“Rate Change Needed” – Wed. PM KTFA Thoughts/News 2-2-22

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KTFA

Samson » February 2nd, 2022

Iraq and Egypt sign a memorandum of understanding on monitoring and electronic payment

02/02/2022 18:35:03

His Excellency the Governor of the Central Bank of Iraq, Mr. Mustafa Ghaleb Mokhif, met the Governor of the Central Bank of Egypt, Mr. Tarek Amer, in Cairo.

During the meeting, they discussed bilateral relations between the two monetary institutions and ways to develop supervisory work and joint cooperation in the banking sector.

A memorandum of understanding was signed on monitoring and electronic payment between the two sides, in addition to ways to enhance cooperation and develop banking relations between the two brotherly countries.

It is reported that the Governor of the Central Bank of Iraq arrived on Tuesday afternoon in Cairo at the head of a large banking delegation at the invitation of the Egyptian side.  LINK

Don961 » February 2nd, 2022

Digital money.. Temptations and fraud

Wednesday 02 February 2022 Baghdad: Kazem Al-Hanawi

Concerned authorities have warned citizens against trading securities in the foreign exchange market, as companies are adopting innovative means through unlicensed fraudsters to inflict their victims in forex or digital currency activities, and to lure quick profit and investment. 

Fraudulent methods include publishing fabricated videos on social media that appear as news bulletins broadcasting official news by opening new investment channels for citizens, and inviting them to register their names and data, with the aim of deceiving citizens by transferring their data to steal their money.

Among the methods used by fraudsters are also creating fake electronic platforms that impersonate names and brands and marketing them through accounts on social networking sites, and there are many fraud methods to include fraud by advertising for jobs and conducting personal interviews via telephone or video call, luring victims to obtain their personal and banking information, and promoting For fake investments through currency trading, and others are looking for people to deceive them of financial assistance through Donations (humanitarian). 

fake sites 

Statistics Al-Jabour, head of the Samawa Chamber of Commerce, says that, “At the beginning of the emergence of these investments, the Chamber announced clearly to the citizens who inquired about them, that they should not deal with these sites through an awareness campaign to protect society from the dangers of dealing with fake websites that market to invest in securities, without mentioning them.” Obtaining the required licenses from the competent authorities, and introducing the innovative means pursued by unlicensed companies or fraudulent persons to inflict their victims in currency activities. 

He pointed out that “an important aspect is that the stock market is a market for offering shares for existing and registered companies and investment projects on the ground, and that frauds lie in banking companies and mediation in the sale and purchase of currencies, especially fictitious, in addition to some fictitious practices in displaying a fictitious profit activity that depends On electronic communications to achieve profits and establish an invisible network that pays money under the pretext of profit and presents a model of a shield or anything bearing the characteristics of the company, and then this company and those involved and the promoters disappear, as this spread and remarkably during the absence of state control of those platforms, and the law that must carry Any promoter of that responsibility in the rhythm of citizens victims”.

Jabour explained that “raising awareness and warning against dealing and investing with irregular and unlicensed entities, after some groups were affected, by depositing their funds to entities and companies in irregular ways without referring to the competent authorities.”

And he indicated that “the Chamber of Commerce offers several programs to confront irregular entities and companies, including raising awareness and warning against the activity of trading in securities in the unlicensed foreign exchange market, and several official agencies participate in it with the aim of protecting people from drifting behind this.” 

Investments that are harmful to the economy in general and to individuals in particular.

It is noteworthy that several sources confirmed that the risks that investors and dealers in securities in the foreign exchange market may be exposed to are very high and end in the loss of capital for the individual shareholders, except for the investment promoted by the unregulated bodies whose goal is often to earn money by illegal means by deluding the investors that Investing with these companies is safe, and they are helped by a number of suspicious websites that these companies have designated to announce guaranteed profits, the outcome of which is fraud.

Big losses

For his part, lawyer and member of the Jurists Syndicate Salah Al-Shammari called on the media to play a greater role in this important juncture, which exposes a segment of citizens to great losses, after being lured electronically to fake markets, and warned against “sharing information and personal and private data with others and the need to verify the sources of information by referring to the authorities.” It also ensures that companies have the necessary licenses before starting any investment, and beware of temptations to make quick profits that are promoted by companies trading in securities in the foreign exchange market. regularity”.  link

Thrift and hoarding

Tuesday 01 February 2022 Dr.. Hamed Rahim

Saving is one of the very important variables in the economy, as it is one of the most important sources of funding for investments in the existing economic activity. As for the concept, saving is (temporarily refraining from spending part of the available income), and this common concept in scientific sources contains a problematic overlap between its two sides. With the concept of (hoarding), which is an undesirable economic behavior, and therefore a distinction must be made between them. market.

As for saving, it is a desirable economic behavior and treated in economic theory, and it is one of the investment portfolio options as it achieves a return on the saved financial resources. Income, on the other hand, the economic activity will receive these deposits as they are financial resources that can be converted into other assets that stimulate the real aggregate supply and investment demand as well, and herein lies the role of (credit policy). 

In the end, it is necessary – in addition to the concept referred to – to distinguish saving from hoarding, and the concept of saving can be formulated as (it is one of the investment portfolio options represented by a temporary refrain from spending part of the available income to achieve a return).

And speaking of the structurally dysfunctional Iraqi economy, the story has complex dimensions and problems. The improvements in income after 2003 did not have a developmental impact on reality and did not provide us with a correct picture of the economic variables. Perhaps saving is one of those axes, as the monetary mass that it issues The Central Bank, which has grown significantly as a result of income improvements, is supposed to be an important part of it turning into savings through the adoption of policies that stimulate it.

But the indicators say otherwise. The average percentage of the currency issued by the Central Bank of the banking sector did not exceed 12%, meaning that what the public holds (cash in circulation) is at an average of 88%, taking into account that the investments are very weak, and this is what it shows.

The GDP map, the contribution of the industrial sector did not exceed an average of 2% and the construction and building rate was 5%. As for the tourism sector, its contribution is so weak that no field was singled out for it on the map, and this means that cash in circulation was distributed between consumer spending and hoarding.

The result is that the largest percentage of improvements in income went towards hoarding and not saving, noting that the relationship between saving and the interest rate is inflexible despite the rises from time to time in the interest rate on bank deposits, but without a significant effect in return (consecutive increases) in income most of them I went to (marginal propensity to consume) and not (marginal propensity to save), which showed us economic activity in its current form weak investments and a significant increase in imports consumerism.

Changing this equation is linked to the public’s confidence in banking institutions and general economic activity. banking.  LINK

Samson » February 2nd, 2022

What does it take to change the dollar exchange rate and return it to the previous? Iraq should follow the example of neighboring countries

2nd February, 2022

Today, Wednesday, economic experts considered it difficult to change the exchange rate of the dollar and return it to its previous rate.

Economist Uday Al-Alawi said, according to the official newspaper, that “some of them see that changing the exchange rate is just a digital process that goes up or down,” noting that “this change greatly affects the market and the obligations of many who live on selling materials in it.”

Al-Alawi added that “it is absolutely not possible to change the exchange rate overnight, because the damages of those decisions that are taken without knowledge are estimated at billions of losses on citizens,” noting that “changing the exchange rate requires overlapping processes of continuous preparation of the market that take at least two years.”

He explained that “the statements regarding the change in the dollar exchange rate confused the market and stopped many commercial operations, and imposed on families to reduce spending and be satisfied with important goods, despite the fact that workers in the private sector constitute about 80% of society and they are more than directly affected by such statements.” 

And he stated, “Any moves in the process of decreasing and raising the exchange rate must be deliberate, because there is a benefit between the merchant and the simple citizen, in addition to the fact that many citizens have converted their transactions to the dollar after decreasing the price of the dinar, which suggests that it is not fixed internally, which causes a change a significant economic situation in the event of a decrease or increase in the exchange rate of the dinar against the dollar.

Al-Alawi linked “the efforts to change the exchange rate on the one hand and the government formation talks on the other hand,” noting that “they will be temporary statements and will not go beyond promotion and media marketing.” 

On the technical level, experts believe that “Iraq should follow the steps of some neighboring countries that have fixed the dollar’s exchange rate against its currency for years, even though they do not have any economic data, while the exchange rate in Iraq changes frequently.”

On the same level, other blocs, on the other hand, are trying to push economic laws to the House of Representatives, as Hakim al-Zamili, the first deputy speaker of parliament, had announced the Sadrist bloc’s intention to legislate a law to deduct a financial grant from oil revenues to be distributed directly among citizens under the title “People’s Oil Grant.” However, experts and observers pointed out that these endeavors cannot be implemented within the law, as there is a budget deficit estimated at more than 27 trillion dinars.

Observers warn of Iraq’s dependence on the current high oil prices, especially that their fluctuations will continue according to market requirements and the consequences of the world’s actions regarding the general closure to confront the Corona pandemic. They stressed the need for there to be alternatives away from oil rents, as this wealth may not last long, and could decrease at any moment, noting that those funds can be invested in establishing infrastructure for industrial cities that can compete with the world.  LINK

The Framework Announces The Move Towards Collecting Parliamentary Signatures To Change The Dollar Exchange Rate

1st February, 2022
The deputy of the coordination framework, Ibtisam Al-Hilali, revealed, on Tuesday, the framework’s move to collect parliamentary signatures to restore the dollar exchange rate to its previous rate, surprising at the government’s insistence on maintaining the exchange rate, especially with the recovery of oil markets during the past weeks.

Al-Hilali said in a statement to “The Information”, “The coordination framework is moving towards collecting parliamentary signatures in order to restore the exchange rate of the dollar against the Iraqi dinar or reduce its current price.”

She added that “the framework’s movement in this regard is still continuing until the will of the Iraqi people, who were affected by the high exchange rate of the dollar, is achieved,” noting that “the government raised the exchange rate in order to supplement the 2012 budget, and now it has obtained additional funds due to the high oil price.”

And the representative of the State of Law coalition, Firas Al-Maslmawi, confirmed in a previous statement, that his coalition and a number of members of Parliament within the same direction will not allow the budget to be passed for the current year except after a reduction in the dollar exchange rate against the dinar.  LINK

Wagmister » February 2nd, 2022

A rate change is needed, but or more importantly the Iraqi Dinar must be a put on the FOREX. Delete the three zeros and let the world open its arms to the Dinar.

DCDriver » February 2nd, 2022

Is not the IQD already on the forex? I think it just needs to depeg so it can float IMO

Don961 » February 2nd, 2022

The purchasing power of the citizen decreased by 22%

Monday 31 January 2022  Baghdad: Haider Falih Al-Rubaie

Specialists in economic affairs identified a number of reasons for the high levels of inflation in the country, and their reaching rates they described as “dangerous”, putting at the forefront of these reasons the increase in the prices of food, health services, transportation and electricity, stressing that the high levels of inflation have eaten up approximately 22% of the purchasing power of the citizen. , and led to an increase in poverty rates, and while they agreed that changing the exchange rate is the main cause of high inflation rates

They stressed the need to launch more initiatives aimed at establishing small and medium enterprises, especially in the industrial, agricultural and investment sectors.

The latest statistic published by the Ministry of Planning showed a rise in annual inflation rates of 8.4%, which represents a “danger bell” for a number of economists, who warned of the dangers of rising inflation rates on the national economy in general.

Economic risk 

Despite the significant negative effects of inflation on the national economy in general, however, the economist, Manar Al-Obaidi, believes that the increase in its rates has a direct impact on the life of the citizen, leads to high rates of poverty, and paralyzes the increase in per capita GDP. Al-Obaidi pointed out that “measuring the level of price increases for each item or service, is after measuring the level of its impact on the citizen.

The importance of the food sector is approximately 28% for the citizen, followed by the housing and rental sector, whose importance is 17%.” The economic expert pointed out that “inflation rates in Iraq rose in important sectors, including those that are of great importance such as the food sector, as well as important and necessary sectors for people’s lives, such as the health, electricity and water sectors, which witnessed clear increases.

Food security 

Al-Obaidi believes that the food sector plays an important role in the process of rising inflation rates, because of its great relative importance, which necessitates working to achieve food security by adopting agricultural, industrial and agricultural projects and increasing equivalent productions such as canning and storage, stressing that these steps would Contribute to alleviating the rise in prices globally, and provide Iraq with food security away from external influences, and away from the impact of the exchange rate.

The expert pointed out that “the health sector, other goods and services, and electricity supplies are among the sectors with the highest rise in prices, as they witnessed an increase of more than 30%, and these percentages require active intervention from various parties to reduce them.”

investing money

With the aim of reducing the effects of inflation on the Iraqi economy, Al-Obaidi urged the harm of investing the surplus funds of the state and the reserves of the Central Bank, to launch initiatives that work to establish various projects that can contribute to reducing inflation rates, and to strive seriously to find real productive job opportunities that distance us from the “social welfare” state.

“We are experiencing today, especially with the high unemployment rates that have turned from a problem into a real disaster, rising with more than 500,000 people entering the labor market annually. Al-Obaidi also stressed the importance of “investment in education,” stressing that human capital is one of the factors affecting the rise in unemployment rates, and therefore real strategies must be worked out to implement education projects that raise the rate of human capital, which will contribute to reducing unemployment rates significantly. .

exchange rate

In turn, the economist, Dr. Ali Hadi Al-Nusaifi, attributed the inflation rates to these levels to the change in the exchange rate and the devaluation of the local currency by 22% in parallel with the size of the bill of large foreign imports that are financed in dollars, stressing that this led to the citizen losing a percentage of purchasing power.

His income is much greater than the rate of devaluation of the currency due to the lack of control over the markets and its outrageous rise, indicating that this rise was paid for by the low-income brackets, and then led to the expansion of the poverty gap and the increase in the size of unemployment. Al-Nusaifi also indicated, among other reasons, that he said that they contributed to the increase in inflation rates to those rates he described as “dangerous,” including “the absence of a production function, exports being limited to oil resources, high costs on commodity requirements, and high taxes.”

suggestions and solutions 

In order to reduce the effects of inflation and reduce its high rates, the expert Al-Nusaifi suggested a number of points that he called on the government to implement, putting at the forefront of those points, strengthening the ration card program, and working on the “cash allowance” to replace the commodity, provided that the value of the goods in the market is taken into account, as well as Re-working the supported central market program, activating the market monitoring program, and reducing taxes and customs on some productive activities.

Funding initiatives for small projects of not less than 10 trillion dinars to reduce unemployment and reduce the poverty gap before it is classified in extreme and dangerous levels.   LINK

Source: Dinar Recaps

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