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Central Bank: international banks considering the Iraqi market

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June 23 2010

BAGHDAD (Reuters ) - The central bank governor said on Wednesday that his country is in talks with six or seven foreign banks interested in entering the Iraqi market , despite insurgent attacks on financial institutions including the Central Bank.

The governor said Shabibi told Reuters that the current interest rate at six percent is suitable for the time being in line with core inflation , which stood at three percent in June.

He said in an interview conducted in English: ” Some foreign banks willing to join the local banks and we are negotiating with many of them actually … there were some applications submitted for permits to work. ”

“There are banks in the Gulf region and I think that there are two banks , three from Europe. I think that six or seven is the number of good banks to a large extent . ”

Said Walid Idi Acting Director-General to monitor the banking in the Central Bank of Iraq in a news conference later on Wednesday that the Iranian and Lebanese banks among banks that submitted requests .

Gunmen burst into the suicide bombers and the central bank earlier this month have killed 18 people and fought a gun battle lasted an hour and a half with the security forces. The attack targeted a suicide bomber on Sunday Trade Bank of Iraq .

Shabibi but played down fears that the fragile security situation delayed the formation of new government after the March election that could alienate foreign investors.

“Those goals were long term too. I do not think this will affect investment decisions. ”

The central bank cut its key interest rate by 100 basis points to six percent in April, in response to the decline in inflation.

Shabibi said “( interest rates) are well in line with inflation at the moment … I think that the level of inflation is fairly good .. actually we do not expect any changes in monetary policy in the months to the (next ).

The official interest rate in Iraq guided by the interest rates at banks rather than a mechanism of direct cash because the banking sector as small as capital markets are undeveloped .

Is dominated by the oil sector on the economy, the Iraqi official .

The governor said he did not expect the widening budget deficit in 2010 because oil prices – that was trading around 76 dollars per barrel on Wednesday – not far from the estimates in the budget , adding that the outlook for the Iraqi budget stable “almost “Thanks to high oil prices.

He said, ” but I think that there will be more demand for the development projects … because of some political turmoil and the elections , preventing the implementation of many of them.

“There may be a campaign for the implementation of projects .. and will put some pressure on the budget.”

The Iraqi Council of Ministers approved the budget for 2010 at 78.73 trillion Iraqi dinars. The budget assumed a price of crude at 62 dollars a barrel and predicted a deficit of 17.95 trillion dinars.

I somewhat highlighted the most important line in this article in my eyes.....guess we will just have to wait and see......this article has nothing really to do with the exchange rate so why would he just throw that little tidbit of info out there?? No reason to hide anything from what this article is talking about......

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No change is needed because the internal changes (unannounced) have already been made. IMO

Well you would think if that was the case that there would be no need to even mention such a thing....even if it was already changed internally or behind the scenes he is talking of the present policies on action now so it would mean that ok maybe its done "behind closed doors" but that it wont become active for months....

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