Post From Wealthwatch.world Chat Room 11-5-15
Wealthwatch OOTW Late Evening Chat 11-5-15 Part 1 of 3
OOTW: HI EVERYONE BUTIFLDRM JUST FOUND A VERY INTERESTING ARTICLE
Iraq Economic News>Iraq: a seminar on the central bank auction and determine the foreign exchange rate
OOTW: I WILL POST ON PARAGRAPH AT A TIME
OOTW: THIS IS AN ARTICLE CITING THE WORDS OF MOHSEN/ACTING GOVERNOR OF THE CBI
OOTW: Iraq: a seminar on the central bank auction and determine the foreign exchange rate Iraqi Central Bank Governor Ali Mohsen Keywords announced that the nature of the Iraqi economy Reclining on oil resources, make the relationship between fiscal and monetary policy, including an interactive relationship necessitated by the nature of the revenue and expenditure of the pricing of the dollar.
He pointed out that «Central» exercised important roles in this process, including the financing of the current expenditure of the public budget, with the dollar buying from the Ministry of Finance to cover the needs of the Iraqi dinar, in accordance with the allocations required in the general budget.
And it contributes to «Central» also in the financing of imports and the commercial sector, while the sale process of the dollar means the withdrawal of the dinar from the local market, which will help the bank to curb money supply and reduce the resort to printing more currency.
Donnie: decline in Dinar value? that's going the wrong way for us. Sounds like what China did and Vietnam and a few other countries......
Donnie: lower their currency value to sell more goods because the exported goods will be cheaper.
Donnie: flip side - imported goods go up causing hardship for the citizens of each country.
Abraham: Lowering their currency value increases the cost of imports
OOTW: YES IT DOES
OOTW: HERE'S MORE
Abraham: Which create further cost when tariffs are applied
OOTW: He said at a seminar in «Institute of the progress of development policies», attended by experts and interested in the money sector of the economy, that «such activity is not essential for central banks in the world, it is very rare to have the central sales window, ‘
but because of the nature of the Iraqi economy, Central took over this task ,. While the task required to intervene when there is an imbalance in the exchange rate, as in the European Union »
OOTW: YES ABRAHAM IRAQ IS ON THE BRINK OF ESTABLISHING AN EXPORT MARKET
OOTW: TYPICALLY WHEN A COUNTRY WISHES TO BOOST EXPORTS THEY WANT TO KEEP THEIR CURRENCY VALUE AT A LOWER PAR
OOTW: HOWEVER, WITH IRAQ NOT YET IN A POSITION TO HAVE A WELL RE ESTABLISHED EXPORT MARKET
OOTW: THEY'RE NEEDING TO CREATE A SET POINT
OOTW: TO RE LAUNCH AS IT WERE INTO WORLD TRADE
OOTW: JUST SOMETHING TO KEEP IN MIND AS I CONTINUE TO POST EXCERPTS FROM THIS ARTICLE
OOTW: He pointed to the issue of monetary reserves, which are still under discussion, and stressed that the reserve is the difference between what the central buys and sells.
And over, it goes to the international reserves, and that the function of the reserve financing imports and other transfers and coverage, and the foreign currency reserve is the difference between the dollar sales of the Ministry of Finance to the Central Bank and the central bank sales to the private sector.
And he confirmed the existence of the reserve adequacy criteria, such as coverage of imports for a period of 6 months and cover the local currency and foreign debt.
OOTW: " And he confirmed the existence of the reserve adequacy criteria, such as coverage of imports for a period of 6 months and cover the local currency and foreign debt."
Abraham: The key is looking to manufacture products that have a higher labor value content and not material content
OOTW: Keywords He pointed to the presence of important rules govern the process of selling the dollar to cover imports of personal and transfers of the private sector, including the Central Bank Law Article 28 and guidance of the International Monetary Fund economic system according to the constitution, and the law against money laundering.
He pointed out the real solutions such as the purchase or sale simple unconditional, cash and futures, and to require banks to apply the principle «know your customer» and the application of anti-money laundering and terrorism financing law.
OOTW: He pointed to the devaluation of the Iraqi dinar options by raising the dollar exchange rate of 10 percent to 1300 dinars to the dollar, providing the general budget of 5 trillion dinars ($ 4.2 billion), or raise the dollar exchange rate of 20 percent to 1400 dinars, providing budget 9 trillion dinars.
He said that the reduction option easy, but it does not help in the reform of the structural problems, and the local currency is good for exporting countries cut to stimulate exports. He added that «Iraq importing country, and to reduce the currency hurt the purchasing power of citizens with limited income.
The «taxes can play an important role in the finance, justice and balance without compromising the low-income segments, as can achieve economic goals, social and financial.»
OOTW: HOW CAN IRAQI'S AFFORD FOR THE DINAR VALUE TO GO DOWN? THEY'RE ALREADY PAYING OUTRAGEOUS AMOUNTS TO HOLD DOLLAR
Abraham: As I shared above Iraq has to revalue as their are an importer
OOTW: The head of the «Institute of the progress of development policies» former Planning Minister Mehdi al-Hafez, pointed out that the national need not require the continuation of the so-called dollar auction, organized by the «Central», but must be handled freely and without restrictions.
And it calls for counter-opinion to uphold the auctions and to provide the necessary facilities for the conduct of this operation, and we must stop at the experiences of neighboring countries and operations.
He asked Hafiz for the exchange rate, which raises several problematic, he said, «How can that half of the process required to determine the exchange rate, and is related to the economic and financial situation of the state»?
Turning economist Ahmed Alobreha points relating to the expected path of the Iraqi economy, pointing to the difficulty of reduced private sector demand for foreign currency in the current scope of the exchange rate and income levels.
He added that the lack of the national economy to a diversified productive base that can supplement the national market alternatives to imports of goods and services, adds restrictions and weakens the effectiveness of efforts to address the problem of policies.
OOTW: He pointed out that «the private sector was unable to contribute to the display of foreign currency, as well as the non-oil government sector, and the policy of foreign investment did not succeed in adding a tributary albeit in a limited form.
Iraq has faced interest on the loans in the international market can not afford the prices, and as a result of crude oil remains the only source of foreign currency, and must be serious and responsible move towards real economic development to pay a danger for Iraq ».
OOTW: YES CERTAINLY IRAQ IS IN A BIND
OOTW: FIRST, I HAVE TO SAY THAT THIS IS CERTAINLY INTERESTING TIMING ON BEHALF OF THE CBI
OOTW: TO MAKE THIS ANNOUNCEMENT
OOTW: ON THE HEELS OF PASSING THE INVESTMENT LAW AMENDMENT AND THE ARTICLE BREAK FROM THE WALL STREET JOURNAL ON THE POTENTIAL NEED FOR THE US TO THWART PETRODOLLAR SHIPMENTS TO IRAQ, TO SAVE DOLLAR CONFISCATION BY ISIS
Abraham: As you develop Industry you protect those industries by both value added content and import duties on imports as well as an import licensing mechanism
OOTW: LOOK, I DON'T KNOW HOW BIG A PART THIS PLAYS, BECAUSE CERTAINLY, WE HAVEN'T YET SEEN THIS ISSUE WITH TRAVEL CURRENCY SELLERS IN THE US, AS MOST , IF NOT ALL DO NOT SELL DINAR
OOTW: BUT IN THE UK, MONEYCORP IS STATING THAT THEY HAVE STOPPED SELLING THE DINAR DUE TO A LACK OF BEING ABLE TO OBTAIN DINAR
OOTW: THAT'S VERY INTERESTING TO ME COMBINED WITH ALL THAT'S GOING ON
OOTW: YES ABRAHAM, AGAIN, IF YOU'RE PRIMARILY AN IMPORT NATION YOU WANT YOUR CURRENCY TO HOLD BUYING POWER
OOTW: THE ISSUES WITH ABADI BEING ABLE TO ENACT REFORMS ON AS BROAD OF A SCALE WHICH IS NEEDED IN IRAQ, HAS BEEN A MAJOR ROADBLOCK
OOTW: DAWA MEMBERS IN THE PARLIAMENT HAVE DONE ALL THEY CAN TO THWART THIS
Abraham: ‹@OOTW› each day Iraq does not revalue their currency they dig a little deeper hole
OOTW: MOHSEN'S A DAWA MEMBER AS WELL, NOT SURE WHAT TO THINK ABOUT THE FACT HE STILL HOLDS HEAD POST AT THE CBI
OOTW: YES AND DISSENSION BUILDS AMONG THE PEOPLE
OOTW: AND THE PROTEST SLOWLY, BUT STEADILY INCREASE
OOTW: SO IS KEYWORDS GOING TO ALL THIS TROUBLE TO SAY THAT HE THINKS THE ONLY WAY THROUGH IRAQ'S ECONOMIC HARDSHIPS ARE TO DEVALUE THE DINAR?
Abraham: Could it be Iran wants to delay as long as they can Industry in Iraq?
OOTW: THAT'S AN INTERESTING PROPOSAL ABRAHAM
OOTW: BECAUSE IT SURE SEEMS THAT IRAN IS DOING ITS BEST TO KEEP IRAQ IN A SIMILAR PROGRESSION ECONOMICALLY TO WHAT THEY'RE EXPERIENCING
OOTW: MEMBERS OF THE IRANIAN GOVERNMENT WERE IN ATTENDANCE AT A MOTRANS MEETING A WEEK AGO OR SO
Comments may be made at the end of Part 3 Thank You Part 2