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View Full Version : 'Our aim is to establish a forward market in Iraqi dinars in the near future,' say fi



Busyman
03-13-2010, 06:46 PM
Source: BI-ME with Reuters , Author: BI-ME staff
Posted: Fri March 12, 2010 1:59 pm

IRAQ. Iraq plans to establish an interbank foreign exchange market and dinar forward market and to step up its treasury bill activity in 2010 to help plug continuing budget deficits and foster treasury and foreign exchange markets, the Central Bank and Finance Ministry said in a submission (http://www.imf.org/External/NP/LOI/2010/irq/020810.pdf) to the IMF.
Iraq aims to develop foreign exchange markets outside the framework of dollar auctions currently conducted by the Central Bank, a letter of intent submitted to the IMF for a US$3.6 billion standby arrangement said.
Iraq said it would not return to a budget surplus until 2012.
"As our financing needs in 2010 will still be substantial, we will step up our efforts to mobilize domestic financing through the Treasury bill market," Iraq's Central Bank head and finance minister wrote.
"To that end, we will conduct regular auctions, and refrain from cancellations, while allowing interest rates to be determined by the market. This will have additional benefits by determining a benchmark interest rate, while the development of a secondary market for treasury bills will allow banks to improve their liquidity management."
"They are going to shift to building a local market, they have ample cash, loan-deposit ratios are very low and they will benefit from oil,"Turker Hamzaoglu, emerging market economist at BoA-Merrill Lynch, told Reuters.
"They have to develop a domestic bond market but it's still baby steps, it's still too early, it's not even a frontier market," he said, adding that Gulf Arab and Lebanese investors could be interested in Iraqi domestic paper.
Central Bank Governor Sinan al-Shibibi and Finance Minister Bayan Jabor said in the letter to the IMF that the country planned to introduce a sales tax, as a precursor to a Value Added Tax, "in the coming years".
Iraq's gross domestic product expanded by 4% in 2009 compared with almost 10% the year before, their submission reported. GDP growth would rise to almost 7% this year and 7.5%-8% in 2011 and 2012, they said.
That improvement would be rooted in an increase in Iraqi oil output to 3.1 million barrels per day by 2012, from around 2.5 million bpd now, and exports of 2.5 million bpd, compared to just over 2 million bpd now.
That outlook might be conservative following the signing of 10 multibillion-dollar deals with global oil firms to develop Iraq's vast reserves. If all the deals work out, Iraqi oil capacity could soar to 12 million bpd in six to seven years.
"The CBI will continue to be independent in the pursuit of its policy objectives. The CBIs monetary and exchange rate policies will continue to be aimed at keeping inflation under control and safeguarding international reserves," the submission said
The banking sector is in urgent need of reform to foster financial intermediation and enable banks to contribute to the development of a strong private sector. With the help of the World Bank and other international agencies, Iraq has developed a banking sector reform strategy, it added.
"Iraq is committed to strengthening the management of international reserves by moving ahead with the implementation of new reserves management guidelines that were adopted in early August 2008. Iraq will follow the guidelines to diversify currency composition and establish appropriate duration and credit risk, build capacity for risk analysis, and work towards establishing a dealing room".
The IMF submission said Iraq's Central Bank planned to create a foreign exchange market outside the framework of regular dollar auctions now conducted by the bank. The bank uses the auctions to set the exchange rate, which has been held at 1,170 dinars per dollar for many months.
"To improve the functioning of foreign exchange auctions, we plan to develop organized exchange markets outside the central bank, including an interbank foreign exchange market," it said.
"Our aim is to establish a forward market in Iraqi dinars in the near future."

http://www.bi-me.com/main.php?id=45051&t=1&c=17&cg=4&mset=1011

alk4316
03-13-2010, 07:27 PM
The forward exchange market is a market for contracts that ensure the future delivery of a foreign currency at a specified exchange rate. can you say RRRRRVVVVV

Perez
03-27-2011, 10:56 PM
Even though this post by Busyman is 2010 data, it is from the imf's IRAQ: MEMORANDUM OF ECONOMIC AND FINANCIAL POLICIES FOR 2010–11. Way to go Busyman, here is the exact wording on two excerpts from the imf:

To improve the functioning of foreign exchange auctions, we plan to develop
organized exchange markets outside the central bank, including an interbank foreign
exchange market. Our aim is to establish a forward market in Iraqi dinars in the near future.

and from a separate paragraph:
These mechanisms would enable a full review of the domestic oil sector
allowing the flows of oil and oil products to be fully reconciled with the financial flows
between the state-owned oil companies and the budget by mid-2011.

tudor
03-27-2011, 11:06 PM
Boy, does this sound good! thanks Busyman, great find.

One thing that bothers me is the date of the post March 12, 2010

Perez
03-27-2011, 11:17 PM
from a separate imf article dated a few days prior to Busyman's, and a few days after the original imf document:

Directors supported the central bank’s objective of aiming monetary and exchange rate policies at keeping core inflation in single digits. They called on the authorities to remove the remaining exchange restrictions under Fund jurisdiction.

Directors also encouraged the central bank to fully implement the recommendations of the previous safeguards assessment and looked forward to its update. The need to preserve central bank independence was particularly emphasized. Further steps are necessary to strengthen reserve management, banking supervision and prudential regulations, and the AML/CFT framework.

http://www.imf.org/external/np/sec/pn/2010/pn1034.htm

guardian
03-27-2011, 11:19 PM
Can't believe I missed this awesome article Busyman! Thanks! :D


As Perez pointed out some is from an IMF document.

Perez
03-27-2011, 11:45 PM
yes, Tudor, Busymans post addresses some of the Imf agreements and required actions for 2010-2011

Perez
03-28-2011, 12:17 AM
Thanks Guardian, for helping me cross reference the Imf data to Busyman's post!

SallyDS
03-28-2011, 05:54 AM
Thanks to all for the post and the comments!

guardian
03-28-2011, 07:52 AM
Boy, does this sound good! thanks Busyman, great find.

One thing that bothers me is the date of the post March 12, 2010


The date doesn't bother me at all. It was bumped to the top because it's related to Perez's info from the IMF found yesterday.

Perez
03-28-2011, 11:00 AM
Didn't bother me either, Guardian! Everything that was planned from that date forward, has been worked on, complied with or is continuing to be pursued toward compliance---exactly what they are supposed to do---- and we are beginning to see the results on a daily basis now. Very encouraging. :)

zepplin
03-28-2011, 10:13 PM
This was written back in March of 2010.You really need to read it real slow and try to look at the big picture..They have been auctioning their Dinars for a while and they cannot stop,due to the fact that it has become onother great commodity for them.Even though it's their currency.The IMF also gave them approval for the action,in order to usher in more usd into the country.Now they don't want to stop,because it's too profitable..This is called exchange markets outside the framework of dollar auctions.Also look at the high light investors,and go back a few spaces and read on.Gulf Arabs and Lebanese might be interested in Iraqi domestic paper.They are talking about their currency.what else is happening here?"Iraq is commited to strengthening the management of International reserves by moving ahead with the implementation of new reserves management guidelines that were adopted in early August 2008.Iraq will follow the guidelines to diversify currency composition"..INTERESTING..What am'i getting at?Well!There are now many other nations involved in the Dinars.alot of whom we may not even know.Interbanking is the question of the day..What if it's already been going on for a while..We would not know,except those that are in prestige positions.GOVERNMENT to GOVERNMENT transactions..from time to time someone would throw a bone,and rumors is created..just saying folks.read the whole thing and ponder it for a while..

guardian
03-28-2011, 11:52 PM
This is what caught my eye, "Our aim is to establish a forward market in Iraqi dinars in the near future,". That same line is in the Iraq: Letter of Intent, Memorandum of Economic and Financial Policies, and Technical Memorandum of Understanding, February 8, 2010, as the above article. That line seems very telling. The reason they got behind was no government and budget until recently. So "near future" had to of been moved up in my mind because of the those delays.


Now we have the new Iraq: Letter of Intent 2011 that just came out.

Perez
03-29-2011, 12:45 AM
Have read it [02.08.10 vs as mentioned directly below Busyman's post on page 1 of this thread] thoroughly, and am now reading the 03.03.11 vs... that stlou has just posted----all good for iraq and shows progress in accountability. if any one wants to compare and contrast to see progress for yourself...

http://www.imf.org/external/np/loi/2010/irq/020810.pdf

Perez
07-22-2011, 11:15 PM
This post by Busyman is worthy of looking at again with fresh eyes during 2011...

moonbeam
07-23-2011, 12:18 AM
WOW ! This plan from 3/'10 is right on track,perhaps these guys aren't as dumb as we thought..great find busyman

doolittle63
07-23-2011, 04:52 AM
this coming to an end now (((((((((( LETS AIM TO THE BANK ))))))))))