Home
Market exchange in Iraq since the adoption of the budget in 2015
26/5/2015
Group: Iraq
I. INTRODUCTION
rate rose the gap between the official exchange rate and the market exchange rate in the first half of May 2015 to about 12% after it was less than 5% in January. So what to pay for such a widening in the gap? To explore in this paper the most important actors factors that influenced the external exchange market since the adoption of the budget 2015 law, which is defined in Article 50 from the roof of the sales of the Central Bank of the dollar family / private sector.
But it is appropriate, before that, quote what was stated in an article to me publishing On February 1 (Mirza 0.2015) from within the expected consequences for the application of Article 50: "The capping the sales dollar in the auction currency (US $ 75 million a day, ...) with the central bank's commitment to this ceiling, called signal most of the traders in the market to Sevsrha that fiscal and monetary policies is committed to seriously to maintain a stable level of prices and ensuring a stable level of the dinar exchange rate to the dollar. and will impact negatively on their expectations and pushes them to resort to hedge by increasing demand for the dollar by more than needs justified by the level of income and production (demand normal). This leads, among other results, to speculation and destabilize the balance in the exchange market .... "
Second, the most important factors involved in the exchange market since the beginning of 2015
in spite of the escalation of military operations in 2014, especially since June, the exchange market in general kept on balance. And that can be extrapolated from the lack of a widening gap between the official exchange rate and the market price in 2014 than in 2012 and 2013 (Table 1). It has touched the various factors that have helped the continuation of relative stability in the exchange market to Mirza (2014). But since the early 2015 interacted multiple factors led to the widening of the gap, perhaps the most important:
• political intervention in the exchange market, through Article legislation 50 in the budget 2015 law
• lack of confidence by the end of unforeseen military operations.
• the continued uncertainty of the political process.
• a significant reduction in oil revenues and the accompanying expected continued decline in foreign currency reserves.
• lack of full demand for the dollar at the official exchange satisfying.
Prior to summarize the outcome of the impact of these factors, the first note that the gap rate between the official exchange rate and the market price in January 2015 ( 4.7%) was less than the rate of the years 2012 to 2014 (5.1%).
However, it seems that the Article 50 legislation launched a wave of expectations that interacted with other factors gradually lead to increased precautionary demand and / or speculative on the dollar, which continued even after it has been of "blind eye" on the application of this Article after three weeks on the ratification, within the budget law. [1] Even if this ceiling did not impose the uncertainty of the course of military operations and other factors would have led to a desire to possess additional amounts of the dollar (and foreign currency Other general and perhaps also gold) as a hedge against uncertainty.
At this time interrelated factors play a key role in restricting available from the dollar and yields are lower export of oil and the low level of foreign currency reserves. We have reviewed and, in Mirza (2015), Tombstone, low foreign exchange reserves and the balance of the government in Iraq's development fund. The revenues from oil export revenues this hand has dropped by almost half during the January-second / April 2015 ($ 15.9 billion) compared to their standard language that during the same period of 2014 ($ 30.2 billion). This despite the fact that the export rate increased by 13% between the two periods (from 2:48 pm-bpd during January second-April 2014 to 2.80 m-bpd during the corresponding period in 2015) (Table 1) and the website of the Ministry mail petroleum.
nor I doubt that the decline in oil revenues and the desire to maintain an appropriate level of foreign exchange reserves were the main factors that prompted the central bank to restrict sales of the dollar and then its failure to satisfy the demand. Although a blind eye to the application of Article 50, this sales rate fell during the period January-second mid-May 2015 to almost two-thirds of its level (126 m D-AZ) compared with what reached during the same period in 2014 (187 m D-AZ) . [2] No, but it is within the central bank sales of the dollar, cash sales, which are most representative of the request for precautionary and speculative, fell by 62% between the two periods compared with the decline in remittances by 22%, as can be calculated from the table (1).
We have The net result of these factors interaction (on both sides of supply and demand) widening the gap between the official exchange rate and the market price of 4.7% in January to 6.3% in February and to 9.2% in March and then to 11.7% in the first half of May 2015 (Table 1) .
Third: the multiplicity of exchange rates
despite the breadth of the progressive during the period 2009-2014, has remained the gap between the official exchange rate and the market price within the limits under which the foreign exchange market can be considered in the case of relative balance in Iraq during that period. But this gap expanded and additional factors that have occurred since the beginning of 2015, as noted above. Although the gap is still moderate, it can be considered with the foreign exchange market in Iraq, as now on the threshold of diversity (ie on the cusp of dislocations in the balance) or they under the shadow of the multiplicity of "moderate" (ie imbalance Average) exchange rates. It can at the present time the diagnosis rates the following exchange:
(1) the official exchange rate or exchange a "window" of the Central Bank or what the price was, and remains, called the auction exchange rate; 1,166 dinars to the dollar. [3] It uses this price in official transfers related the public budget. Knowing that these are not official transfers through a window or central bank auction, but directly through the state accounts with the Central Bank or the development of Iraq Fund. So that the window or the central bank auction dedicated primarily if not exclusively for sales to the dollar / private household sector.
(2) the official exchange rate to the actual window / auction of central bank rate. And equal to the actual price: Window price / auction plus bank charges (21 dinars for transfers and 24 dinars for cash, per dollar), that is equal to 1,187 dinars to the dollar remittances and 1190 dinars to the dollar cash sales.
(3) the market exchange rate. This is the price that is determined by the market (companies / money exchange shops, banks, etc.) based on the interaction of supply and demand. It is in fact connected to market / remaining official market (any window / Auction Central Bank). It narrows and expands depending on the adequacy or inadequacy of central bank sales (commercial banks) to satisfy the demand of domestic sector / private on the dollar, on the one hand, and the commitment of these banks to their customers the actual transfer at the official rate, on the other hand. In the first half of May, as referred to, the market price rate was 1,302 dinars to the dollar.
(4) exchange rate conversions "alternative". In late March 2015 the imposition of the central bank on banks insurance are met, refundable, of its customers importers when the conversion of the dinar to the dollar, and totaling 8% of the amount of transfers. [4] The Central Bank imposed the collection of this insurance as a watchdog to monitor and ensure the actual check import . In the case of failure to do import will not relive insurance. Thus, the exchange rate, for the importer who does not follow the import process, equal to 1,282 dinars to the dollar, ie: [1.08 × (1,166 + 21)]. This adds another possible price at the exchange rate set forth above, we launched the name "exchange rate conversions alternative." And the more likely the emergence of this price at widening the gap between the official exchange rate and the market price (and probably contributes to the expansion of his appearance itself gap). For example, the arrival of the market exchange rate in the first half of May to 1,302 dinars to the dollar to make it beyond the 1,282 dinars. It is clear that "imported" who does not want to import will not deter him pay insurance as long as he can get for the dollar total price of 1,282 dinars, officially and which is cheaper than the market price (1,302 dinars to the dollar). This addition of the great importance for easy conversion to the outside, through the banking system, and lower risks compared to resort to the market. It can be concluded, which are also offered to expand the gap between the official exchange rate and the price the market will diminish and with most likely negate the effectiveness as a regulatory insurance are met.
I've dealt with in my article, mentioned above, (Mirza .2015), to the consequences of multiple exchange rates and the resulting the separation of markets and arent balance and low economic efficiency. It is enough to add, in this area, the expansion of the gap between these prices increases the impact of those consequences, which took manifestations clear now.
Fourth, the general price level
in spite of mounting and the continuation of armed operations during 2014 and 2015, the increase in the index of consumer price rate was very low in 2014 (2.3%). But not the same that the consumer price rate fell during the first two months of 2015 (inflation minus!). After that data is not available from the Central Bureau of Statistics. Although difficult to predict such trends in the conditions experienced by Iraq, but he could come back as we have in Merza (2014) to ensure the continuation of commodity supply of imports to areas outside the military operations and find alternative outlets for points of border controlled by armed groups. In addition, it is after June 2014 does not include the index of consumer prices in Iraq price indices in the insurgency areas Kninoy, Salahuddin, Anbar and Kirkuk. In 2015 it seems that despite the decline in central bank sales of the dollar in 2014, the central bank policy, in addition to skipping the ceiling to Article 50, focused on the distinction between the reduction in transfers and cash. As noted above was lower cash ratio is much larger than the percentage decline in remittances in central bank sales. As a result, despite the decline in transfers to the increase of total sales rose from about 74% in January-May, the first half of 2014 to more than 85% during the same period in 2015. In the light of that transfers exclusively aimed at financing the private sector imports may have contributed to the continuation of own without serious negative impact imports. This is assuming that the audit documents in imports led to reduce phantom imports that showed evidence of repeated numerous documents and documents previously (with a note that we noted above as a means to decrease the effectiveness of supervisory insurance are met to ensure the import check).
[You must be registered and logged in to see this link.]
26/5/2015
Group: Iraq
I. INTRODUCTION
rate rose the gap between the official exchange rate and the market exchange rate in the first half of May 2015 to about 12% after it was less than 5% in January. So what to pay for such a widening in the gap? To explore in this paper the most important actors factors that influenced the external exchange market since the adoption of the budget 2015 law, which is defined in Article 50 from the roof of the sales of the Central Bank of the dollar family / private sector.
But it is appropriate, before that, quote what was stated in an article to me publishing On February 1 (Mirza 0.2015) from within the expected consequences for the application of Article 50: "The capping the sales dollar in the auction currency (US $ 75 million a day, ...) with the central bank's commitment to this ceiling, called signal most of the traders in the market to Sevsrha that fiscal and monetary policies is committed to seriously to maintain a stable level of prices and ensuring a stable level of the dinar exchange rate to the dollar. and will impact negatively on their expectations and pushes them to resort to hedge by increasing demand for the dollar by more than needs justified by the level of income and production (demand normal). This leads, among other results, to speculation and destabilize the balance in the exchange market .... "
Second, the most important factors involved in the exchange market since the beginning of 2015
in spite of the escalation of military operations in 2014, especially since June, the exchange market in general kept on balance. And that can be extrapolated from the lack of a widening gap between the official exchange rate and the market price in 2014 than in 2012 and 2013 (Table 1). It has touched the various factors that have helped the continuation of relative stability in the exchange market to Mirza (2014). But since the early 2015 interacted multiple factors led to the widening of the gap, perhaps the most important:
• political intervention in the exchange market, through Article legislation 50 in the budget 2015 law
• lack of confidence by the end of unforeseen military operations.
• the continued uncertainty of the political process.
• a significant reduction in oil revenues and the accompanying expected continued decline in foreign currency reserves.
• lack of full demand for the dollar at the official exchange satisfying.
Prior to summarize the outcome of the impact of these factors, the first note that the gap rate between the official exchange rate and the market price in January 2015 ( 4.7%) was less than the rate of the years 2012 to 2014 (5.1%).
However, it seems that the Article 50 legislation launched a wave of expectations that interacted with other factors gradually lead to increased precautionary demand and / or speculative on the dollar, which continued even after it has been of "blind eye" on the application of this Article after three weeks on the ratification, within the budget law. [1] Even if this ceiling did not impose the uncertainty of the course of military operations and other factors would have led to a desire to possess additional amounts of the dollar (and foreign currency Other general and perhaps also gold) as a hedge against uncertainty.
At this time interrelated factors play a key role in restricting available from the dollar and yields are lower export of oil and the low level of foreign currency reserves. We have reviewed and, in Mirza (2015), Tombstone, low foreign exchange reserves and the balance of the government in Iraq's development fund. The revenues from oil export revenues this hand has dropped by almost half during the January-second / April 2015 ($ 15.9 billion) compared to their standard language that during the same period of 2014 ($ 30.2 billion). This despite the fact that the export rate increased by 13% between the two periods (from 2:48 pm-bpd during January second-April 2014 to 2.80 m-bpd during the corresponding period in 2015) (Table 1) and the website of the Ministry mail petroleum.
nor I doubt that the decline in oil revenues and the desire to maintain an appropriate level of foreign exchange reserves were the main factors that prompted the central bank to restrict sales of the dollar and then its failure to satisfy the demand. Although a blind eye to the application of Article 50, this sales rate fell during the period January-second mid-May 2015 to almost two-thirds of its level (126 m D-AZ) compared with what reached during the same period in 2014 (187 m D-AZ) . [2] No, but it is within the central bank sales of the dollar, cash sales, which are most representative of the request for precautionary and speculative, fell by 62% between the two periods compared with the decline in remittances by 22%, as can be calculated from the table (1).
We have The net result of these factors interaction (on both sides of supply and demand) widening the gap between the official exchange rate and the market price of 4.7% in January to 6.3% in February and to 9.2% in March and then to 11.7% in the first half of May 2015 (Table 1) .
Third: the multiplicity of exchange rates
despite the breadth of the progressive during the period 2009-2014, has remained the gap between the official exchange rate and the market price within the limits under which the foreign exchange market can be considered in the case of relative balance in Iraq during that period. But this gap expanded and additional factors that have occurred since the beginning of 2015, as noted above. Although the gap is still moderate, it can be considered with the foreign exchange market in Iraq, as now on the threshold of diversity (ie on the cusp of dislocations in the balance) or they under the shadow of the multiplicity of "moderate" (ie imbalance Average) exchange rates. It can at the present time the diagnosis rates the following exchange:
(1) the official exchange rate or exchange a "window" of the Central Bank or what the price was, and remains, called the auction exchange rate; 1,166 dinars to the dollar. [3] It uses this price in official transfers related the public budget. Knowing that these are not official transfers through a window or central bank auction, but directly through the state accounts with the Central Bank or the development of Iraq Fund. So that the window or the central bank auction dedicated primarily if not exclusively for sales to the dollar / private household sector.
(2) the official exchange rate to the actual window / auction of central bank rate. And equal to the actual price: Window price / auction plus bank charges (21 dinars for transfers and 24 dinars for cash, per dollar), that is equal to 1,187 dinars to the dollar remittances and 1190 dinars to the dollar cash sales.
(3) the market exchange rate. This is the price that is determined by the market (companies / money exchange shops, banks, etc.) based on the interaction of supply and demand. It is in fact connected to market / remaining official market (any window / Auction Central Bank). It narrows and expands depending on the adequacy or inadequacy of central bank sales (commercial banks) to satisfy the demand of domestic sector / private on the dollar, on the one hand, and the commitment of these banks to their customers the actual transfer at the official rate, on the other hand. In the first half of May, as referred to, the market price rate was 1,302 dinars to the dollar.
(4) exchange rate conversions "alternative". In late March 2015 the imposition of the central bank on banks insurance are met, refundable, of its customers importers when the conversion of the dinar to the dollar, and totaling 8% of the amount of transfers. [4] The Central Bank imposed the collection of this insurance as a watchdog to monitor and ensure the actual check import . In the case of failure to do import will not relive insurance. Thus, the exchange rate, for the importer who does not follow the import process, equal to 1,282 dinars to the dollar, ie: [1.08 × (1,166 + 21)]. This adds another possible price at the exchange rate set forth above, we launched the name "exchange rate conversions alternative." And the more likely the emergence of this price at widening the gap between the official exchange rate and the market price (and probably contributes to the expansion of his appearance itself gap). For example, the arrival of the market exchange rate in the first half of May to 1,302 dinars to the dollar to make it beyond the 1,282 dinars. It is clear that "imported" who does not want to import will not deter him pay insurance as long as he can get for the dollar total price of 1,282 dinars, officially and which is cheaper than the market price (1,302 dinars to the dollar). This addition of the great importance for easy conversion to the outside, through the banking system, and lower risks compared to resort to the market. It can be concluded, which are also offered to expand the gap between the official exchange rate and the price the market will diminish and with most likely negate the effectiveness as a regulatory insurance are met.
I've dealt with in my article, mentioned above, (Mirza .2015), to the consequences of multiple exchange rates and the resulting the separation of markets and arent balance and low economic efficiency. It is enough to add, in this area, the expansion of the gap between these prices increases the impact of those consequences, which took manifestations clear now.
Fourth, the general price level
in spite of mounting and the continuation of armed operations during 2014 and 2015, the increase in the index of consumer price rate was very low in 2014 (2.3%). But not the same that the consumer price rate fell during the first two months of 2015 (inflation minus!). After that data is not available from the Central Bureau of Statistics. Although difficult to predict such trends in the conditions experienced by Iraq, but he could come back as we have in Merza (2014) to ensure the continuation of commodity supply of imports to areas outside the military operations and find alternative outlets for points of border controlled by armed groups. In addition, it is after June 2014 does not include the index of consumer prices in Iraq price indices in the insurgency areas Kninoy, Salahuddin, Anbar and Kirkuk. In 2015 it seems that despite the decline in central bank sales of the dollar in 2014, the central bank policy, in addition to skipping the ceiling to Article 50, focused on the distinction between the reduction in transfers and cash. As noted above was lower cash ratio is much larger than the percentage decline in remittances in central bank sales. As a result, despite the decline in transfers to the increase of total sales rose from about 74% in January-May, the first half of 2014 to more than 85% during the same period in 2015. In the light of that transfers exclusively aimed at financing the private sector imports may have contributed to the continuation of own without serious negative impact imports. This is assuming that the audit documents in imports led to reduce phantom imports that showed evidence of repeated numerous documents and documents previously (with a note that we noted above as a means to decrease the effectiveness of supervisory insurance are met to ensure the import check).
[You must be registered and logged in to see this link.]
