Iraq plans to “neglect the US dollar” and Parliament proposes “diversifying foreign currency baskets”
The House of Representatives Finance Committee said today, Monday (November 13, 2023), that there is a necessary and important need to diversify the basket of foreign currencies in Iraq and not rely on the US dollar in commercial transactions.
Committee member Moin Al-Kazemi told “Baghdad Today” that “the basket of foreign currencies in Iraq must be diversified and not relied on the dollar in commercial transactions, whether external or even internal, as this reduces American dominance over the Iraqi economy.”
He added, “The Iraqi economic ground is ready and prepared to strengthen banks in various foreign currencies and not be limited to the US dollar, and there is a real trend by the monetary authority in this matter, and the coming days will witness various commercial transactions through the UAE dirham as well as the Chinese yuan and other currencies, and this will reduce demand.” On the dollar, and it will have an impact on reducing the dollar exchange rate in the parallel market.”
Last Saturday (November 11, 2023), 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, according to what was reported by the “official agency,” 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 the Iraqi news agency “Inaa.”
The source added 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 the UAE dirham 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 in Chinese yuan are being enhanced through the Singapore Development Bank.”
The source also reported that bank accounts had begun to be opened in Indian rupees for a number of Iraqi banks at the same correspondent, the Singapore Development Bank (New Delhi branch), and operations had actually been carried out to enhance the balance of two Iraqi banks as a first stage, and it is expected that this mechanism will contribute to financing Iraq’s imports from India, especially medicines and materials. Food, which is estimated at about $3 billion link
Foreign currency deals bolster Iraqi banks amid no-confidence bid against central bank governor
Iraq’s Central Bank (ICB) struck deals with foreign nations to support Iraqi private banks in foreign currencies, coinciding with lawmakers’ no-confidence efforts against ICB’s governor amid currency pressure from the US dollar.
ICB and US officials have reached a deal to strengthen the reserves of 10 Iraqi banks with the US dollar after detailed discussions in Abu Dhabi, the state-run Iraqi News Agency reported on Sunday, 12 November, citing governmental sources within the meetings.
“After recent discussions between the Iraqi Central Bank and American representatives, ten banks can now strengthen their reserves in US dollars—five through Citi Bank and five via JP Morgan,” INA reported.
Iraq imports almost 95 of its needs through foreign trade using foreign currencies.
“Furthermore, the number of banks allowed to enhance their reserves in the Chinese Yuan through the Singapore Development Bank will increase to 13 banks. Two banks have already fortified their accounts in Indian Rupees with the Singapore Development Bank,” the agency added.
It also clarified that several developments have unfolded in banking collaboration between Iraq and other countries; notably, issues with rejected transfers have been resolved. It also revealed a promising mechanism to boost balances in Emirati Dirhams for Iraqi banks is “imminent”.
ICB also makes serious negotiations to enhance Iraqi bank balances in Euros, and more banks are reinforcing their balances in the Chinese Yuan and Indian Rupees for Iraqi banks, signalling a strategic move to finance imports, especially in pharmaceuticals and food items.
ICB recently decided that Iraqi private banks can import foreign currencies via commercial flights, a controversial step that backfired on its governor, as Iraqi lawmakers and legal experts considered it unconstitutional.
Al-Alaq is facing a parliamentary motion to remove him from his position due to the decreasing value of the Iraqi dinar in exchange for the US dollar in the parallel markets.
Since assuming office, economic experts believe that the ICB governor has failed to resolve the devaluation of the ID in exchange for the dollar crisis despite measures taken since his appointment.
Iraq’s cabinet approved a currency revaluation on 7 February and set the exchange rate at 1,300 dinars per US dollar. The Central Bank of Iraq (CBI) also imposed several measures to boost the dinar and prevent the outflow of US dollars outside the country, especially to Iran and Syria, which are under US sanctions.
Despite the official rate of the dinar, a US dollar still sold at around 1,620 in the currency exchange markets. The sharp drop in the dinar’s value plunged local markets into further recession, with prices of every essential goods soaring daily.
The President of the Republic: The government is determined to confront and curb corruption
The President of the Republic, Abdul Latif Jamal Rashid, confirmed that the government is determined to confront and curb corruption and proceed with the reform process, while urging Saudi businessmen to invest in the encouraging opportunities in Iraq and enter the Iraqi market.
The Media Office of the President of the Republic stated in a statement received by the Iraqi News Agency (INA), that “President of the Republic, Abdul Latif Jamal Rashid, met today, Sunday, with the Saudi Minister of Commerce, Chairman of the Saudi-Iraqi Coordination Council, Majid Al-Qasabi, and a group of Saudi businessmen.”
During the meeting, according to the statement, the President stressed the importance of cooperation and coordination between Iraq and Saudi Arabia in the commercial, economic, industrial, energy and environmental fields, and benefiting from the expertise, experiences and capabilities of the two countries.
The President of the Republic pointed to the depth of relations between the two countries, and the religious, national, social and cultural ties between the two peoples, praising Saudi Arabia’s role in the region and its keeping pace with the development and progress the world is witnessing.
The President reviewed the complex and difficult circumstances that Iraq has experienced over the past years, including wars, sanctions, and terrorism, and the major effects they had on infrastructure and services, indicating that “today the country is witnessing a different reality in terms of security stability, service provision, and the start of strategic and investment projects.”
He added,“ The recent elections resulted in the formation of a government that represents all Iraqis, as it developed an important program that made it one of its priorities to establish security and stability in the country, and the government is determined today to confront and curb corruption and proceed with the reform process.” The President urged Saudi businessmen to invest in the encouraging opportunities in Iraq and enter into
… The Iraqi market, pointing out that “the government is determined to provide facilities to investors and businessmen in order to encourage them and benefit from investment opportunities in Iraq.”
In turn, the Saudi minister affirmed the Kingdom’s keenness to maintain and develop relations between the two countries, and expand the horizons of cooperation to serve common interests, pointing to social ties. And the historical link between the Iraqi and Saudi peoples.
He added, “Businessmen in Saudi Arabia, through the Saudi-Iraqi Coordination Council, are making unremitting efforts to overcome some of the procedures, and there is communication and meetings held between Iraqi and Saudi businessmen in order to enhance cooperation between the two sides, expressing his aspiration to develop trade exchange.” “And creating a true partnership that contributes to the progress and prosperity of the two countries.”
The Ambassador of the Republic of Iraq to Saudi Arabia, Safia Al-Suhail, expressed her thanks to His Excellency the President for the meeting and his keenness and interest in developing the commonalities between the two countries, stressing that “Iraqi-Saudi relations have witnessed a tangible development, which reflects the will of the two countries and their serious desire to build distinguished relations that serve the two brotherly peoples and the peoples of the region.”
The meeting was attended by His Excellency Deputy Prime Minister and Minister of Foreign Affairs, Fuad Hussein, and Member of Parliament, Jabbar Freih Al-Kinani. link
Source: Dinar Recaps
Central bank ceases bill issue amid increasing interbank interest rates | Vietnam+ 11.13.23
The State Bank of Vietnam(SBV) has ceased bill issue after nearly two months of using the channel to withdraw cash out of the banking system.
On November 9, 20 trillion VND (820.2 million) of bills came to maturity, but the SBV did not issue new bills for the first time after seven consecutive weeks of using the channel. It meant a corresponding amount of money was pumped back into the banking system.
On the day, though the SBV continued to offer to buy valuable papers with a seven-day term, no banks participated in the auction.
Previously, in the context of a liquidity surplus in the banking system and the lowest interest rate in the interbank market since the beginning of 2021, the SBV reopened the bill channel to withdraw cash out of the banking system on September 21 after more than six months of ceasing the channel.
According to analysts, the SBV’s bill issue move was aimed to adjust liquidity in the banking system in the short term, which is expected to push up Vietnamese dong-denominated interest rates in the interbank market with an aim to reduce the interest rate gap between the US dollar and the dong to indirectly support the foreign exchange rate.
The SBV’s statistics showed from September 21 to November 8, 2023, the SBV issued a total of nearly 360.35 trillion VND in bills, with a term of 28 days. By November 9, 2023, bills worth 185.69 trillion VND came to maturity so the cash returned to the banking system. Bills worth 174.65 trillion VND are under circulation and will mature in the near future.
The SBV ceased bill issue in the context that interbank interest rates have rebounded from the lowest level.
According to the SBV’s data, the average overnight interbank interest rate of dong-denominated deposits on November 8 was 0.83% per year, a sharp increase compared to the 0.14% interest rate applied on September 21 when the SBV reopened the bill issue channel to withdraw cash out of the banking system. The interest rates for one-, two- weeks, and one month also increased by 0.3-1 percentage point.
In addition to the increasing trend of interbank interest rates, the US Federal Reserve (Fed)’s decision to keep interest rates unchanged in the last November meeting caused the value of the greenback in the international market to reverse and decrease sharply, which helped reduce pressure on the domestic foreign exchange rate.
In fact, the USD/VND exchange rate has also decreased continuously in recent days. On November 9, 2023, the greenback selling price at Vietcombank – the bank with the largest foreign currency transaction scale in the banking system – was listed at 24,250 VND per dollar, down 0.9% against the previous week.
US, Indonesia to discuss potential for deal on EV minerals | Malay Mail | 11.13.23
The United States and Indonesia on Monday will discuss how to advance a potential minerals partnership aimed at stimulating trade of the electric vehicle (EV) battery metal nickel, according to three people with direct knowledge of the conversations.
Next steps that could move the countries toward formal negotiations on the partnership will be discussed when Indonesian President Joko Widodo visits the White House for a meeting with US President Joe Biden on Monday, according to one of the people.
The Biden administration is still concerned about environmental, social and governance standards in Indonesia and is examining how a deal might work, the sources said. The administration also plans further consultations with US lawmakers and labour groups in the coming weeks, one of the sources said.
“There’s a lot of work to do before we are able to formally announce negotiations on a critical minerals partnership,” the person said.
The White House did not respond to a request for comment.
Indonesia, which has the world’s biggest nickel ore reserves, in September asked the United States to begin discussions for a trade deal for critical minerals so that exports from the South-east Asian country can be covered under the US Inflation Reduction Act (IRA).
Most of Indonesia’s nickel is processed into crude metal but the government is keen to develop an EV supply chain to use the vast reserves of nickel, which can be processed into battery materials.
“The overall momentum is promising, but (we) don’t want to minimise the fact that there is a fair amount of work to be done here,” one of the people said.
Indonesia’s nickel supplies are the world’s largest and nickel mining there has been blamed for heavy deforestation and water pollution.
Under guidelines for the US law issued in March, Washington has required that a certain amount of critical minerals in EV batteries be produced or assembled in North America or a free trade partner, for EVs sold in the United States to be eligible for tax credits. Indonesia does not have a free trade agreement with the United States.
The Biden administration is also discussing ways to carve out any nickel that is extracted from Indonesia but processed in China from receiving the IRA credits, one of the sources added.
One estimate puts the global market value for the nickel industry at US$33.5 billion in 2022, though the market is over-supplied.
The only US nickel mine is set to close in a few years, and the country has no nickel smelter, a risk to Biden’s goal for the United States to lead in EV manufacturing.
The government last year gave nearly US$115 million to Talon Metals, to partially fund a nickel processing plant in North Dakota that will supply Tesla Inc.
Talon is seeking permits for its proposed Minnesota nickel mine, but has faced opposition from Indigenous people. Many US miners have said that the Biden administration should focus more on approving domestic projects than seeking international supply.
Source: Dinar Recaps
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