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TNT
Tishwash:
this is in Bahrain’s news
Iraq is moving to support its assets with the Chinese yuan to finance imports amounting to $12 billion annually
Opening bank accounts in Indian rupees for Iraqi banks to finance trade worth $3 billion
A government source in Iraq said that officials from the Central Bank of Iraq held “intensive meetings” with American officials in Abu Dhabi in recent days to discuss external transfers to cover imports.
The source added that Iraq has strengthened its assets denominated in the yuan through the Singapore Development Bank to finance Iraqi trade and imports with China by about 12 billion dollars annually.
The source stated that the oil-exporting country also moved to strengthen its assets in UAE dirhams and is negotiating to increase its assets denominated in euros to finance trade with the European Union, according to what was reported by Iraqi news agency “Inaa.”
The source said that negotiations with the American side reached a set of decisions and mechanisms that contribute to facilitating procedures for foreign transfers related to imports through the foreign currency sales window.
He added, “It was agreed to enhance the advance balance of five Iraqi banks in their dollar accounts with Jordanian banks and transfers via JP Morgan Bank,” noting that “the problems related to the rejected transfers were resolved, and it was agreed that the rejection of transfers should be based on strong reasons.”
He continued: “There were also other meetings that brought together one of the Emirati banks, the Central Bank of Iraq, and the American side, to implement the mechanism for enhancing balances in the Emirati dirham for Iraqi banks,” indicating that “things are going well in this regard, as all technical details related to the issue have been resolved, and it is expected to begin.” The mechanism for enhancing balances in UAE dirhams during the next few days.”
He stressed that “there are serious negotiations that have reached their final stages to enhance the balances of some Iraqi banks in euros with UBAF Bank to finance trade with the European Union,” noting “an increase in the number of banks whose balances are being enhanced.” In Chinese yuan through the Singapore Development Bank.”
The source also reported that bank accounts had begun to be opened in the Indian rupee for a number of Iraqi banks at the same correspondent, the Singapore Development Bank (New Delhi branch), and operations to enhance the balance of two Iraqi banks had actually been completed as a first stage, and it is expected that this mechanism will contribute In financing Iraq’s imports from India, especially medicines and foodstuffs, which are estimated at about 3 billion dollars link
Parliament Finance responds to the Central Bank’s decision to import foreign currency and plans to host the governor
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Today, Saturday (November 11, 2023), the Finance Committee in the House of Representatives commented on the decision of the Central Bank of Iraq to import “foreign currency” from abroad, while indicating that it will work to host Governor Ali Al-Alaq.
Committee member Mustafa Al-Karaawi told “Baghdad Today” that “the committee will work to host the Governor of the Central Bank, Ali Al-Alaq, and the senior staff at the bank, to discuss the decision to import foreign currency from abroad, and to find out the reasons that prompted such a decision to be taken and how it might have an impact.” On the internal Iraqi economic situation.”
He stated, “There is a fear that such decisions will be exploited by some parties and personalities who want to exploit any decision to their advantage, and for this reason we will have a position of following up and monitoring this decision, and we will also have a position in making an appropriate decision after reviewing the full details of this decision within a few days.” “The next one.”
The instructions of the Central Bank of Iraq, which it issued on Wednesday (November 8, 2023), regarding allowing banks to import foreign currency from abroad, raised a number of questions and discussions in economic circles about the legality, motives, and goals of this step.
The discussion was topped by some recalling the decision of the State Shura Council in 2011, to infer the lack of legal basis for the decision to import foreign currency, as the State Shura Council issued Resolution 2/2011, in January of the year 2011, based on a request for an opinion that came to the Council by the Office Financial oversight, as the State Shura Council relied on several legal texts, to infer the absence of a legal basis for the Central Bank to grant licenses to import foreign currency from abroad.
On the other hand, researchers in economic affairs have proven the validity of the Central Bank’s instructions, as the Central Bank had previously issued instructions to import foreign currency in July of 2011, and they were published in the Al-Waqe’at newspaper at that time, that is, 6 months after the decision of the State Shura Council, which makes it a document. Legally enforceable.
Observers and specialists raised a number of questions about the Central Bank’s decision, about the reason for opening the door to importing foreign currency, and whether this means or indicates that the Central Bank has begun to find difficulty in obtaining the dollar or sufficient quantities of it from the US Federal Reserve, and therefore the bank The Central Bank has become unable to meet the demand for the dollar because it does not possess it in sufficient quantity link
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Moody’s Cuts Outlook on U.S. Credit Rating
Moody’s Investors Service changed its outlook on the U.S.’s credit rating to negative from stable late Friday. The ratings firm cited the federal deficit as a “key driver” behind the action.
Moody’s retained its top Aaa rating for U.S. credit, unlike the other major credit rating firms. S&P downgraded U.S. credit to AA+ in 2011. Fitch followed suit this past August.
In its ratings action, Moody’s said: “The downside risks to the US’ fiscal strength have increased and may no longer be fully offset by the sovereign’s unique credit strengths.”
“In the context of higher interest rates, without effective fiscal policy measures to reduce government spending or increase revenues, Moody’s expects that the US’ fiscal deficits will remain very large, significantly weakening debt affordability.”
The agency added that politics was a concern, as well: “Continued political polarization within US Congress raises the risk that successive governments will not be able to reach consensus on a fiscal plan to slow the decline in debt affordability.”
Despite the concerns, Moody’s held on to its top rating for U.S. debt: “The affirmation of the Aaa ratings reflects Moody’s view that, despite rising fiscal pressures and political risk, the US’ formidable credit strengths continue to preserve the sovereign’s rating, in particular exceptional economic strength, high institutional and governance strength, and the unique and central roles of the US dollar and Treasury bond market in the global financial system.
Moody’s announcement had a limited immediate impact on stocks. The SPDR S&P 500 ETF Trust link
SPY 1.56% , which tracks the S&P 500 index, was down 0.2% in after-hours trading Friday.
Source: Dinar Recaps
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