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This is a few days old, but didn't see this posted.
The implications of low exchange rate of Iraqi dinar (beneficiaries and affected)
On: Saturday 21/04/2012 15:42
By: Ali Mahmoud gnathion NA
I saw the Iraqi dinar during the past few weeks, a decline in its value falling exchange rate of (
0.0008333) dollar / dinar in early December 2011 to (0.00077) dollars / JD in early April 2012. In other words, the number of dinars per dollar of (1200) JD / dollar in the free market to the (1300) JD / dollar during the period. The exchange rate that was in the seventies Sunni $ 3.20 / JD any more than the current price of more than four thousand times (almost "). (3.2 ÷ 0.00077 = 4155 times).
Reasons for the decline in the new Iraqi dinar exchange rate:
It was still Iraq's cross-border trade
Cross Border Trade carried out by the sons of his sons with the neighboring countries such as Iran, Syria and Turkey. Was and is the local currency of the Toman JD and SP cover part "regardless" of the trade along with the dollar. What is happening now active trade across the border in the (District of Kalar) and (Haj Omran) in Kurdistan, is a vivid example of this trade. This resulted in the accumulation of large reserves of cash to the Iraqi bankers and traders Iranians, Jordanians, Syrians, Turks and others. We have enhanced the acceptance of those of the Iraqi dinar their trust in him over the past five years, which did not happen to him before that over a quarter of a century ago. And increased the flow of the Iraqi dinar cross-border done by the Central Bank a few months ago (from step is calculated results) that allowed himself to be a tool and a policeman, "but the taxes to make the enforcement of documentary credits and remittances from importers of Iraqi persuasion" to obtain prior approval from the General Authority for taxes. Causing the flow of Iraqi currency, increasing towards the neighboring countries and increased in availability outside the border. The cross-border trade in local currencies is a booming trade between the countries of the world, and like her what had passed by the Convention between the Governments of Turkey and Iran from trade in local currency of the two countries, as well as Pim Malaysia and its neighbors using the local currency.
Eight to impose economic sanctions on Iran and Syria could reduce the dollar reserves of these countries walks dealers to get the dollar from the Iraqi market Iraqi dinars users have available in abundance. Thus, increased display of the dinar and exceeded his current stream pumped by the Iraqi Central Bank of dollars over the Mzhadath famous. One night, the dinar exchange rate in the course of fluid in the pots Almsttriqh dropped inside Iraq to equal the price at the border. With each rise in the dollar exchange rate and lower the price of the dinar at the border to respond levels of exchange rates in the inside of what is happening on the border exchange rate fell from normal adult levels
1200 Danardolar to the low exchange rate, after the flow of large quantities of the dinar, which was towards the two neighboring countries to buy the dollar.
It is worth mentioning that this phenomenon (the phenomenon of the present decline of the value of the dinar) is a natural phenomenon arising from the mechanism of adaptation price in the market and according to the "forces of supply and demand which is not a phenomenon satisfactorily. But what bone would this phenomenon is that people here in Iraq are still memories of what happened to Danarhm in the nineties are stuck in their minds. People still feel the anguish of what happened in the nineties. lubricate their minds that this could be like Fastbd their concern. seemed many of them moving from the dinar to the dollar, or that documents the rights of it. It is bone of this phenomenon is also "is sintering atmosphere concerns the confrontation between America and Iran and may bring about the repercussions in the Strait of Hormuz, where it passes the bulk of our oil exports and revenues of the dollar. It is bone of this phenomenon also "that all this happened in time vogue campaign led by the Central Bank to cancel the zeros of the Iraqi dinar (increased the panic and uncertainty in the future) at a time encouraged the bank to repay the amounts of money orders (received by the Iraqis from abroad) KD instead of" from the dollar This increased the fears of men, but that the bank's decision to deal with it the last grant (
10 thousand dollars) for the traveler at (1148) has increased the disorder rather than "that was Ahdih disturbance in the bank like a ladder" to transfer it, but the offer.
As much as it comes to prices of imported goods when the lower exchange rate of the local currency of a country, the price of imported goods in the country devalued its currency rise the other hand, it would require the buyer to pay a monetary units more local than was needed by a drop to get the same amount of purchases.
The depreciation of the currency of the country represented by lower exchange rate against foreign currencies may be a deliberate policy or monetary policy of the destination country on a number of things in order to encourage the country's exports. An example of this is done by the government of South Korea in
2011 of reducing the value of its currency, L. (Wen Won) benefiting export industries Korean, including the automotive, shipbuilding, electronics, and that was a factor "important" is to enable Hyundai Korean (for example ") that sell a million vehicles in the U.S. market in that year. Which is has not previously achieved in the market before, Vtboat place Nissan, Hyundai Japanese (Zuta exchange rate high) and removed on Tuesday for a count, which was the sixth for the first and fifth of a second in that market. but from the other side, the Korean government was surprised (as a result of this policy), including not not unexpected, "he protests to consumers from time to time in the streets of the capital, Seoul says that Avcthm on the right side of the picture the following (the government was sacrificing the interests of 99% of people in favor of one percent of them). The following two graphs shown in Figures rise of the consumer price index (figure on the left side) against falling purchasing power index of the real wage of the worker Korea in 2011, a period that low exchange rate of Korean currency (figure on the right side).
May take the devaluation of the currency of the country form the "last to force a state wishing to devalue its currency or more other States to raise the value of the currency of that country. Which is what I did during the American trade dispute (
Trade Friction) with Japan and Germany (days of the German mark) dropped the value of the dollar between 1985 and now to a third of what it was the exchange rate before, "of 220 yen to the dollar to 80 yen to the dollar rising value of the yen and the dollar fell. Value of the dollar against the yen today in 2012 is the third value it was in 1985, in the sense that he lost two thirds its value against the yen. today is pressing the U.S. to China in order to raise the latter the value of its currency, thereby increasing American exports to China and the decline in Chinese exports to America. America is pursuing this course Xlk protective of their products and adjust the balance its trade balance with these two the two countries offset the imposition of fees and restrictions Kmarkip protectionism against the exports of Japan and China it, and in turn encourage its exports to those countries. the same goal, which will come to America, if carried out a reduction of "direct" its currency to the dollar (as Korea did), but do not want to ignite the war to reduce currencies. It does not do so for a number of considerations which is carrying the banner of trade liberalization and reduction of customs restrictions. They do not want to prohibit others from the policy is and then come in kind. that will apply when the words of the poet:
Do not end for creating and comes like a shame if you did a great
The irony in Iraq:
While the depreciation of the dinar adds a burden "Klvuja" on consumer prices, the House wants to pass the customs tariff law adds to the burden of "Klfoah other people and generates (pressure" on the pressure), or in other words (Vuk scratched bombed))
Affected and the beneficiaries of the low exchange rate of Iraqi dinar
That the decline of the current exchange rate of the dinar against the dollar, resulting in benefit categories of people and the loss of other groups in Iraq, as follows:
Affected are:
A
Owners of dinar savings:
Having increased the confidence of savers in dinars (over the years Aalakhirh) prompted the confidence numbers "big them to turn in their savings to keep the bulk of their savings in dinars. Of these traders, industrialists and others. When they will need to convert their savings into dollars would receive dollars less than if Enshrined they had their money in dollars.
With
Contractors Bmquaolat prices Ddinria:
They receive dinars. But most or a lot "of their expenses and purchases of local or imported are in dollars usually. Including amounts purchases of imported materials of foreign origin, as is the case with building contractors, construction and what they're buying from construction materials and building construction are imported. When you have made their presentations they may Arise, the costs of business plans at the exchange rate prevailing before the devaluation of the dinar, and now they have to pay the new rate of exchange in this loss for them. When residues receive benefits after the delivery of work out business plans will receive JD yielding less than a dollar that prevailed "when you get started to work.
C - lessors of their property and rental contracts Ddinria:
While experiencing the normal daily purchases prices "Ddinria high.
D - Real Estate Tenants rents dollar but Doakhlhm Ddinria
: They should now that Astro dollars at a higher price than before.
E - Producers:
They will sell their products at prices Ddinria when they buy inputs in their production at a dollar.
But the choice in front of them to raise prices of their products, making it vulnerable to the low volume of sales
And - pensioners.
H - the poor covered, social welfare programs
: What they are implicitly (
Foگ Dred God hit me Bmegnh) as described by the popular poet Mullah Abboud Karkhi.
I - lenders Dinars:
They would recover their loans dinar dollar amounts less than the dollar amounts that were prevalent on lending.
K -
Borrowers in dollars:
Where would repay their debts at maturity dollars with less purchasing power Ddinria of its power in the history of lending, Vdolar payment over a dollar lending.
L - Officials and employees of wages and Ddinria Earners:
They are making a basket the size of dollar purchases less than what was achieved by the same amount of salary or wage when converted to the dollar (for the purpose of exchange in the domestic market).
It is known that about
90% of the value of purchases of our people in Iraq are imported products. And you do not enter the grocery store or shopping center only to find at least 90%, which on the shelves of goods are imported goods. These rising prices at the low value of the Iraqi currency and high exchange rate against the dollar. This damage will be greater that a lot, "with the gradual withdrawal of the current state of the ration card system.
Beneficiaries:
A - the owners of private banks and bureaux de change and money transfer companies
: They are buying the dollar from the central bank is limited to the right at their
1148 dinars to the dollar and they were selling the dollar to 1.200, but now they sell 1,300, fall in Iraqi dinar exchange rate here has increased the profit margins of these categories, note that the central bank devoted to banking offices $ 250 thousand dollars a week at the exchange rate in question is 1148, and states that limit the sale of the central bank to these groups without the citizens represents an alliance between money and politics in Iraq (Business-Politics Alliance) where he was able men of the categories mentioned, including their locations and access decision-makers on this feature is limited to sale of the Central Bank to them without the rest of the people.
B -
Owners of dollar savings:
They would be able to buy dinars more numerous "than they were offered the same amounts of their savings.
C
Staff and the measure in dollars the Iraqi
: They will receive the same salary but with a greater local purchasing power and the number of dinars, where the largest number of dinars will increase compared to the amount of dollars.
D -
Borrowers dinar and dollar earnings and savings
: They would repay their debts and amounts of benefits Bdnanar cheaper. "
E - Exporters:
That Iraq's industries and the activities of export other than oil (and oil to excludes in our research that there is no relation), in the forefront of dates and their derivatives, and wool, leather, Innards and products of rural industries and the household of carpets, rugs, and agricultural products, industrial and services and activities for export again .. For these industries and economic activities, links to background are thousands of workers in the processing of their inputs. Although the amount of the annual export is around 1% of the total exports of Iraq, but also important. "
That a price, "an export" of (
2200) dollars per ton of washed wool of Iraq was before the deterioration of the Iraqi dinar exchange rate brings the Iraqi source (2.64) million dinars. But the deterioration of the exchange rate to the (1300 dinars / dollars) became brings (2.88) million, an increase of (240) thousand dinars per ton price for diamonds by the previous decline. The dates and derivatives industry will benefit from the same phenomenon (the phenomenon of rising price of Iraqi exports diamonds). As well as other export products. Vim does not Mjhezwa these industries and activities to raise prices of their services or wages of their workers. So that the wage levels tend to be influenced by factors in the slower demand and supply of prices there is an interval or the so-called English Time lag between the two variables. Workers in this industry and the processors own inputs are between the hammer and the anvil of the stability of wage inflation caused by the devaluation of the dinar. On the other hand that the purchases of raw materials for the two industries most Tsidireeten two dates, washed wool, two seasonal purchases, and for one season and once per year. Valsof raw in the spring (March / April), a (season cut wool). Crude and dates in the fall (September / October) harvest dates. This means that these two industries may Astraeta Mdkhlathma material on the dollar exchange rate was 1,200 dinars / dollars. They are now Tstvidan after low exchange rate of the dinar. According to the information available that the bulk of the cash reserves for these two industries, as for other export industries and export of Iraq's reserves are dollar savings. In the Iraqi Industries tigers (the largest surges in Iraq (mixed, special government)) is the amount of cash reserves of dollar nearly two thirds of the market value of its shares. It is interesting to consider that the Ministry of Commerce has a (40%) of the capital of this company. The Ministry of Trade and the company would benefit from the new exchange rate.
As noted above, the importance of any damage or economic benefit in these export industries unclear
Given the links to the economic background and number of employees and local costs. In general, the low value of the dinar is a comprehensive damage to an audience of people in Iraq, including bump up the cost and value of imported goods which are
90% of purchases ahead of the people as pointed out earlier. "
Notes that the low exchange rate of the dinar in the case of Iraq, people will work "and hurt others.
The continued escalation of the terrible event in prices in the era of the eighties and nineties of the last century in Iraq was not because of the increased amount of the money supply itself. But for the fact that these increases were without balance true offset by the strength of a national economy and national income or GDP supported, as well as "what was from the constraints of trade and the transfer of external was the conduct of the State in the issuance of currency such as the behavior of dealer issued instruments" without balance meets their nominal value, and this reminds us of the Day asked the Minister of Military Industrialization (in the mid-years of nineties of the twentieth century) for the amount of the cost of the establishment of the bridge with a deck in Baghdad, the biggest and the greatest bridge was established in which, he said (it cost a load car Pickup of paper with barrels of ink) - Ya Balash!!!. Otherwise, the amount of cash in circulation in a country such as Japan is more than the amount of Iraqi currency (as the number of absolute) in circulation.
In the postwar period, the balance meets, but the source of the high prices of imported goods is the low value of Iraqi dinar for the reasons that we have mentioned previously, "in addition to the high costs. However, come back and say that the phenomenon of currency depreciation ethnic current is a natural phenomenon and is not satisfactory and feasible to restore balance.
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