Wednesday, April 17, 2024
"ANALYSIS OF IRAQ NEWS: AFTER 21 YEARS OF THE DOLLAR AUCTION… IRAQ IS CLOSE TO CLOSING THE WINDOW AMID REASSURANCES AND WARNINGS" BY MNT GOAT, 17 APRIL
AFTER 21 YEARS OF THE DOLLAR AUCTION… IRAQ IS CLOSE TO CLOSING THE WINDOW AMID REASSURANCES AND WARNINGS
Iraq is approaching the end of the closure of the dollar selling window at the Central Bank – which has been controversial – over the past two decades. The Central Bank’s management plans to gradually cancel the dollar auction during the year 2024, leading to its complete cancellation by the end of the year, and to maintain it for audit and statistical purposes, in an effort to enable Iraqi banks to establish and establish solid banking relationships with the global and regional banking sector in order to achieve the sobriety of the Iraqi banking sector and full commitment. According to international standards and requirements.
Iraq relies on the platform for selling currency directly to local banks and companies, which was previously known as the daily dollar auction, as one of the mechanisms for preserving the value of the Iraqi dinar and combating speculative operations in the parallel market.
The visit of Prime Minister Muhammad Shia Al-Sudani to Washington provided a strong impetus in closing the Central Bank window and moving towards direct commercial banking transactions.
According to the joint statement of the Iraqi-American discussions headed by Al-Sudani and President Joe Biden, the latter “discussed Iraq’s advanced efforts to reform the financial and banking sectors, which help link Iraq to the international economy and increase trade while protecting the Iraqi people from the harmful effects of corruption and money laundering, and what was achieved during the years 2023 and 2024.” “With banks in Iraq expanding (correspondent relationships) with international financial institutions to enable trade financing.”
The statement notes that “the majority of trade financing operations are now carried out through these channels.”
Iraq and the United States pledged their commitment to “strengthen their cooperation to achieve greater transparency and cooperation against money laundering, terrorist financing, fraud, corruption, and sanctioned activities that could undermine the integrity of the financial systems in both countries.”
The two countries expressed their commitment “to support the Central Bank of Iraq in ending the electronic auction platform for international financial transfers by the end of 2024, through direct dealing between licensed banks in Iraq and approved global correspondent banks, to achieve this transformation that will connect Iraqis and Iraqi companies to the international economic system.”
In this regard, the financial advisor to the Prime Minister, Mazhar Muhammad Saleh, confirmed to {Al-Furat News} that the agreement of Iraq and the United States to end the electronic platform of the Central Bank of Iraq for selling the dollar at the official price means the cancellation and end of the foreign currency window that was established since 2003.
Saleh said, “It is not One of the functions of the central banks in the world is to carry out financing operations for foreign trade in their countries. Central banks are banks that work on monetary stability as they are banks that issue the national currency, as well as the function of supervising banking activity and ensuring its safety and stability.
He added, “But Iraq’s rentier conditions, and because of the foreign cash flows entering the country through which foreign exchange reserves originating from oil export revenues are created, such a necessity was imposed in financing foreign trade for the private sector through the establishment of the foreign currency window (auction) a month ago.” October 2003, during which this window played a dual role in the work of the Central Bank of Iraq’s monetary policy, both in controlling local liquidity levels (monetary sterilization) and the so-called open market process, which requires exchanging the dinar for the dollar for the purposes of external transfer related to financing domestic trade. In addition to achieving the goal of controlling the stability of the Iraqi dinar exchange rate at the same time.”
Saleh noted that, “In order to return to the principles of financing trade through the commercial banks themselves directly by opening documentary credits with correspondent banks abroad, their external accounts opened with their correspondents from foreign banks will be fed with their requests for foreign currency through the Central Bank of Iraq in order to enable them to… Opening documentary credits to finance foreign trade to the private sector in a more transparent manner and at the same time subject to international compliance rules through the role that these international banks with high credit ratings will play.”
He explained, “What practically means canceling the auction or the foreign currency window that was established in October 2003 and its expected lifespan was two years, but unfortunately it continued for more than twenty years!”
He continued, “Based on the above, the efficiency of using foreign currency will undoubtedly increase through continued control of local liquidity levels and the imposition of stability in the Iraqi dinar exchange rate, but in a different way that is consistent with the new banking applications fully approved in the year 2024.”
On the other hand, specialists warn against stopping the platform for selling the dollar, especially with the continuing delay in Iraqi banking systems and the failure to activate Iraqi commercial banks’ dealings with international banks, because this will lead to a monetary disaster that will ravage the Iraqi market.
But Abdul Rahman Al-Mashhadani, the economic expert, downplayed the seriousness of these warnings.
He told {Al-Furat News}, “The subject of the agreement with the American side does not mean that the currency auction will end, but rather it will return to work according to the old mechanism for enhancing balances. However, the Iraqi banks that will be entitled to external transfer must be linked to solid correspondent banks.”
He stated, “The mechanism will not change. Rather, the Iraqi Bank will be transformed into a correspondent bank, and its balance will be enhanced by the Central Bank.”
Al-Mashhadani ruled out, “The exchange rates in the markets were affected because they are not directly related to these matters. Rather, the decline and rise are due to trade with the sanctioned countries, for which there are no solutions because they are financed from the parallel market, and without solving them, there cannot be stability in exchange rates.”
Another economic expert believes it is necessary to tighten control to prevent the “leakage” of the dollar.
Bassem Jamil Antoine told {Al-Furat News}, “When the dollar crisis is addressed scientifically, economically, and financially, there will be a floatation of the currency through supply and demand, so that the citizen will obtain the quantities of dollars to the extent he wants, as the scarcity is now in the dinar and not in the dollar from which it is received.” On a daily basis, no less than 300 to 400 million dollars.”
He stated, “This process goes to the financial stability of the country, as the import is through correspondent banks that transfer money amounts, and this process requires follow-up, time, and knowing the fate of the money.”
Antoine explained that “the process of floating the currency must be under conditions, and Iraq differs from other countries because its financial imports in dollars are very large, and there must be control over the process, stopping the leakage of the dollar, and not leaving it floating under the freedom of speculators. There will be difficulty in achieving balance, and this matter needs a rule.” Productivity away from imports, creating job opportunities and ending unemployment, and this process requires more time and strict oversight to stop the currency auction, which has greatly destroyed the country,” he said.
"RV UPDATE" BY MILITIAMAN, 17 APRIL
Militia Man
Al-Sudani's visit to the White House...we know he's already done that...They brought about 130 different people with them. I think they said three planes worth...That [Large] motorcade yesterday in WDC was so very telling in just how important today and tomorrow will be. If you are not excited by now? Wake up!
Article: "Sudanese visit..Government advisor: The economy with America will be activated on a large scale for the first time"
The red carpet is laid out for Iraq and the news we see is phenomenal ... That motorcade shows it. This is not a shun like we saw with Haider al-Abadi on the White House lawn.. A stark and profound difference today is and it is a good thing!
[Sudani] is going to need some exceptional strength, which is exchange rate oriented to do business deals with the likes of GE...big oil companies...big solar energy...They're looking to get people in the steel industry, rebar industry, cement companies because they're going to need more than Iraq has on the ground. They're going to want the support from around the world and Al-Sudani is stating he's ready for business and opening to the world.
Sudanese for members of Congress: Reasons the coalition was built on 10 years ago no longer exists, 17 APRIL
Sudanese for members of Congress: Reasons the coalition was built on 10 years ago no longer exists
The Prime Minister, Mr. Mohammed Shiaa Al-Sudani, received at his residence in the US capital, Washington, on Tuesday evening (Baghdad time), and at a working lunch, a number of members of the American House of Representatives from the two parties; the Republican and the Democrat, and in the presence of a number of members of the Iraqi Council of Representatives within the delegation accompanying his Excellency on his official visit.
His Mredenty talked about the objectives of the visit, stressing the importance of moving the relationship between Iraq and the United States to the level of comprehensive bilateral relations in various fields of exchange and development, indicating that the reasons on which the international coalition was built to fight ISIS ten years ago no longer exist, and that the capabilities of the Iraqi security forces have evolved to defeat the terrorist threat of ISIS.
Mr. Al-Sudan explained that Iraq is committed to the outputs of the ongoing dialogue within the Supreme Military Committee between the two countries, while continuing to partner with the international community to confront terrorism, stressing that the Iraqi people are one of the most peoples in the world that bravely faced the evils of terrorism and its gangs.
His Mintrence pointed to the form of the sustainable relationship that Iraq seeks with the United States, as it depends on the size of convergence and common understanding between the Iraqi and American peoples, beyond the borders of governments and administrations, and in light of the unique position that Iraq has in the region through diversity in components and spectrums, and the democratic constitutional order that includes the peaceful transfer of power, in a way that enhances the unity of the country and respect for all freedoms.
Mr. Al-Sudan indicated that one of the strength factors for Iraq, today, is the association with historical and social relations and joints with neighboring countries, including Iran, and at the same time, having an important strategic relationship with the United States, as well as possessing resources and an important location that enables the establishment of a vital economic position for the interests of the peoples of the region, development opportunities and strategic projects that enhance security, stability and prosperity.
For their part, the members of the US House of Representatives welcomed his visit, stressing the aspiration to build a constructive and sustainable partnership that enhances friendship between the Iraqi and American peoples, reiterating their support for everything that consolidates the development in Iraq, the stability of the region and peace efforts.
"RV UPDATE" BY FRANK26, 17 APRIL
Frank26
There are many Chief Executive Officers of many banks around the world at the US Treasury meeting right now with Sudani, Alaq and Barzani...Also...CEOs of CitiBank, Chase Bank and Bank of America are there.
We also have all of the JP Morgan representatives, Merril Lynch, all investment companies you can think of, all of them are meeting...The meetings are going on now...This [Iraqi] entourage is here in the United States to meet with their counter parts.
Sudani, where are you going?
Three places - Michigan...California...Texas...Sudani goes to visit his people in his private banks...In Texas is where the CBI has its servers for its website. He only has one hour that he's dedicated to Washington DC? ...Six days and 23 hours is for the reforms...This trip is very powerful.
TIDBIT FROM KAPERONI, 24 NOV
Kaperoni The dinar is not a lottery ticket so there is no significant RV or instantaneous riches. It could take months or even years to...
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Frank26 [Bank story] This time we didn't go down, we just called [the bank]... We said we want to see if we can exchange some cu...
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Bank appointment for Currency EXCHANGE Instructions/Checklist Bank Name_________________________________________ Bank 800#____________...
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Walkingstick All these meetings that the CBI had with all these agencies that were helping them with their monetary reform are done. Al...