Advisor Al-Kazemi: Floating the currency leads to the collapse of the Iraqi market
Mazhar Muhammad Salih, Advisor to the Prime Minister for Financial and Economic Affairs, confirmed, on Monday, that it is not permissible to float the currency in Iraq, indicating that this leads to the collapse of the market.
Saleh said that “it is not permissible to float the currency in Iraq because the market will collapse in this case,” indicating that “the entry and exit of hard currency does not enter the market, which is only an exit for it, but the government is the one that brings this hard currency.”
Saleh added, “If the government withdraws its hand, the supply will stop and the demand increases, and therefore the market will collapse.”
He pointed out that “the problem in Iraq is that the market is asking and that the state is offering, and in the event that the Central Bank does not sell the dollar, it means that all the supply has stopped and there is no other offer. Because demand will be more than supply. “
He stressed that “the state is the bidder in Iraq, and therefore if the state tends to float, this means that there is no supply and thus prices collapse.”
Floating currency is completely liberalizing the exchange rate, so the government or the central bank does not interfere in determining it directly, but rather it is secreted automatically in the currency market through the supply and demand mechanism that allows setting the national currency exchange rate against foreign currencies.
It is noteworthy that some officials talk from time to time on the need to float and liberalize the currency to preserve the hard currency reserves at the Central Bank. link
Legal clarification: What does removing Iraq from the ‘high risk countries’ list mean
Legal expert Tariq Harb commented, on Monday, about Iraq’s exit from the British classification of high-list countries, in what he considered a “political and economic victory” for the government and the Central Bank.
Harb said in a clarification followed by “People” (April 19, 2021), that “many years have passed since the name of Iraq has been included in the lists of high-risk countries, with the consequences of this staircase of great political and economic effects, perhaps the first and most important of which is the impact on investment and the reluctance of companies.”
“The government of Al-Kazemi and the Central Bank of Iraq have made great efforts, especially in the field of their cooperation, by taking the necessary measures regarding money laundering and terrorist financing.”
He added, “For a period of time, the Iraqi newspaper Al-Waqi’a has hardly been issued without publishing international procedures and decisions, especially those issued by the special committee linked to the UN Security Council with regard to combating money laundering, terrorist financing and other charges related to seizing the money of those accused of money laundering and terrorist financing, even if not They are Iraqis
And a higher committee has been established in the Central Bank with the mission of combating money laundering and terrorist financing, and these and other measures such as activating the AML / CFT Law No. 39 of 2015, therefore Resolution 392 of 2021 was issued including raising the name of Iraq from among the countries with high risks and thus it deserved The government and the Central Bank deserved praise and praise for their efforts in removing Iraq from the lists of high-risk countries.
Earlier, the Central Bank of Iraq announced a departure from the British classification of high-risk countries.
A bank statement, of which Nass received a copy (April 18, 2021), stated that “within the efforts of the Central Bank of Iraq and through the Office of Combating Money Laundering and Combating Financing of Terrorism in developing the business environment within the international compliance standards for combating money laundering and terrorist financing, the British Treasury In the United Kingdom government department, not to include the name of the Republic of Iraq from among the lists of high-risk countries according to Resolution No. 392 of 2021.
He added that “the United Kingdom adopted the recommendations of the Financial Action Task Force (FATF) in classifying countries with high risks in terms of applying anti-money laundering and terrorist financing standards, after their exit from the European Union countries, and promised Iraq is committed to keeping up with and implementing international recommendations.”
He continued, “The fact that Iraq is not included in the list of high-risk countries is positively reflected in facilitating business and entering companies between the two countries, as well as supporting financial operations between the Iraqi banking sector and the United Kingdom link
Bloomberg expects the price of a barrel of oil to rise to $ 74 … and talks about the reason and the timing
Data from the International Energy Agency showed that the oil reserves accumulated in storage facilities around the world during the epidemic were practically exhausted, which may increase oil prices in the second half of this year.
Oil reserves in the world’s advanced economies were 57 million barrels higher than the average data for this indicator for the years 2015-2019.
And Bloomberg News reported that the surplus reserves of oil in July 2020 were almost five times higher, amounting to 249 million barrels, indicating that stocks decreased in recent months further, amid increased demand.
The agency said that the largest oil reserves are currently stored in China, while US hydrocarbon reserves have practically returned to the level observed before the epidemic, reaching 1.28 billion barrels in February.
And Bloomberg notes that oil stocks on the east coast of the United States, last week, hit their lowest level in 30 years.
Over the past two weeks, tanker oil reserves decreased by 27% to 50.7 million barrels.
The cost of Brent crude futures for the month of June on the London Stock Exchange rose on Friday to $ 67.08 a barrel.
Bloomberg predicted that the price of oil, against the backdrop of the expected reduction in oil reserves in the second half of 2021, may rise to $ 74 a barrel.
The oil exporters had decided, contrary to expectations, in a meeting held on the first of April, to increase oil production as of next May.
OPEC + countries will increase their oil production in May by 350,000 barrels per day, in June by another 350,000 barrels per day, and in July by another 450,000 barrels per day. The decision was taken immediately for a period of three months.
It is noteworthy that OPEC + countries, which represent more than 40% of global oil production, have met every month since the beginning of 2021 to determine production levels in the short term. This approach gives members more flexibility in the face of a recovery in fragile demand. link
Source: Dinar Recaps
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