, but with a fixed exchange rate central banks struggle to maintain the exchange rate. Constant.
There is a point where the countries currency remains stagnant, but the fundamentals appear to be undervalued or overvalued, this opens the door to speculative attacks on the currency as it seeks to make some easy money, and this in turn can lead to drastic shifts in the foreign exchange market which can cause great distress to national economies.
In contrast, a floating exchange rate is constantly changing reflecting a wide range of underlying conditions ranging from inflation to economic performance, so the exchange rate is largely in line with its underlying value.
Disadvantages of floating the exchange rate
- Exacerbation of economic issues Countries
may face economic difficulties at home, there may be excessive inflation rates, economic stagnation or poor job opportunities, all of which can play a role in the foreign exchange market.
As a result of the flotation, investors look at the basic features of the economy to determine its value, and these basics include economic indicators such as growth and inflation, so when these indicators perform poorly, they are likely to lose value against other currencies.
The float also has the potential to drive the economy down as a weak currency puts pricing pressures on its imports, so for countries that import heavily they may face higher prices that will likely reduce consumer demand.
- Possible volatility
One of the main problems with a flotation is that it can create volatile conditions for companies and countries, a sharp depreciation in the value of a currency can greatly affect the dynamics of its economy, imports become significantly more expensive which puts pressure on value-adding exporters, moreover Companies that import raw materials will see higher prices as a result.
If the economy is formed in such a way that imports are a major component, it may struggle more during periods of currency weakness.
By contrast, countries such as export-led China may benefit, since most of their business is focused on exporting their goods become cheaper abroad and thus Increased demand and improved economic conditions at home.
- Weak monetary policy
excuses flotation system The central bank has the responsibility of maintaining its currency peg, instead, it has the autonomy to pursue its monetary policy and economic agenda.
This is a two-sided coin. On the one hand, a well-managed monetary system can take advantage of this freedom, and on the other hand, mismanagement can lead to hyperinflation and financial crisis.
Many countries have tried to work their way out of debt by floating the currency, but the result has always been excessive levels of inflation and a bad credit rating. Instead, countries that may struggle to manage their monetary policy are better off having a fixed exchange rate. LINK
KandG: Very interesting to see an article such as this – WHY would you ever talk about about a float – to educate the Iraqi citizens maybe? – maybe you have just told on yourself on what are doing?? BET Frank covers this one in the next conf call IMO – any takers on this bet LOLOLOL