Iraqi citizens and hammer monetary policy ... Challenges low dinar exchange rate against the dollar part I Date: Sunday, 19-05-13 05: 02 am
The first part Prof. Dr. Jawad Kazem Al-Bakri
Babylon University-Faculty of management and Economics
Monetary policy is one of the most important areas of economic policy, it means money relationship with economic activity on the one hand, and the monetary stability of the appropriate climate for economic activity to members of the community on the other. FULL ARTICLE & LINK AT END
Kaperoni: Basically he is saying since Maliki started to interfere in monetary policy, then getting rid of Shabibi the dinar has started to fall.
Read More Link On Right
Tlar: The CBI's hands have been tied because they have only been able to use one of the possible three tools to control inflation. The auctions are the only tool they have used since 2003 because the other two tools to control inflation, Taxes an Tariffs, and the exchange rate have been unavailable to them mainly because of politics.
They have only used the auctions and up until April they were mostly effective. Iran and Syria are deeply ingrained in activities that allow them to benefit greatly from the auctions now.
In turn this means that as the CBI attempts to saturate the dollar into Iraqi streets that much of it ends up being smuggled to Iran creating a shortage in Iraq no matter how much USD is sold at auctions..
Iran has created a market independent of the CBI rate and they are willing to pay the highest price in order to insure a continual flow of USD brought back home. They are paying much more than the program rate which means they are sucking up the hard currency to use in Iran to pay for their own imports and to support their economy.
Iran is like a parasite that is slowly sucking the life out of the host without thought to moderation. Iran's currency is no good. Nobody will accept it in trade because of the sanctions and because of the sanctions, it has lost most of its value.
They need USD and the only place they can get it is Iraq and what little oil they can slip through the UN sanctions. Iran must be dealt with in order to fix this problem
Tlar: P.S. IMHO Shabibi most likely would have found himself in the same problem were he still at the helm of the CBI. Shabibi, with all his great attributes was missing the one attribute that would have solved this problem in 2009, 2010, 2011, and 2012.
He was unwilling to do his job and pull the trigger and make the currency 1 to 1. This one act would have stopped Iran due to the fact the new non counterfeit able smalls would have been introduced. When it came to the Iraqi government, in the end Shabibi was an appeaser who failed at his job IMHO..
Timsters: so TLAR whats stopping this from happening iyo please..?
Kaperoni: Timsters, this was never what Shabibi didn’t do. He wanted too...and tried at least twice. It is clear as day if you go back and read the articles, the GOI -Maliki stopped him. Told him to wait. And when Shabibi tried to do it, Maliki said the CoM took a vote and ordered him to stop.
When in reality, there never was a vote (CoM minutes don't show any such meeting). Therefore, the problem is Maliki.Timsters, this was never what Shabibi did'nt do. He wanted too...and tried at least twice. It is clear as day if you go back and read the articles, the GOI -Maliki stopped him.
Told him to wait. And when Shabibi tried to do it, Maliki said the CoM took a vote and ordered him to stop. When in reality, there never was a vote (CoM minutes don't show any such meeting). Therefore, the problem is Maliki.
Timsters: doesnt seem this will ever get done
Kaperoni: It may very well not while Maliki is in office.
Punisher: If that is true Kap were are looking at the middle or end of 2014.
BlueyesinLevis: I agree.. it may take getting rid of Maliki.. but I also think they are ALL about done with him.... seriously... I think Maliki's days are numbered. I honestly dont think he will serve out his term... but if that is what we have to wait for... his term is over come spring of 2014... PM election is less than a year a way...
Kaperoni: I'm a realist. Maliki has already hinted at a delay in next years elections. He is not leaving on his own. Election or no election.
BlueyesinLevis: 11 months to be exact. Can you handle waiting another 11 months? Can the Iraqi economy survive another 11 months with Iran leeching off of them? Will Iran make changes after this upcoming election? Will Assad fall? Will variables change? Will Maliki take an "accidental" fall down a twisty staircase?
DarbSalad: Blue, I hope you are correct about Maliki. Unfortunately, I have little faith in the National Alliance. The State of Law stated they would not attend a special session this week over the security difficulties. Now, some members desire to summon Maliki to parliament.
There is no evidence that the Shiites want Maliki removed from his position. Sadr and Hakim talk a great game, but they will fall back into line. The Presidency of Iraq has been vacant for several years and literally the last five months. The Kurds and Barzani appear unwilling to fill the position and take care of Maliki. We will see what unfolds in the coming days.
BlueyesinLevis: Yeah, Iraqiya National Dialogue coalition, Haider al-Mulla, caling again today for Nujafi to grill Maliki in Parliamnet in advance of a No Confidence vote. We shall see what comes of that.
The elections for the MP's and PoR ( Talibani's Job) is in 6 months.. November...
FULL ARTICLE & LINK BEING DISCUSSED:
Iraqi citizens and hammer monetary policy ... Challenges low dinar exchange rate against the dollar part IDate: Sunday, 19-05-13 05: 02 am
The first part Prof. Dr. Jawad Kazem Al-Bakri
Babylon University-Faculty of management and Economics
Monetary policy is one of the most important areas of economic policy, it means money relationship with economic activity on the one hand, and the monetary stability of the appropriate climate for economic activity to members of the community on the other.
Monetary policy is the set of procedures used by the country's highest monetary authority (represented by the Central Bank) with a view to influencing the money supply (the amount of money circulating in the economy), to reach a set of economic targets, they reflect the range of texts, laws and actions by the Monetary Authority to influence the money supply expansion or contraction in order to achieve specific economic objectives.
It is no secret that monetary policy, particularly in developing countries, such as Iraq, be one of the most important causes of internal and external imbalances, together with other economic variables, and if the most important monetary policy goals is to achieve economic stability somewhat balanced growth, it means that there is a close link between economic activity and cash and shows this through a link of economic problems, including unemployment, inflation, balance of payments, monetary policy by the Government.
Among the most important objectives of monetary policy is: to achieve an acceptable level of economic and monetary stability by avoiding changes in the value of the national currency internally and externally which arise through changes in the general price level first, and contribute to the achievement of appropriate economic growth rates in the various economic sectors to increase national income and GDP growth when the successful monetary policy in economic stability and boosting production when increasing the money in the market in a recession, or reduce the amount of money in In the case of market inflation, stabilize prices at a certain level, i.e. the Elimination of inflation in prices, and to eliminate economic and social expenditure to inflation.
And monetary policy tools to achieve the above objectives, normally the Central Bank uses to influence the economic situation:
• Change the reserve ratios: it is known that the legal reserve ratio is the percentage of cash commercial banks must keep at the Central Bank of the volume of deposits in those banks, so if he wants the Central Bank to increase the money supply by increasing the ability of commercial banks to create money, the Bank in this case, for example, the legal reserve ratio is reduced from 40% to 20%, increasing the ability of commercial banks to grant credit and money creation, money supply increases and vice versa if the Bank Central reducing money supply by reducing the ability of commercial banks to create money.
• Open market operations: intended for the Central Bank to buy or sell government securities to control the monetary base, if the goal is to increase the money supply, the Central Bank purchases of Government securities from commercial banks, and paying for the cheques drawn on the Central Bank, and these checks are deposited in commercial banks and the commercial banks have to expand the size of the credit and creating money from term deposits, And then increase the money supply, if the goal is to decrease the money supply, the Central Bank sells Government securities.
• Change the price discount: discount price is that part of the interest acquired by the Central Bank as a result of commercial banks for discounting its commercial papers against customers, and now you re deducted at the Central Bank, also known as the bank rate, when the Central Bank discount rate changes, it changes the money supply, if the goal is to expand the money supply, the Central Bank lowered the discount rate, and thus encourages banks to borrow from it and if the monetary base and display Money increase.
And Iraq has been applying tool through open market operations auctions sale of foreign currency by the Central Bank when the CPA was ordered in 2004 by the Central Bank to sell dollars to the market in the light of the objectives of monetary policy, as the Central Bank uses monetary policy instruments at its disposal,
in particular the recruitment of Iraqi dinar exchange rate as a means to control inflation and curb the Central Bank intervention in the exchange market to raise the value of the dinar against the dollar and to defend The value of the dinar to satisfy every demand for dollars at this price through the sale of dollars to banks and licensed money transfer companies in the currency auction, organized by the World Bank, the Iraqi dinar has been maintaining its value against other currencies since the introduction of this tool until December 2012 and beyond with this policy, and some other monetary policies, Iraqi citizens from the fallout of the inflation problem.
But from January 2013 started gradually increasing inflation rates, the record in the said month high index year & # 65275; consumer prices rate (0.6%) Compared to the month of December, 2012, and since then started coming increases in the consumer price index rate (0.6%, 0.1%, 0.5%, 1.1%) For the months of January, February, March, April 2013 respectively.
Returns increase indicators consumer price index to rising prices for some commodities such as partitions (food, clothing, housing, vegetables, tobacco, health, education, catering, transportation, and entertainment).