WOTS WED JAN 5 21
This is the article I referenced on https://anchor.fm/dashboard/episode/eol583
Market Review: "Stock Market Rallies on Currency Devaluation"
this gives a nice little history of the dinar imo
For Iraq and its equity market the year ended the same way it began, with a bang that is much louder than its effect.
The official IQD exchange rate versus the USD was reset from 1,190 to the new USD rate of 1,460 on December 20th - or a de facto devaluation of 22.7%.
The IQD's parallel market's FX price increased throughout the year, from about 1,203 at the start of 2020, reflecting several factors. Starting with the momentous events at the beginning of the year that raised the spectre of a US-Iran proxy war fought in the country, followed by the full lockdown from mid-March and the rolling lockdowns that cut the working weeks to four days throughout the summer, and finally by the rumours of a devaluation as last reported on here in October .
By the end of November, the IQD parallel market FX rate was about 1,250 IQD to the USD and throughout December increased to about 1,300-1,350, just before the devaluation was made official. However, after initially increasing to about 1,470, trading at a premium to the official price, it began to decrease in the following days to about 1,390, trading at a discount to the official price, before rising higher than the official exchange rate as the month concluded.
(Source: Central Bank of Iraq, Iraqi Foreign Exchange Houses, AFC Research, data as of December 31st)
Moreover, USD-Iraqi Dinar (IQD) transaction volumes conducted by the Central Bank of Iraq (CBI), declined significantly in the two weeks following the devaluation reflecting market uncertainty and confusion over whether the devaluation would be challenged by parliament. Prior to the announcement these volumes were beginning to show a pick-up in the first two weeks of December after a few months of low volumes - daily volumes throughout July-November were on average 86% of the levels that prevailed from January to mid-March.
(Source: Central Bank of Iraq, Iraqi Foreign Exchange Houses, AFC Research, data as of December 31st)
The last time the IQD went through a significant devaluation was in the early 1990s in response to the United Nations (UN) embargo following the invasion of Kuwait, and before that during the Iraq-Iran war in the 1980s. The official exchange rate, last fixed at USD 1 = IQD 0.31 in 1982, remained the same until the rate and the rules governing the convertibility of the currency changed following the US invasion in 2003.
However, the parallel market rate, or what was referred to pre-2003 as the black-market rate, declined meaningfully during the 1980s to about USD 1 = IQD 1.86, and nosedived to about USD 1 = IQD 3,000+ by 1995 as the government resorted to printing money to meet its expenditures as its oil revenues came to an end following the UN embargo in response to the invasion of Kuwait.
The UN's "Oil-for-Food programme" in 1995 improved the rate somewhat but it remained at these elevated levels until 2003. Following the invasion, new IQD notes were issued to replace the old notes and the rate began to recover with the earliest Central Bank of Iraq (CBI) data showing an average new official rate of USD 1 = IQD 1,949 in October 2003. The stabilisation of the country in the following years brought with it a meaningful recovery in the exchange rate as can be seen from the above chart.
However, the current devaluation is very different from those of the past. The primary reason was to stretch the government's oil revenues to cover more of its expenditures and thus to preserve the country's foreign reserves. Nevertheless, a by-product of the devaluation was to address the country's loss of competitiveness versus its major trading partners whose currencies depreciated significantly versus the USD, and hence the IQD, over the years as argued in the government's reform program, known as the "White Paper".
This argument was vindicated somewhat by the subsequent strong rally of the Iraq Stock Exchange (ISX), as discussed below. Iraq's still meaningful oil revenues estimated at USD 42.3 bn based on an estimated average Iraqi oil price of USD 38.54 per barrel in 2020, and USD 51.5 bn in 2021 based on an estimated average Iraqi oil price of USD 42.0 per barrel, with foreign exchange reserves of USD 54.9 bn as of early December should preclude the necessity for a further devaluation.
The equity market reacted extremely positively to the news of the devaluation, with the Rabee Securities RSISX Index rallying 8.7% in local currency terms in the five days between the announcement of the devaluation and the closing of the month. Among the top gainers in the same five days were Baghdad Soft Drinks (IBSD) up 19.6%, National Bank of Iraq (BNOI) up 9.5%, Asiacell (TASC) up 5.9%, and Bank of Baghdad (BBOB) up 5.1%. The most promising aspect of the rally post devaluation has been the significant increase in turnover following a very subdued start to the month, as well as the increased foreign buying as can be seen in the two charts below.
[...]
(Source: Iraq Stock Exchange (ISX), AFC Research as of 24th December)
While the devaluation is an adverse event, the reaction of the equity market and the increased foreign participation indicates that the change is positive for equities. While the missing pieces of Iraq's re-rating are many and will take time to materialize, this positive reaction to the devaluation suggests that the event might start the process of Iraq's re-rating - which from a long-term perspective is positive for the equity market.
Away from the drama of the devaluation and the market's action, Christmas was more special than usual this year as parliament voted unanimously to establish Christmas as an annual national holiday , making permanent the government's decision two years earlier. Parliament's vote was preceded by a Vatican announcement that Pope Francis will visit Iraq in March 2021, the first visit by a pope to Iraq and the first visit by the current pope since the pandemic began.
Iraq's leaders attended Christmas Mass, including the President and the Prime Minister, calling for the protection of Iraq's Christian minority and reaffirming the continuity with Iraq's Christian past - before the sacking of Baghdad by the Mongols in 1258 and the Tamerlane in 1410, the city was a major world centre of Christianity in which "... the Iraq-based Church of the East had bishops and monasteries as far east as Beijing." Source: Heirs to Forgotten Kingdoms . Yet probably the most poignant was the Prime Minister's visit to the church of "Our Lady of Salvation" - an Assyrian Christian church that survived two terrible terrorist attacks in 2004 and 2010, with the last one an attack at a Sunday Mass that led to over 52 deaths.
The approximate exchange rates for the dollar and precious metals on the local markets on Wednesday (January 6, 2021), according to the monitoring of specialists.
The selling price of the dollar is 144,750
The purchase price of the dollar is 142,750
approximate
The Markets:
Al-Kazemi: 2021 will be the year of Iraqi achievement, and the stage of depletion of wealth is over
KING DOLLAR ABOUT TO COLLAPSE?
Year to fly by as Earth spinning fastest in half century...
Missions to Mars, Moon and Beyond Await in '21...
Advisor Al-Kazemi comments on the fluctuation of the dollar price in the Iraqi market and talks about a near benefit
The financial and economic advisor to the prime minister, Mazhar Muhammad Salih, confirmed today, Tuesday, that the exchange rate .of the dollar against the Iraqi dinar will stabilize soon, while he spoke about a positive side of the decline in central bank sales
In an interview with (Baghdad Today), Mazhar Muhammad Salih said, "The exchange rate of the dollar against the Iraqi dinar will stabilize in the market, as approved by the Central Bank of Iraq," indicating that "the current instability is due to the market shock from " .raising the exchange rate according to monetary policy." New, which takes time to settle completely
Saleh added, "The decrease in the central bank's sales of dollars includes something positive, as it will increase the reserves of the Central Bank of Iraq, and the decrease is a temporary issue that is not permanent, and the dollar will resell according to a specific ".ceiling as it was previously A member of the Finance Committee in Parliament, Jamal Cougar, spoke today, Tuesday, about the mechanism that enables the return of stability to the Iraqi markets, while noting that the reduction of the effects of the reduction of the value of the dinar against the .dollar will be after the passage of the 2021 budget bill
In an interview with (Baghdad Today), Jamal Cougar said, "The decline in the effects of reducing the value of the dinar against the dollar and achieving stability in the market is done by fixing the exchange rate of the dollar in the draft general financial budget, after ".passing it in the House of Representatives
Cougar added, "The second step is for the government to work to develop solutions to address the high prices, by supporting imported ".goods and activating the local product as well as searching for other alternatives He pointed out that "citizens have so far been uneasy about the current exchange rate, and thus a state of anxiety has been born that has made the market largely unstable," noting that "the decline in central bank sales indicates that the numbers that were announced in the past and the current numbers are real, because The real investor who needs financial liquidity goes to the bank to buy dollars, or " .traders who were taking advantage of the dollar selling price are afraid of going to the bank
A member of the Finance Committee in the House of Representatives explained, "Many traders expect as a result of rumors that the dollar exchange rate will stabilize at 1,300 dinars, but after passing the budget at the official rate announced by the bank and approved ".by the Ministry of Finance, the bank’s sales will rise again In the latest update of the dinar exchange rates against the dollar, the US dollar continues to rise against the dinar in the Iraqi market .in a few provinces after a slight decline on Monday, while it stabilized in Baghdad and most cities for the second day in a row :Today, Baghdad published the latest update of the exchange rate this afternoon, which was as follows:
Baghdad / Al-Kifah Stock Exchange: sell 144,500, buy 142,550,
Karrada and Al-Harithiya exchange, sell 144,500, buy 1430 .
Diyala / market price, sell 1450, buy 1430,
Erbil / Bursa, sell 144.750, buy 142.700,
Sulaymaniyah / Bursa, sell 143.500, buy 1420 .
Mosul / Wholesale Market, selling 143.750,
Najaf /Bursa, selling 1440, Basra / Bursa, selling 143.700 .
Rest of the South: Selling 144,500, Buying 142,500
Brent crude above $ 54 for the first time since February 26
As of 05:38 Moscow time, Brent was trading at $ 53.96 per barrel (+ 0.67%), and WTI was trading at $ 50.23 per barrel (+ 0.44%).
Nouri al-Maliki: The time has come to restore the prestige of the state and enforce the law in Iraq
Deputy: The 2021 budget includes Kurdistan's dues for six years
Member of the Al-Fateh Alliance, MP Hamid Al-Mousawi, said today, Tuesday, that “the 2021 budget included Kurdistan's dues for six years, stressing in return that the region has not delivered any of its revenues to the state treasury.
Al-Mousawi said in a statement to (Al-Mustaqilla) that “the draft budget of 2021 calculated the dues of the Kurdistan region for previous years (2014-2020), at a time when it did not deliver any oil and non-oil revenues to the state treasury.”
He added, “Article (11), Clause Second, stipulates that the Kurdistan region should deliver (250) thousand barrels of crude oil per day to the SOMO company, and it is more correct for the text to deliver the Kurdistan region of its entire production of crude oil to the federal authority, as is the case with the rest of the Iraqi provinces.”
He pointed out that "the current expenditures for the year 2021 amounted to (120) trillion dinars, while it did not exceed in previous years to (44) trillion dinars."
Surprising news from Kuwait: the government will resign within 48 hours!
Kuwaiti media reported today, Wednesday, that the Kuwaiti government is expected to submit its resignation within the next 48 hours, less than a month after its formation
The newspaper said "The opinion Al-Kuwaiti said that "reports were circulated about the government's intention to submit its resignation within the next 48 hours, in light of the interrogation submitted to the Prime Minister Sheikh Immortal morning And the mounting parliamentary support that came with it reached 37 deputies, with the member’s joining Ali Al-Qattan Today, to the 36 deputies who declared their support for the interrogation yesterday
He was the chief National Assembly Marzouq Al-Ghanim Today, I announce the adjournment of the parliament’s session, as the government will not attend after the deputies announced their intention to question its president
The Kuwaiti newspaper "Al-Jarida" stated that "the reason for the interrogation falls within the context of 3 axes, namely: a flagrant violation of the provisions of the constitution when forming the government, not taking into account the elements and trends of the new council, the domination of the executive authority over the composition of the parliament, and a breach of the constitutional obligation in Article 98 of the constitution by delaying the presentation Government Action Program
1-5-2021 Intel Guru Frank26 What do you mean they lowered the price of the Iraqi dinar? Well they did. That's impossible, they said they were going to raise it. It's the China syndrome. China said the same thing back in 1995. 'We are not going to raise the value of our currency.' So did Kuwait. They said the same thing. But 3 days later China changed the value of their currency. They didn't want anyone to take advantage of them...The Iraqi dinar went down in value inside the country of Iraq...but now as of January 1st IMO they got a new rate...they are trying to tell you they don't have a program rate anymore...
1-5-2021 Intel Guru MarkZ [via PDK] This is a very important week…There are people in position all over the globe…they are actually in place…for those that follow the forex closely…we have started seeing a change in value of the VND to the IQD…so we are seeing some movement there which I think is important because the amount is limited to the 2 treasuries that hold the most amounts of each others currencies in their reserves …Vietnam and Iraq are closely related economically. So we have started seeing a movement of funds….
1-5-2021 Newshound/Intel Guru Petra the [last] two, five or six days the auctions have gone from 150-200 million down to a million, down to 350 thousand and I think today was zero. There's definitely a change going on.
1-5-2021 Newshound/Intel Gurus Walkingstick & Frank26 IOO at the end of this week by Thursday or Friday and reviewed again at the end of the following week the CBI and all their money exchangers and banks will meet...on the subject of the tally of the 3 zero notes that have been collected. They want to determine if they have hit the sweet spot that they have agreed upon with them and the IMF. The CBI and IMF have a target in order to release the new small category notes and the next exchange rate change...
1-5-2021 Intel Guru Frank26 ...something is about to happen with the Iraqi dinar on a permanent basis...they are about to introduce a 1 to 1 rate because the American dollar is disappearing [Inside of Iraq]...
1-5-2021 Newshound/Intel Guru Mnt Goat ...We hear today in news from Iraq this strategy is working and the daily currency auctions are way down...This new strategy of devaluation of the dinar is working and taking root. ...This is the time to do this since price of oil being low and less oil revenues are generated it would not take long to drain the CBI reserves if action was not taken. It has forced them to take action. ...they fully intend to one day soon end the auctions and use the dinar to buy imports. They can not do this unless they also reinstate the dinar on the global currency exchanges and get out of OFAC sanctions. [post 2 of 2]
1-5-2021 Newshound/Intel Guru Mnt Goat The CBI does not tell you everything. What they do is take measures and countermeasures to ensure the overall plan of the project to delete the zeros can be carried out. ...The CBI and GOI had to work together to find a way to get these notes off the streets. By the devaluation of the dinar, it is causing the citizens to exchange their long, sought after dinars into dollars. Why not if the dollar can buy more? Also, some banks in Iraq are offering up to 5-7% annual interest on a two year locked-in saving account. WOW! Now tell me why they would do this if the currency was going to crash? [post 1 of 2....stay tuned]
1-5-2021 Intel Guru Footforward Don't be surprised if they devalue again to try and get those notes in faster.
1-5-2021 Intel Guru Austin-Powers-For-PM Next two weeks are huge. They need to finish collecting as many 3-zero notes as possible and hit a "Sweet Spot" before releasing the New Small Category Notes and releasing the rate.
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