Iraq Economic News and Points to Ponder Thursday Afternoon 5-2-24


Iraq Economic News and Points to Ponder Thursday Afternoon 5-2-24

His Financial Advisor: The Dollar Exchange Rate In The Parallel Market Is Gradually Approaching The Official One

Economy | 02/05/2024   Mawazine News – Baghdad   Today, Thursday, Adviser to the Prime Minister for Financial Affairs, Mazhar Muhammad Saleh, explained the dangers of the exchange rate fluctuations in the event that demands for floating the dinar are met, while confirming that the dollar exchange rate in the parallel market is gradually approaching the official one.

Saleh said to the official agency, followed by Mawazine News, that “calls for floating the dinar to end the gap between the official exchange rate and the parallel market may be possible in an economy in which the free market alone influences the movement of the balance of payments, and not in an economy in which the rentier government sector is dominant and generates currency reserves.”

Foreign currency, as the monetary authority alone is the main source of supply of foreign currency that meets the desired demand for foreign exchange in the money market, to provide stability in this market and achieve a desired and homogeneous exchange rate through the interventionist role played by monetary policy.

He added, “Claims for flotation mean in all cases adopting the prevailing exchange rate in the parallel market to achieve the goal of stability and balance in the official exchange rate itself at a new point reached by the market at the end of the supposed flotation policy and returning to stability again. Also, the flotation scenario means in all cases the withdrawal of the authority.”

Cash from being an essential central supply of foreign currency, to be replaced by new forces supplying foreign currency from free market makers, which only have a weak, limited supply of foreign exchange, and at the same time they carry an uncontrolled package of inflationary expectations and are called in economic literature the forces generating expectations. “inflationary”.

He continued, “The hypothetical new supply forces for foreign exchange adopted by the exchange market in that scenario will mean the dominance of supply forces from speculators with very limited quantities of foreign exchange available for supply in the parallel market, matched by an open demand for foreign currency on the part of the market that undoubtedly exceeds that limited parallel supply.”

of foreign exchange, perhaps by more than 10 times at least in our estimation, and such a policy of floating to achieve a homogeneous equilibrium exchange rate would be an open and perhaps unruly situation, as long as the central government supply of foreign currency would be absent from the market, and we would not then obtain any equilibrium point in the exchange rate.

An exchange rate that is sought to float except with a widespread deterioration of the exchange rate as long as it is controlled by forces that generate inflationary expectations, as we noted in a highly unilateral rentier economy, and it is an exchange rate whose mechanisms will move in a market that is incomplete in terms of production in its compensation for the required supply of goods and services.

Saleh warned, “Then no one knows how much the new exchange rate resulting from the flotation will be, which will undoubtedly be accompanied by a prior wave of inflationary expectations, which is a dangerous wave whose directions are difficult to control, which may force monetary policy according to this floating scenario by intervening with foreign reserves.”

It is an unjustified extravagance in foreign exchange to impose a state of stability in the general level of prices again, just to adopt it when exchange rates reach low rates, and no one knows how much they will reach.”

He pointed out that “the difference in the two prices currently, in which the parallel market is gradually approaching the official market, did not come about due to the short supply of foreign exchange at the Monetary Authority, but rather came about due to a sudden external factor imposed by the compliance platform and administrative audit restrictions on external transfer movements, which is a matter related to the deficit in the authority’s reserves.”

Cash is about bringing the two prices closer in light of a very high level of foreign reserves. The commercial efficiency of those reserves is the highest in Iraq’s financial history, and they are covered in foreign currency that touches more than 16 months of imports compared to the global standard of three months of imports.

Revealing The Latest Developments In Changing The Exchange Rate And The Barrel Of Oil In The 2024 Budget

Economy | – 05/02/2024  Mawazine News – Baghdad,  Deputy Chairman of the Parliamentary Planning Committee, Muhammad Karim, confirmed today, Thursday, that the current year’s budget will proceed after completing the changes in its schedules for allocations for governorate and ministries projects only.

Karim told Mawazine News, “The exchange rate of the dollar, the barrel of oil, and the quantity exported will remain the same according to what was proven in last year’s budget.”

He pointed out that “the tripartite budget approved by the Sudanese government and approved by the House of Representatives allowed the government to make changes and amendments imposed by force after the parliament’s vote.”

He pointed out that “the changes to the schedules will include projects of ministries and governorates in accordance with the requirements of the government program.”

Al-Sudani And The American Ambassador Discuss Following Up On The Work Of The Committee To Activate The Strategic Framework Agreement

Sports | – 02/05/2024   Mawazine News – Baghdad   Prime Minister Muhammad Shiaa Al-Sudani discussed, today, Thursday, the US Ambassador Alina Romanowski, following up on the work of the Committee to Activate the Strategic Framework Agreement.

The Prime Minister’s Media Office stated in a statement, received by Mawazine News, that “Prime Minister Muhammad Shiaa Al-Sudani received, this evening, Thursday, the American Ambassador to Iraq, Alina Romanowski.”

The statement added, “During the meeting, bilateral relations in various fields and files were reviewed and discussed, and the understandings and memoranda of understanding included in the Prime Minister’s visit to the United States related to aspects of energy, trade, and others, and the follow-up of their implementation.”

The statement continued, “The meeting also discussed the foundations for transitioning bilateral relations between the two countries, to include multiple fields, and following up on the work of the coordinating committee for activating the strategic framework agreement, which includes broad stages of joint cooperation for the benefit of the Iraqi and American peoples.”

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Provoking Thoughts and Points To Ponder On Conviction and Belief:

A belief is not merely an idea the mind possesses; it is an idea that possesses the mind.  – Robert Bolton

Every man who attacks my belief diminishes in some degree my confidence in it, and therefore makes me uneasy, and I am angry with him who makes me uneasy.  – Samuel Johnson

Penetrating so many secrets, we cease to believe in the unknowable. But there it sits nevertheless, calmly licking its chops.  – H. L. Mencken

Believe not your own brother – believe, instead, your own blind eye.  – Russian proverb

Whether you are really right or not doesn’t matter; it’s the belief that counts.  – Robertson Davies

I love an opposition that has convictions.  – Frederick the Great