Thread: Archive Latest News - Dinar Think Tank - 27/08/08 - 15/01/09

Stable demand for the dollar on Wed

Demand for the dollar was stable in the Central Bank of Iraq's (CBI) auction on Wednesday, registering at $110.240 million compared to $112.309 million on Tuesday.

"The demand hit $15.740 million in cash and $94.500 million in foreign transfers outside the country, all covered by the bank at a stable exchange rate of 1,184 Iraqi dinars per dollar, one tick lower than yesterday," an official source from the bank told Aswat al-Iraq - Voices of Iraq - (VOI).

None of the 10 banks that participated in the auction offered to sell dollars.

The Iraqi Central Bank runs a daily auction from Sunday to Thursday.

Aswat Aliraq

International cooperation workshop in Baghdad next November

The general director of the Iraqi public fairs announced on Tuesday that a workshop for international cooperation and investment will be held at the Baghdad International Fair next November, noting that a total of 200 companies will take part in the event.

"Preparation are under way with government's support to set up the Iraq International Fair which will be held under the title "the international cooperation work shop for reconstruction and investment" between October 10-15," Sabti Gomaa told Aswat al-Iraq - Voices of Iraq (VOI).

"A total of 200 Arab and foreign companies will take part in the event," he also said.

"We have contacted all Arab and foreign embassies and other ministries to promote the fair," he added.

"The interior ministry will provide us with protection," the official said.
"The fair will offer great investment opportunities in Iraq and will contribute in reconstruction operations through contracting with big companies," Sabti Gomaa added.

Aswat Aliraq

The Central Bank Of Iraq Warning the Citizens to Deal with Informal Financial Companies

The official source at the Directorate General of the banking and credit control to the emergence of a number of fictitious companies engaged in operations of financial swindling and fraud in the provinces through the exploitation of money out of citizens for promises of the benefits outweigh the benefits of high banking system, and that leads to the theft of citizens money and money laundering.

An official source stated to the Information Office of the National Council of Ministers to "Elaf" today , asked the citizens not to deal with these private companies explaining that it was directed to the concerned authorities in the Interior Ministry to take necessary action against those companies and shut off from work and forwarded to the judiciary.

On the other hand, the Ministry of Planning and Development Cooperation announced on the suspension of future activities with the 31 Iraqi , Arab and foreign companies and not to deal with them for their violation of contractual obligations with Iraqi ministries and governmental departments.

A source in the ministry stated that the governmental contracts department of the ministry suspended works with 31 Iraqi , Arab and foreign companies for violation of contractual obligations with ministries and government departments to implement the projects allocated to them. He explained that those projects belong to the ministries of industry and minerals, Electricity , Youth and Sports, health, agriculture, communications, trade, oil and the Municipality of Baghdad. He stressed that he decided to suspend future activities to work with these companies and not to deal with them until these matters to be solved, according to the controls in place. He added that the suspension of work "included the Iraqi and Arab companies (UAE ,Kuwaiti , Egyptian ,Jordanian) and foreign German, Turkish , Italian , Indonesian , Iranian, French, Ukrainian , Russian , American and British.

On another front, the Director of Planning Service Center of the Ministry of Trade, indicated on more than 700 cases of false civil identity all over Iraq and the owners were seeking to register in the ration card. The Director General of Chamber, Riyadh Fakhir Al Hashemi stressed that the names of the identities owners were transmitted to the competent authorities to take legal action against them. It is noteworthy that the Ministry of Trade is carrying out currently a major campaign to combat financial and administrative corruption to prevent wastage of public money.

PUKmedia :: English - The Central Bank Of Iraq Warning the Citizens to Deal with Informal Financial Companies

Ibrahim: No Request to Establish Permanent American Bases in Kurdistan

Jaffar Ibrahim, the leadership in Kurdistan Democratic Party (KDP) denied any request by the Kurdish leadership to establish permanent American military bases in Kurdistan region.

“Iraq needs an international support. Signing the security agreement with U.S. is for Iraq’s interest to exclude it from the 7th Article of the U.N. and to protect its sovereignty”, Ibrahim said.

He added “the Kurdish leadership did not request to establish permanent military bases in Kurdistan region. All the news that concern this issue is untrue. Establishing any bases will be via talks between U.S. and Iraqi governments, U.S. embassy in Baghdad and the concerned authorities. These authorities will handle the technical issues like the place, scale and the role of these bases.”

“Kurdistan Alliance Bloc is a major part in the Iraqi government, and Kurdistan region’s security is part of Iraq. There are negotiations between Iraq and U.S. concerning the security pact, which will guarantee facing any internal or external threats according to its 1st article. The region’s provinces witness security stability, but help is needed to face any external threat. To ensure the consent of all the Parliamentarian blocs, Iraq needs more time to sign the security agreement with U.S.”, Ibrahim said.

PUKmedia :: English - Ibrahim: No Request to Establish Permanent American Bases in Kurdistan

Iraq: US Sought Troop Presence to 2015, Agreed 2011

The United States asked Iraq for permission to keep its troops there to 2015, but U.S. and Iraqi negotiators agreed to limit their authorization to 2011, Iraqi President Jalal Talabani said.

"It was a U.S. proposal for the date which is 2015, and an Iraqi one which is 2010, then we agreed to make it 2011. Iraq has the right, if necessary, to extend the presence of these troops," Talabani said in an interview with al-Hurra t.e.l.e.v.i.s.i.o.n, a transcript of which was posted on his party's website.

PUKmedia :: English - Iraq: US Sought Troop Presence to 2015, Agreed 2011

Turkey to Open Consulate in Basra

In a joint press conference with Basra governor, Turkish ambassador to Iraq Derya Kambai said “the Turkish government decided to open a consulate in Basra province to expand its diplomatic representation in Iraq, to further serve the bilateral relations between the two countries.”

“Our government pays more attention to southern Iraq. I think that opening this consulate will develop our relations, especially in economic terms, with Iraq’s southern provinces. Our government aims to send Turkish companies and to make investments, especially in Basra due to its economic and strategic position. We are planning to increase our aerial shipping and passengers transfer between Turkey and Basra”, said the Turkish ambassador who visits Basra for the first time.

On his part, Basra governor Mohammed Misbih al-Waeli said “we welcome the decision of opening a Turkish consulate in Basra. There are huge Turkish companies that intend to come to Basra to participate in the reconstruction process and modifying infrastructures. The consulate was to be opened at the beginning of this year, but it was postponed due to the security operation that was carried out in the province at March.”

The governor added “Basra will witness opening several Arab and European consulates next year. There are also several countries that intend to open their consulates in Basra like Russia, Czech and some Arab neighboring countries.”

PUKmedia :: English - Turkey to Open Consulate in Basra

Default Saudi revaluation -expected effects on its stock market
http://www.business24-7.ae/articles/...udibourse.aspx

This should settle the issue if stockholders feel affects of revaluation but also how revaluation affects other financial indicators. I saved my remarks for the end



“If there were a change in the currency, the impact on the stock market would be as follows: after an initial bounce, we think a revaluation would have a negative impact, as it makes investment in foreign markets relatively cheaper,” it said.

“Listed companies that import would benefit from a revaluation; those that have foreign earnings may lose out… as rising inflation is eroding consumers’ disposable incomes and generating uncertainty for local companies, it is likely that the Tadawul All-Share Index (TASI) would jump in the event of a revaluation.

“After this immediate euphoria has evaporated, there is likely to be an outflow of funds. This is because reducing the number of riyals necessary to buy a unit of foreign currency makes investment in foreign currency denominated assets more attractive,” it said.

The study about Saudi Arabia’s economy and possible currency revaluation said a 15 per cent appreciation of the riyal against the dollar would make the riyal price of shares listed on US markets 15 per cent cheaper.

Some foreign investors may also choose to exit the Saudi market after making a one-off exchange rate gain from the revaluation, the study added.

Jadwa ruled out an imminent revaluation of the riyal but said any appreciation in its value against the dollar in the future would benefit the firms and sectors that import from foreign markets as the revaluation would lower the cost of their imports.
It expected those importers to increase their profit margins although they will come under pressure to pass on the impact of a revaluation to final consumers.

“Retail and transport are the most import-dependant sectors on the Tadawul. Companies undergoing major expansion programmes where the necessary technology comes from abroad, but final product is sold domestically, should also benefit. These include telecoms and real estate.

“Performance of all companies with foreign earnings will worsen in the event of a revaluation, as these earnings will be worth less when converted into riyals and recorded in their financial statements,” the study said.

It said sectors focused on exporting, such as petrochemicals and some manufacturers from the investment, construction and agricultural sectors, would be most affected. In addition, travel agents and other companies reliant on foreign spending would be hit.

“A revaluation would lower the value of commercial bank foreign assets and raise the value of foreign liabilities in addition to lowering the value of returns on foreign investment when reported in riyals. Insurance firms would see a similar impact on their balance sheets, as would investment companies with large foreign holdings,” it said.

“The energy and utilities, cement and agricultural sectors would be little affected by any revaluation of the riyal as the bulk of their inputs (power, limestone, water and labour) are sourced from within the Kingdom and their output is consumed domestically.”

According to the report, foreign banks have largely increased their riyal-denominated deposits with Saudi banks in anticipation of a revaluation decision.

“But speculation of a revaluation, which heightened during 2007 and early 2008, has not prompted any measures by Saudi Arabia’s commercial banks to cut their foreign assets.”



The above tells us alot
1) Most importantly, Investors benefit from the revaluation exchange
2) Further appreciation greatly benefits importers
3) Companies with foreign earnings financials are negatively affected
- With the dinar not international, I expect this to be a very small number, if any, of listed companies.
Definately a benefit to RV before going intl.
4) runup then bounce back market growth. This would be expected.
*The bourse is still small enough that the gains from economic growth would still follow and the fall back.

5) Outflow of capital- expected but it will be interesting to see if the rumor of additional bump to investors to keep funds in market bears fruit

6)Signs Saudi moving foreign funds may indicate rv around corner to protect these foreign assets.
__________________
"currencies rarely trade on economics alone" Daniel Hanna -REGIONAL ECONOMIST FOR THE MIDDLE EAST
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Not being a doctor of any sorts, but is it not true that a deathly ill, or a just sick person, and of course a recoverying person react differently to the same medicine,even adversely to it in many cases?

Maceman

Which patient is iraq?

You know, I still think it is a wait and see as to how this plays out. Hope that these articles are put out deliberately to confuse, but accept that this may very well be the case.

I am more and more believing this is the case and if it is, it is still possible to make a profit (not as much obviously) by converting the dinar to the new dinar currency and holding because I'm sure the rate will increase over the next few years after zero's are removed. If this happens at all.

I haven't posted much this week because of the EID holiday, there is news out there but not important news, however, back to full steam next week.

Analysis: Stable Iraq could influence Mideast

As violence in Iraq recedes, neighboring states are pondering how to deal with an unwieldy country that could re-emerge as a key player along with Saudi Arabia and Iran in one of the world's most strategic regions.

The role of regional power broker may seem far-fetched for Iraq — a devastated land best known for car bombs, death squads and suicide attackers.

Still, countries of the Middle East cannot ignore the potential role of a resurgent Iraq, a nation of 28 million people, bordering Iran to the east, Syria and Jordan to the west and sitting on one of the world's major pools of oil.

For those reasons, the United States cannot afford to lose focus on Iraq, which will remain a strategic and important country even after the last of the 140,000 American soldiers have gone home.

Clearly Iraq is a long way from re-establishing itself as a major force in the region. In a first step, however, representatives of 35 international oil companies are to meet this month with Iraq's oil minister in London to discuss improving Iraqi gas and oil fields. Fellow Arab countries are talking about upgrading their relations with Iraq.

Iraq is likely to play a significant role in America's Middle East policy for decades — even as the Pentagon scales down military operations here and ramps them up in Afghanistan.

The Middle East has long confounded forecasters, and the rosy predictions from the Bush administration that Iraq would emerge as a beacon of Western-style democracy in the Arab world have been long discredited.

However unlikely it may seem today, a relatively stable Iraq would have all the cards necessary to emerge as a major player in the Persian Gulf, where Saudi Arabia and Iran are competing for leadership.

Those three countries account for most of the population and most of the oil in the Gulf, which has about 60 percent of the world's proven reserves.

How the three deal with one another will shape the Middle East for decades.

Iraq's vast oil reserves alone should guarantee the country a major regional role.

Current estimates put Iraq's proven oil reserves at 115 billion barrels. But many experts believe that figure could rise by another 70 billion to 80 billion barrels once better security allows for renewed exploration.
If those estimates prove accurate, Iraq would have the world's second-largest proven oil reserves behind Saudi Arabia and ahead of Iran.

As Iran and Saudi Arabia compete for influence in the region, each has a strong interest in using Iraq as leverage against the other.

Neither Iran nor Saudi Arabia can afford to have Iraq throw itself solidly behind the other. Each wants a stable Iraq — but not one strong enough to threaten its neighbors as when Saddam Hussein invaded Kuwait in 1990.

In competing for influence in Iraq, Iran would seem to have the advantage. Most of Iran's nearly 70 million people are Shiites, the Muslim sect that includes about 60 percent of Iraq's population.

Iran offered asylum to thousands of Iraqi Shiites who fled Saddam's Sunni-dominated regime. Many of them returned home to assume positions of power after the U.S.-led invasion of 2003.

Iran has also cultivated close ties with the Kurds, who along with the Shiites have dominated political life in Iraq since the fall of Saddam.

Despite those advantages, Iran faces major obstacles in building influence in a country with bitter memories of the eight-year Iran-Iraq war of the 1980s and a legacy of centuries of rivalry between Arabs and Persian Iran.

U.S. and Iraqi officials remain convinced Iran is financing and training Shiite extremists, although Tehran denies the allegation. Many Iraqis — both Shiites and Sunnis — view their Iranian neighbor with deep suspicion.

At the same time, Iran sees Washington's ties to Prime Minister Nouri al-Maliki and others in the Shiite religious parties as a potential threat.
Other Arab countries fear that Iraq will fall under Iranian domination once the Americans have gone.

Arab pessimists see a dark vision of a Middle East with Iranian clients ruling Iraq, Iranian-backed Hezbollah as the dominant political force in Lebanon and Tehran's Hamas clients running the Palestinian entity.

Nowhere are those fears stronger than in Saudi Arabia, whose geriatric leadership has faced problems in responding to the political changes in Iraq, its northern neighbor.

The Saudis and other Sunni-dominated Arab governments maintain close ties to the United States. But their natural allies in Iraq — minority Sunnis — were fighting the Americans for most of the U.S. occupation.

Other Arab governments found it difficult to support the Shiite leadership in Baghdad while Iraqi Sunnis and Shiites were slaughtering each other in the streets.

Sectarian fighting has eased, and thousands of Sunni insurgents turned against al-Qaida and joined forces with the Americans.

Still, Arab governments have been slow to develop full diplomatic relations with Iraq, despite intense American pressure. Iraqis face enormous problems in seeking refuge elsewhere in the Arab world.

Many Iraqis resent the Arab attitude and fear that shunning them only enhances the influence of Iran, which embraced the new Iraqi government.

All these uncertainties will probably encourage Washington to pay close attention to Iraq for years.

"All Americans should be and are proud of the achievements in Iraq and the American role in bringing about the change," U.S. Ambassador Ryan Crocker said recently.

Losing interest in Iraq, he warned, risks paying "a major long-term price."

Robert H. Reid is the AP's Baghdad bureau chief and has covered Iraq since before the U.S.-led invasion.

The Associated Press: Analysis: Stable Iraq could influence Mideast