The implications of low exchange rate of Iraqi dinar (beneficiaries and affected)

On: Saturday

21/04/2012 15:42

By: Ali Mahmoud gnathion NA

almowatennews.com





By: Ali Mahmoud gnathion NA has seen 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
and still Iraq's cross-border trade Cross Border Trade carried out by
his sons with the people of neighboring countries such as Iran, Syria
and Turkey. was and is the local currencies of dinars and Toman To
Pounds covering the part, "regardless" of the trade along with the
dollar.



what is happening now from the exchange of commercial active across the
border in ( Elimination of Kalar) and (Haj Omran) in Kurdistan, is a
vivid example of this trade. This resulted in the accumulation of
exchange reserves Iraqi significantly with the 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 get Prior to the
approval of the General Authority for taxes. causing it to flow
increasing the Iraqi currency against 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 the
local currency of 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 users Iraqi dinars that are available in abundance for
them. and 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 all the high price of the dollar and a fall in the rate of the
dinar at the border to respond levels of exchange rates in the inside of
what is going on border fell exchange rates from levels normal amount
of 1200 Danardolar to the exchange rate low, after the flow of large
quantities of the dinar, which was the two neighboring countries towards
the purchase of 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 of price in the market and
according to the "forces of supply and demand which is not a phenomenon
satisfactorily.



However, the magnitude of what would this phenomenon is that people
here in Iraq are still memories of what happened in the nineties Danarhm
stuck in their minds. People still feel the anguish of what happened in
the nineties. To lubricate their minds that this could be like Fastbd
their concern. Many of them seemed to move from the dinar to the dollar,
or that documents the rights of it.



It is bone of this phenomenon is also "is the sintering atmosphere
concerns the confrontation between America and Iran and may bring about
the repercussions in the Strait of Hormuz, where it passes from the bulk
of the exports of our oil and revenues of the dollar.



It is bone of this phenomenon also" that all this happened at a time
when popularity campaign led 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 pay money remittances (received by the
Iraqis from abroad) KD instead of "from the dollar and adding more
people's fears, but that the decision to the bank's recent deal with it
to give ( 10 thousands of dollars) for the traveler at (1148) has
increased the disorder rather than "that Ahdih was the bank disturbance
as one who carries 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 depreciated its currency rise in return, as 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
destination of the monetary policy of the country concerned order a
number of things including the promotion of exports of the country.



and ideals 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 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.



Something never before achieved in the market before, Vtboat place
Nissan, Hyundai Japanese (Zuta high exchange rate) and removed on
Tuesday for the sixth count, which was 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 unexpected, "he
protests to consumers from time to time in the streets of the capital,
Seoul says Avcthm that 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 .)



as shown in Figures graphs following the rise of the consumer price
index (figure on the left side) against falling index of purchasing
power 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 "Another is that the
state wishing to force the devaluation of its currency or more other
States to raise the value of the currency of that country.



Which she did America during the period of dispute Trade ( Trade
Friction) with Japan and Germany (day 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 dollar against the yen today in 2012 is the third of its 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 reduced China's exports to America.



America is pursuing this course Xlk protective of their products and
adjust the balance its trade balance with these countries compensated
for 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 that will come to America, if
carried out a reduction of "direct" its currency to the dollar (as Korea
did) but they do not want to inflame war reduction of currencies.



they do not do so for a number of considerations which is carrying the
banner of free trade and reduce restrictions customs. They do not want
to prohibit others from the policy and then comes the kind. when that
will apply the words of the poet: Do not end for creating and comes
Shame on you like it if I did a great paradox in Iraq: While the
devaluation 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" pressure) or in other words (Vuk
scratched bombed)) affected and the beneficiaries of the low exchange
rate of Iraqi dinar to drop 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. the owners of savings dinar: Having increased the confidence of
savers in dinars (over the years Aalakhirh) pushed the numbers that
trust "them to become great 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 will get the
dollars less than if they had Enshrined their money in dollars.





B Contractors Bmquaolat Ddinria prices: 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 price
of the new exchange in this loss for them. When receiving residue
benefits business plans after the delivery of work will receive JD
yielding a dollar less than that prevailed "when you get started to
work.



c - lessors of their property contracts and leases Ddinria: while purchases experiencing the usual daily 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 their prices of their products, making it vulnerable
to the low volume of sales and - pensioners.



h - the poor covered, programs of social welfare : they are implicitly (
Foگ Dred God hit me Bmegnh) as described by popular poet Mullah Abboud
Karkhi.



i - lenders JD: They would recover their loans dinar amounts of dollar
less than dollar amounts that were prevalent on lending. as - Borrowers
in dollars: where would repay their debts at maturity dollars of
purchasing power Ddinria less of its power in the history of lending,
Vdolar payment over a dollar lending.

for - Officials and employees wages Ddinria and Earners: They are
making the size of basket dollar 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 the people we
have in Iraq is for imported products. and you do not enter grocery
store or shopping center only to find at least 90 %, which on the
shelves of goods are imported goods.



These high prices when the devaluation of the Iraqi currency and the
high exchange rate against the dollar. that this damage will be greater
lot, "with the gradual withdrawal of the current state-of-the ration
card system.





Beneficiaries:



A - the owners of private banks and banking offices and companies money transfer :



They are buying the dollar from the central bank which is a right
limited to them at 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 is allocated to the offices banking $ 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 this
feature is limited to sale of the Central Bank to them without the rest
of the people.



B - the 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 workers in dollars of Iraq : they will receive the same
salary but with a purchasing power greater local and the number of JD's
largest in terms will increase the number of dinars compared to the
amount of dollars.



d - Borrowers dinar and their earnings and savings in dollars : they
would repay amounts of their debts and 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 and
leather products, innards and rural industries and the household of
carpets, rugs, and agricultural and industrial products, services and
export activities of the other ..



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. " the price "an export" of $ ( 2200) dollars per
tonne of wool Iraqi washed it was before the deterioration of the Iraqi
dinar exchange rate brings to the source of Iraq (2.64) million .



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 from the price diamonds last before deteriorating. to
date industry and their derivatives will benefit from the same
phenomenon (the phenomenon of higher price diamonds of Iraqi exports.)
as well as other export products.



Wim 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 slower in the vulnerability factors of demand and supply of prices
there is an interval or the so-called English Time lag between the two
variables.



Workers these industries and processors own inputs are between the
hammer of the stability of wages and the anvil of inflation caused by
the devaluation of the dinar.



On the other hand that the purchases of raw materials to the most
prominent two industries Tsidireeten two dates, wool, washed, two
purchases of seasonal, but one season and once per year. Valsof raw in
the spring (March / April), a (season cut wool)., dates of crude in the
fall (September / October) harvest dates.



This means that these two industries may Astraeta Mdkhlathma material
on the price of USD 1,200 dinars / dollars. They now Tstvidan after the
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 in Iraq is the reserves of savings
dollar.



In Industries Tigers Iraq (the largest surges in Iraq (mixed, special
government)) is the amount of cash reserves dollar about 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 significance of any damage or
beneficial economic in these export industries clear view of the links
economic background and the number of employees and costs of local
communities.



In general, the low value of the dinar is of damage to a comprehensive
audience of people in Iraq, including bump up the cost of imported goods
and value which constitute 90% of the purchases of people also came
before us pointed out earlier.



" notes that the low exchange rate of the dinar in the the case of Iraq
will work people "and hurt others. The rise continued 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
or durability of a national economy and income national or domestic
product it supports, 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 the barrel ink) - Ya Balash!!!.



Otherwise, the amount of cash in circulation in a country such as Japan
is more than the amount of currency Iraq (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 ethnic
devaluation current is a natural phenomenon and not satisfactory and
feasible to restore the balance.





SOURCE

My eyes glazed over...

They love to talk about the DINAR's value instead of doing something about it...

We're talking about Iraq- What do you expect? They couldn't tell the truth if it was spray painted on a brick wall-:evil:

Gotta love those translations though ... I'm wondering how do you Mjhezwa and industry, what exactly is a Tsidireeten, what happens when you diamond a price, and what sort of currency is Astro Dollars? They sound fun, maybe I'll buy some to hold, anyone know the exchange rate?