Tuesday Afternoon  Iraq Economic News Highlights 8-1-23

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Tuesday Afternoon  Iraq Economic News Highlights 8-1-23

Fears Of A New Shock To The “Iraqi Dinar” Due To A Lack Of Supply And An Increase In Demand!

Political  scene Tuesday August 01 2023 (158 views)  Baghdad / Sky Press  Fluctuations in the exchange rates of the US dollar in Iraq raised fears that the dinar might be subject to a new shock, while news spread of a campaign of arrests of those accused by the authorities of “manipulating the currency market.”  And the value of the dollar reached 1580 dinars, on Friday, before it fell on Saturday to less than 1500 dinars, to rise on Sunday and Monday to 1520-1540 dinars per dollar.

And the United States prevented 14 Iraqi banks from conducting transactions in dollars as part of a comprehensive campaign to transfer US currency to Iran and other countries subject to sanctions in the Middle East.

“We have strong reason to suspect that some of these money laundering operations may benefit either sanctioned individuals or potentially sanctioned individuals,” a senior US official said.

“The main danger of sanctions in Iraq is definitely related to Iran,” the US official added.

And on Wednesday, US State Department spokesman Matthew Miller said that the United States would like Iraq to have bilateral relations with Iran.

Miller continued, saying: “We haven’t always seen that in the past, you’ve seen that we implement policies to try to prevent, reduce, or mitigate the way Iran is trying to gain influence over Iraq.”

Money changers warned of the possibility of a new rise in the dollar at the beginning of the week due to a “lack of supply” and increased demand, which “is not linked to a change in market requirements, but to extreme international and local measures.” ,” says Salim Mustafa, owner of a money exchange company operating in Baghdad.

Mustafa added, “The lack of supply in the market was associated with the exit of a number of banks from work due to international decisions, and also due to the reluctance of a large number of currency traders to work because of fears of a campaign of arrests launched by the Iraqi Economic Security Service.”

According to Mustafa, a number of currency dealers are now under investigation on charges of working in the “parallel market” that sells dollars at market prices, not at its official rates.

The Iraqi Ministry of Interior did not respond to inquiries about the existence of arrests or investigations against currency dealers.

And the Iraqi Supreme Judicial Council announced, on Monday, efforts to “support the Iraqi dinar and confront manipulation and speculation.”

The council said in a statement that it held a meeting that included the head of the Public Prosecution Service, the investigation judges of the economic courts in Baghdad, the head of the National Security Agency, and the Undersecretary of the Ministry of Interior for Intelligence Affairs .

The statement added that the meeting discussed “the best ways and mechanisms to address the phenomenon of manipulation of the value of the Iraqi dinar against the dollar, in order to limit it and prosecute those involved in it in accordance with the laws in force.”

A ban on dealing in dollars, imposed by the US financial authorities on 14 Iraqi banks, led to a rise in the price of the dollar resulting from “these banks being part of the process of financing the local market” in hard currency, says Ahmed Al-Saadi, managing director of the Islamic Advisor Bank, one of the banks that was subject to the ban. .

Al-Saadi says that their bank, and other banks, were “victims” of the country’s political problems.

According to the Prime Minister’s advisor, Fadi Al-Shammari, the sanctioned banks were financing 116 local exchange companies.

Al-Shammari said in a press statement that the Central Bank of Iraq transferred these companies to other banks, which led to a drop in the dollar by 60 points, against the dinar, and strengthened the value of the local operation.

The decision of the US financial authorities led to losses in the Iraqi banking sector, according to Tamkeen Al-Hasnawi, director and owner of Mosul Bank, one of the banks that were subject to sanctions.

Al-Hasnawi said that the decision led to “many customers withdrawing their bank deposits after the US Federal Reserve’s decision, which caused great losses for the bank and for these customers.”

Dollar depositors in the banned banks received their deposits – or part of them – in Iraqi dinars according to the official exchange rates of 1,350 dinars to the dollar, at a loss of 150 dinars for every dollar, or 150,000 dinars for every thousand dollars of deposits .

The 14 banks said in a statement that they are ready for local or international financial scrutiny, according to Reuters, and denied any wrongdoing.

The Federal Reserve Board in New York had approved more stringent controls on international transactions in dollars for Iraqi commercial banks last November.

The US ambassador to Baghdad, Alina Romanowski, said the measure was a “restriction” of banks’ dealings in dollars.

In a tweet, on Saturday, the ambassador denied imposing sanctions on any Iraqi bank, and said that the measures were imposed due to “money laundering concerns.”

Economist Ali Hameed warned that the impact of the measures could create a state of mistrust in the country’s banking system.

“The recent measures were vague in nature, which could contribute to increasing the alienation of citizens from the banking system, and impede the modernization of the country’s financial system,” Hamid said.

According to Hamid, “the largest percentage of the Iraqi financial bloc moves outside the banks, which deprives the country of huge funds that can be pumped into investments through banks, and impedes the building of economic policies based on accurate data and correct expectations.”

And the Central Bank of Iraq confirmed, on Wednesday, that other banks were able to cover the market’s needs for transactions in dollars, as the 14 banks subject to US procedures represent only 8% of foreign transfers.

And prevented the 14 banks from conducting transactions in dollars, but they can continue to use Iraqi dinars and other foreign currencies.

According to the governor of the Central Bank, Ali Al-Alaq, the transactions on the basis of which the restriction measures were imposed took place in 2022 “before the Central Bank of Iraq imposed stricter regulations on dollar transfers that required applicants to go through an online platform and provide detailed information on the end beneficiaries,” according to Reuters. .

Two officials at the Central Bank of Iraq said that the latest US sanctions, along with previous sanctions on eight banks, left nearly a third of Iraq’s 72 banks on the blacklist.

The dinar exchange rate crisis against the dollar continues in Iraq, since late last year, which is witnessing fluctuations despite measures taken by the country’s central bank with the aim of pushing the stability of currency prices.

Last February, the Central Bank decided to raise the value of the official exchange rate of the dinar against the dollar by 10 percent, in a measure aimed at limiting the currency depreciation that accompanied the adoption of stricter regulations regarding financial transfers outside the country.

At the time, the Iraqi government agreed to the Central Bank’s proposal to raise the value of the exchange rate from about 1,470 dinars to 1,300 dinars per dollar, which had a clear impact on the exchange market at the time by reducing prices, which reached the level of 1,700 dinars in the parallel market.   LINK

Trade Takes “Urgent” Measures To Maintain Price Stability, Coinciding With The Month Of Muharram

Localities / Economy |Today   Baghdad today – Baghdad  Today, Tuesday (August 1, 2023), the Ministry of Commerce announced taking a package of measures to maintain price stability in conjunction with the month of Muharram.

The ministry, in a statement received by “Baghdad Today,” stated that “the crisis cell in the Ministry of Commerce took urgent measures to maintain price stability in conjunction with the month of Muharram,” indicating, “strengthening food stores in the Ministry of Commerce.” Trade with basic materials.”

And she added that “thousands of tons of basic foodstuffs (flour, adult milk, tomato paste, table eggs, grains, legumes) have been secured in its marketing outlets, in addition to the launch of a new portion of flour.”

And she indicated that “a monitoring campaign was launched to follow up prices in coordination with the security services to curb the greed of some merchants,” explaining that “the readiness to run trucks loaded with basic foodstuffs in districts and districts and sell them at competitive prices has been completed.” LINK

Specialists: The Dollar Crisis Is Economic And Political

Iraq  2023/08/01    Baghdad: Hoda Al-Azzawi  The exchange rate crisis reared its head again in the local markets after US sanctions included 14 banks that prevented them from dealing in hard currency and entering the currency auction. political and economic dimensions.

The rapporteur of the Finance Committee in the former parliament, Ahmed Al-Saffar, said in an interview with “Al-Sabah”: “The instability of the dollar exchange rate, which causes a great burden on the citizen as a result of the high prices and the erosion of his income in general, whether he is an employee or a worker or has intermittent income.

It makes us think that its cause is political, economic and financial,” noting that “the Iraqi economy is in the hands of politicians, meaning that politics is what drives the economy and the political blocs interfere in the process of writing and legislating public budgets and their provisions and allocations.”

Al-Saffar explained that “the political class, since 2003, has not been able to set a financial and economic policy to rebuild the Iraqi economy, but they deliberately increased dependence on oil rents, and therefore there is no real Iraqi production.  

The local tendency to cover the needs is to import more than 95% of the country’s need.” This is a natural thing with the existence of oil rents in dollars, as goods and commodities are imported from regional countries.

He explained that “there is a deliberate policy that Iraq does not have a production device for goods and services and that it remains a market for the exchange of goods of regional countries in exchange for oil revenues, noting that Iraq has become an arena for international and regional political conflict.”

He pointed out that “the imposition of sanctions by the US Federal Reserve and the US Treasury on 14 Iraqi banks under the pretext of transferring them to dollars to countries subject to US sanctions has a structural and economic imbalance. Iraq has always consumed from these countries and certainly it pays in dollars.”

While the professor in economic affairs, Jaafar Alloush, said, in an interview with “Al-Sabah”, that “the dollar crisis is an actual crisis that may exacerbate. The dollar is owned by the US and the rest of the countries own it, and the owner sets controls to deal with it, and underestimating these controls is not always possible.”

While the expert on economic affairs, Nabil Jabbar Al-Tamimi, indicated to “Al-Sabah” that “what happened in recent days is a repetition of US Treasury sanctions,” noting that “imposing new sanctions on Iraqi banks often generates fears that the dollar will rise again, as happened eight years ago.” Months”.

Al-Tamimi added, “The rumors fuel the idea of the dollar’s rise without a backlash by state agencies or even political and economist analysts who have become like bearers of wood and pouring oil on the fire. So far, there is no convincing indication or a clear factor for the dollar’s rise again,” adding that “there is One possibility that may lead to its rise again for a short period is the behavior of punished banks by buying dollars from the markets with the trillions of dinars available to them.  https://alsabaah.iq/81469-.html

Contrary To What Is Expected.. The World Bank Confirms That Iraq Is Witnessing An Economic Recovery

Economy  2023/08/01 Number of readings: 156   Baghdad – Iraq today:  The World Bank confirmed that Iraq is witnessing a strong recovery after years of turmoil.

“Iraq is witnessing a strong recovery after many years of turmoil,” Jean-Christophe Carré, Regional Director of the Middle East Department at the World Bank, said in a press statement.

Carre added, “It is necessary to take measures to accelerate the move towards diversification of economic activity.”

He continued, “The importance of reforming the banking sector and promoting digital financial services in order to increase financial intermediation activities and enhance financial inclusion.”  LINK

Oil: Revenues Last Month Amounted To More Than $8 Billion

Balsam Hameed  Oil: The Oil Ministry announced today, Tuesday, that last month’s revenues amounted to more than $8 billion.  A statement by the ministry, received by (Al-Oula News), stated that “the total exports of crude oil, according to the preliminary statistics issued by the Iraqi Oil Marketing Company (SOMO), amounted to (106) million (755) thousand and (169) barrels, with revenues amounting to (8.293) billion.” dollar”.

He pointed out, “The total quantities of crude oil exported for the month of July from the oil fields in central and southern Iraq amounted to (105) million and (487) thousand and (610) barrels, while the quantities exported to Jordan amounted to (344) thousand and ( 804) barrels, while exports from Qayyarah were (922) thousand and (755) barrels.

He added, “The average daily quantities exported amounted to (3) million and (444) thousand barrels per day,” noting that “the average price of one barrel amounted to (77.69) dollars.”  LINK

A Source Reveals The Issuance Of Secret Implementation Instructions For The Budget!

Policy  2023/08/01 Number of readings: 231    Baghdad-Iraq Today:  An official source in the Budget Department of the Ministry of Finance indicated that instructions for implementing the budget were sent to the ministries, with government secrecy and unwillingness to announce the matter.

The source said in a press interview, “The Ministry of Finance has sent instructions to implement the budget to the ministries during the past days.”

The source added, on condition of anonymity, that “the government issued instructions to the ministries and asked them not to disclose this, in order to avoid the anger of some groups, whose contracts have been terminated, and the lecturers who were not included in the budget materials within its allocations.”

He explained, “The government fears their anger in light of the state of confusion that Iraq is witnessing at the present time, and the state of anger, as a result of the collapse of the electricity system more than once, and the imbalance in the rest of the services, including the continued interruption of drinking water.”

He stressed that “firm instructions were issued by the Prime Minister’s Office not to make a statement or to disclose the matter.”  LINK