Tuesday, September 17, 2024
DINAR REVALUATION REPORT: Impact of Iraq Approving HCL Law on Iraqi Dinar Value in 2024, 17 SEPT
Impact of Iraq Approving HCL Law on Iraqi Dinar Value in 2024
The approval of the Hydrocarbon Law (HCL) in Iraq in 2024 could have significant implications for the value of the Iraqi dinar. This law is designed to regulate the country's oil and gas sector and aims to attract more international investments.
Historical Context of the Iraqi Dinar
To understand how the HCL might affect the dinar, it's important to review the historical context of the currency's valuation. In December 2020, the dinar was devalued by 23%, primarily due to the fiscal crisis and the drop in oil prices. This was intended to help the Ministry of Finance obtain more dinars for each dollar of oil revenue. In February 2023, there was a revaluation, increasing the value of the dinar from 1,450 to 1,310 per dollar. This revaluation was beneficial for importers but negatively impacted exporters of non-oil goods.
Current Exchange Rates and Challenges
As of September 16, 2024, Iraq is dealing with dual exchange rates. The official exchange rate is approximately 1,310 Iraqi dinars per US dollar, while the market rate is higher, at around 1,460 Iraqi dinars per US dollar, representing a 12% gap between the two rates. This dual rate system has several negative effects on Iraq's economy, including slowing economic growth, encouraging corruption, and complicating fiscal policy.
Impact of Dual Exchange Rates
The existence of dual exchange rates can have the following effects: Slows economic growth: It disrupts existing contracts and discourages trade and investment both domestically and internationally. Encourages corruption:Individuals and entities can profit from the difference between the official and market rates by being paid in dollars and making payments in dinars. Complicates fiscal policy: It makes it harder for the government to manage the economy effectively.
Potential Effects of the HCL Law on the Dinar
The HCL law, by allowing foreign companies to have a share of oil output in Iraq in partnership with the government, could lead to increased foreign investment and potentially stabilize the country's economy. This, in turn, could strengthen the dinar by reducing the gap between the official and market exchange rates.
Investor-Friendly Environment
By offering improved terms and contract structures, Iraq aims to create a more investor-friendly environment. This could attract more international oil companies to invest in Iraq, leading to an increase in oil production and, consequently, a boost in government revenues.
Boost in Government Revenues
An increase in oil production and foreign investment could lead to a boost in government revenues. This could potentially lead to a stronger Iraqi dinar, as the government would have more resources to manage the economy and potentially reduce the gap between the official and market exchange rates.
Conclusion
The approval of the HCL law in Iraq in 2024 could have a significant impact on the value of the Iraqi dinar. By attracting more foreign investment and potentially stabilizing the country's economy, the law could strengthen the dinar and reduce the gap between the official and market exchange rates.
LATEST FROM MARKZ, 17 SEPT
MarkZ
[via PDK] The chatter from Iraq has been exceptional...It’s very possible this is our week…Lets see if all the hype is right.
Iraq offers 100 investment opportunities in November, 17 SEPT
The Investment Authority revealed the desire of Egyptian companies to enter as partners in the International Development Road project with the aim of establishing this vital corridor, while it will offer 100 investment opportunities at its forum scheduled to be held in early November.
The Authority’s spokesperson, Hanan Jassim, said in a press statement that the Authority’s Chairman recently held an extensive meeting with a number of major Egyptian companies, during which they confirmed their desire to enter the local market on a large scale in order to employ Egyptian expertise in the fields of infrastructure, bridges, and electric power, in addition to building residential cities, as well as entering as a fourth partner in the International Development Road project with Turkey, Qatar, and the Emirates with the aim of establishing this vital corridor that shapes the future of the region’s economies for the next stage.
She added that the meeting witnessed an invitation to these companies to attend the investment forum that will be held early next November, during which 100 investment opportunities will be presented in all sectors.
She pointed out that the Authority has granted eight investment licenses in the housing, oil, gas, electricity and tourism sectors since the beginning of this year until now.
Jassim explained that the residential projects included the Al-Ghazlani residential city in Mosul, covering an area of 4,700 dunums, as well as part of the Karbala City Banks project, covering an area of 100 dunums, in addition to a third project on another part of the Karbala City Banks project, covering an area of 1,400 dunums, in addition to the new Ali Al-Wardi City project in Baghdad, covering an area of 61 million square metres.
She added that the authority granted a special license in the electricity sector for a project to generate electricity through solar energy with a capacity of 1000 megawatts for a French company in Basra Governorate, as it is the first license of this kind within the government’s plan to diversify in the energy sector, in addition to other projects represented by the sustainable Baghdad forests in Rashid Camp, the Bani Omar gas field project in Basra Governorate, as well as another project to complete the axial weighing stations within the plan of the Ministry of Construction, Housing and Public Municipalities to protect bridges from large loads.
Jassim pointed out that the investment process in the country has taken a new pattern that will raise the level of services and urban development, noting that the amended Investment Law No. 13 of 2006 is attractive to investors due to the facilities it includes. link
FIREFLY: "WE KNOW IT MEANS THAT THE REAL VALUE OF THE DINAR WILL SONN BE GIVEN TO US FOR OUR FOOD, TRANSPORTATION ETC" , 17 SEPT
Frank26
[Iraq boots-on-the-ground report]
FIREFLY:Television is telling us they are completing digitization at all of our ports. We know it means that the real value of the dinar will soon be given to us for our food...transportation...housing...the whole world.
FRANK: You see every day there's more and more exciting news being given to the Iraqi citizens and they all piece it together...When you see prices of your food...market... housing...cars, start to change, it's because they will introduce a new exchange rate very soon to you...
FIREFLY:Mr Sammy [Iraqi bank manager friend] says we are in charge of our own money. It's not being overseen by the US Treasury.
FRANK: This is the most powerful thing I can share with you tonight...IMO when Alaq came back he told everybody there's no more sanctions on the banks of Iraq...That means your program rate does not exist anymore.
FIREFLY: Mr Sammy says they are running the new system...This new system will remain for the rest of the year...This monetary reform education phase we're in right now will last for this whole year...
FRANK: Mr. Sammy and I are on the same page. The only difference is he's turning the page a little slower than I am. I do not see this going into next year. Actually it's impossible. I see the monetary reform education...commercials...US Treasury revealing to you all sanctions have been release, which tells me we are extremely close...Mr Sammy...tells you it's coming at the end of the year or beginning, I tell you it's now..
TIDBIT FROM FRANK26, 13 NOV
Frank26 The monetary reform policy is being introduced to you Iraqi citizens on a daily basis isn't it. It's is my hope. It ...
-
Bank appointment for Currency EXCHANGE Instructions/Checklist Bank Name_________________________________________ Bank 800#____________...
-
Walkingstick All these meetings that the CBI had with all these agencies that were helping them with their monetary reform are done. Al...
-
JENTEL RV UPDATE RV NEWS- AA Uriel Payments are being received. They started yesterday in other countries. To meet today's requireme...