Iraqi Dinar/US Dollar auction results 10-19-2020

One Response to “Iraqi Dinar/US Dollar auction results 10-19-2020”

1. Velez says:

   October 20, 2020 at 7:48 am

   independentarabia.com/

   The Iraqi Central Bank denies changing the exchange rate and warns of the consequences of devaluing the currency

   The Parliamentary Finance Committee did not make any recommendations regarding raising the exchange rates or floating the dinar

   Ahmed Al-Suhail is a reporter @ aalsuhail8
   Tuesday 20 October 2020 12:17

   The Iraqi Central Bank held speculators responsible for the temporary increase in the exchange rate

   The Iraqi financial crisis does not seem to be on its way to receding, with the continued decline in oil prices in global markets, and the absence of economic alternatives, which complicates the actions of Mustafa Al-Kazemi’s government, in the context of restoring the country’s financial situation.
   Meanwhile, the Iraqi market recorded a significant decrease in the Iraqi dinar exchange rate against the dollar, which raised fears of a possible decision to float the currency, or to announce an official increase in exchange rates, in an attempt to reduce the general budget expenditures. The economy warned of dangerous repercussions on the Iraqi economy, if a similar decision is taken.
   The price of one dollar reached the limits of 1270 dinars on Saturday 17 October, but it quickly fell to about 1240 on Monday 19 October, after the Central Bank increased the supply of dollars in the currency window, to the range of 192 million dollars.

   Fixed rate and very good precautions

   In the meantime, on October 18, the Central Bank of Iraq denied all these concerns, blaming what it called “speculators” responsible for the “temporary” rise in exchange rates. The media office of the Central Bank confirmed in a statement that “the statements that have spread recently regarding the reduction of the Iraqi dinar exchange rate against the dollar represent the viewpoint of those who stated it, and do not represent the official position of the Central Bank. This was accompanied by rumors released by speculators, which temporarily affected the price.” Stressing that “the exchange rate is fixed and unchanged,” and that its monetary policy is “clear and transparent.”
   The Central Iraqi indicated that its reserves of “foreign currency are very good, according to all international indicators, to enable it to overcome the current crisis that the country is going through,” hoping that the media would use its own sources exclusively in this regard.

   Justifications of the Financial Commission

   The justifications of MPs and members of the Finance Committee in the Iraqi parliament varied, while some attribute the high exchange rate to printing a currency that exceeds the limits of the central bank’s reserves of the dollar, others point out that the speculators ’exploitation of the low supply in the currency auction is the main reason. A member of the Finance Committee, MP Naji Al-Saeedi, points out that “the main reason behind the high exchange rates is the printing of a new currency in the central bank, which led to a discrepancy between the size of the local currency and the dollar reserves.” He added to “The Independent Arabia”, that “the Finance Committee did not make any recommendations regarding raising the exchange rates or floating the currency,” expressing his belief that “the condition of switching from the fixed exchange rate to the convertor depends on achieving financial stability.”

   As for the reporter of the Parliamentary Finance Committee, Representative Ahmed Al-Saffar, he explained the reason for the high exchange rate of the dollar to “the decrease in the dollar supply in the window of sale of currency at the central bank (currency auction),” indicating that “the window was selling up to 250 million dollars a day, but the amount decreased. After the financial crisis, to the extent of 170 million dollars per day, which speculators used to raise exchange rates. ”

   Inflated by 50 percent

   On the other hand, specialists in the Iraqi economy warned of the consequences of raising the local currency exchange rates, noting that the main reason for the increase was due to the financial deficit and the political and security situation of the country. Economist Majed Al-Suri attributed the increase in exchange rates to “the country’s financial deficit, and the statements of some officials that one of the solutions offered is to reduce the value of the dinar against the dollar,” noting that among other reasons, “the political and security situation in the country.”
   Al-Suri pointed out that “the goal of those defending the devaluation of the dinar is to maximize the government’s financial resources,” noting that this measure “will cause an increase in the prices of goods and services, and indirectly reduce the value of employees’ salaries, given the lack of local production.”

   While noting that this measure may cause a “popular revolution”, Al-Suri considered that it would be “the biggest crime committed against Iraqis,” indicating that “raising the exchange rate to the limits of 1500 dinars per dollar means reducing its value by 31 percent, which means a decrease.” In theory, the per capita’s purchasing power is the same, but in practice it will lead to the inflation rate reaching 50 percent.
   As for possible solutions to overcome the financial crisis, Al-Suri indicated that “any measures that do not include reducing public expenditures cannot address the problem of revenues,” noting that the “white paper” announced by the government a few days ago represents “the best proposals to overcome the financial crisis.”

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   Huge expenditures

   Al-Suri revealed the size of the government’s expenditures during the first eight months of this year, pointing out that “according to official figures, about 48 trillion dinars (40 billion dollars) have been disbursed from the beginning of the year until the end of last August,” adding that “this means that Monthly expenditures amount to about 6 trillion dinars (5 billion dollars). ” He continued, “Oil revenues in the same period amounted to about 32 trillion dinars (27 billion dollars), and the deduction of remittances from the central bank (borrowing) amounted to about 15 trillion dinars (12.5 billion dollars), in addition to the funds retained from state institutions until the same date. It amounted to about 6 trillion dinars (5 billion dollars), “indicating that” the remainder is 4.5 trillion dinars (3.8 billion dollars) until the beginning of last September, without adding the verified oil revenues in September, which amounted to 3.7 trillion dinars ( $ 3.1 billion).

   Al-Suri pointed out that “the estimates of the 2020 budget indicate that the volume of other non-oil revenues, until the end of August, amounted to about 6 trillion dinars (5 billion dollars),” indicating that the calculation of these figures means that “the government owns until the end of August about 14 One trillion dinars (12 billion dollars). ”

   He believed that one of the necessary measures to solve the financial crisis would be through “canceling the allocations related to illegal salaries by law,” expressing his belief that this measure “will save about 16 trillion dinars (13.5 billion dollars).”
   Al-Suri concluded that “what hinders all reform measures is the absence of the political will of the parties controlling the power and the uncontrolled weapons,” noting that these measures “contradict to a large extent with the interests of some political parties that aggravate the country’s economic situation.”