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After changing the exchange rate, the inflation rate rose by 3.3%
13:30 - 24/01/2021 The information / Baghdad ..
The Central Bureau of Statistics of the Ministry of Planning released its qualitative report for the Consumer Price Index for the month of December of 2020, which is the first report issued by the agency after changing the exchange rate.
The official spokesman for the Ministry of Planning, Abdul Zahra Al-Hindawi, said in a statement that the information received, a copy of it, that “the report showed an increase in inflation indicators for the month of last December by (3.3%), compared to the previous month, while the annual inflation rate increased compared to December 2019 by (3.2%) affected by the change in the dollar exchange rate.
Al-Hindawi added, "The prices of the tobacco section increased by (10.1%) due to the increase in the prices of imported cigarettes, and the health department also recorded an increase in its prices, which reached (8.8%), and the prices of the entertainment section increased by (7.5%) due to the high prices of reception equipment and pictures. Such as televisions, cameras and computers. The transportation department also registered an increase by (7.2%), due to the high prices of cars, especially private cars, as well as the increase in the prices of bicycles and the prices of spare parts such as tires and batteries.
He explained, "The prices of the goods and services section increased by (4.9%), as a result of the rise in gold prices throughout IraqThe prices of the household equipments, equipments and maintenance section also recorded an increase by (3.7%) due to the increase in the prices of the household appliances and the furniture group, while the prices of the housing section increased by (3.2%), as a result of the increase in the prices of the water and electricity supply group, and the increase was concentrated in The generators ’subscription fees, while the rate of increase in the prices of the call section was (3%) due to the increase in the prices of mobile phones, and the Food and Non-Alcoholic Beverages Department recorded a slight increase of (0.5%), due to the increase in the prices of the batches of bread, grains, meat, fish, milk, cheese, eggs, and oils Sugar, non-alcoholic beverages.
Al-Hindawi pointed out to "the increase in the base inflation rate during the month of last December by (4%), compared to the previous month of November, while the annual base inflation rate recorded an increase of 4.2% compared to the same month of 2019." End / 25
Reducing inflation corrects economic plans
November 12, 2019
Inflation is defined as a continuous rise in the general level of prices. The rise is always associated with a continuous decline in the value of money.
Inflation rates are governed by a range of factors, including the country's monetary policy, the size of GDP, the balance of trade with other countries, the country's self-sufficiency rates of industrial and agricultural goods and products, and population growth rates.
Inflation comes from the large and persistent demand for goods and products and the lack of supply, because of the imbalance between supply and demand in favor of demand, leading to a cumulative rise in prices of goods, products and services and a successive decline in purchasing power For money.
Inflation is also an economic phenomenon to which the various countries of the world are subjected to their different capitalist or targeted economy.
Inflation causes negative economic and social impacts on members of society of varying intensity, which requires work to reduce these negative effects, both economic and social.
Inflation in development has a negative impact, particularly on government economic policies and plans due to price differentials between the estimates made in the economic plans for their implementation and the changing reality due to higher prices resulting from inflation.
Therefore, it is necessary to work by the competent authorities in Iraq to reduce the high inflation rates and work to control, and always be within the reasonable and economically acceptable and not be very negative effects in order to reduce its economic and social consequences, because of the other negative effects of inflation Increasing the financial gap between the wealthy and low-income people in favor of the first category due to the erosion of the savings of these individuals due to the price increases to them, which means increasing the impoverishment of the poor and increasing the wealth of the wealthy and causing an increase in the class gap between the layers of society, leading To increase disadvantage among many groups in the society.
Controlling inflation is very important in order to continue working to achieve economic development and the well-being of the members of society resulting from the stability of prices and enable the majority of citizens to buy goods and services at prices Acceptable. Inflation rates can be reduced by reforming fiscal and monetary policies and using financial and monetary instruments in a correct manner, thereby reducing inflation rates and achieving control over these rates and keeping them within the economically permissible limits.
Therefore, it is necessary to develop plans to get rid of this economic problem of social dimensions in Iraq and not to make it have significant negative effects, and does not allow them to influence the policies of economic reform and economic development negatively, and can benefit from the results of scientific economic research in the development of these plans and divided The experience of other countries that succeeded in getting rid of the problem of inflation, taking into account the special economic conditions and capabilities of Iraq, can be used to achieve success in efforts to get rid of inflation. Form Inflation.
interesting article about inflation in Egypt. Iraq needs to take notice before RVing.
This is What Happens to Inflation when a Currency Gets Unpegged from the Dollar
by Wolf Richter • Feb 13, 2017 • 49 Comments
The “supply shock” in Egypt
On November 3, the Egyptian Central Bank removed all exchange-rate restrictions and raised its benchmark rate by three percentage points. This was done to obtain that all-important $12-billion bailout loan the IMF had provisionally agreed to provide in August, though by November 3, the IMF’s executive committee still hadn’t ratified it.
In the unofficial market, the pound had already collapsed against the dollar. With the peg gone, the official exchange rate instantly plunged from 9 pounds to the dollar to over 15 pounds to the dollar, and four days later it was at 18 pounds.
On November 11, the IMF stopped dragging its feet and ratified the $12-billion loan.
At today’s rate of 17 pounds to the dollar, the currency has lost 48% of its value since November 3. This chart, showing the value of each pound in US cents, depicts that plunge in its horrific brutality:
But Egypt imports about $60 billion per year in fuel, raw materials, and finished goods. And for Egyptians who have to pay for them in pounds, there are some bitter consequences.
The latest announcement of those bitter consequences was the inflation rate for January: Overall consumer price inflation soared by 28% year-over-year and core inflation soared by 31%. This chart (via Trading Economics) of core inflation shows that everything from rents to computers was a big driver in a horrendous increase in the cost of living:
This soaring inflation was due to “supply shocks,” Egyptian Finance Minister Amr El-Garhy told Bloomberg TV. It was not demand driven. It was “expected,” he said, given the devaluation. And it’s going to get worse: “We knew that this is still peaking when it comes to inflation, we expect this to happen.”
Eventually, the impact of that supply shock may fade from the year-over-year statistics, and inflation might settle down, under ideal conditions, but the currency got crushed, and will remain crushed.
But El-Garhy said the rise in Egyptian stocks was an “encouraging sign, and a strong vote of confidence in the economic reform program.” He also credited the $12-billion bailout loan from the IMF that Egyptians have to service with their devalued currency.
With inflation changing so rapidly, no one knows what inflation amounts to on a daily basis. Everything denominated in pounds is losing value at a rapid rate that no one knows exactly. Inflation reporting happens after the fact, and may be unreliable. But the value that the pound loses today is what matters in order the gauge stock and bond prices today. And everyone is in the dark. The stock market denominated in Egyptian pounds has gained about 50% since the devaluation. That looks good on paper. And El-Garhy touted that. In reality, it just reflects the destruction of the currency.
And foreign investors that are chasing yield wherever they can find it jumped on Egyptian debt. Last Thursday, they bought 98.5% of the 6.6 billion pounds ($372 million) in six-month Egyptian Treasury bills that the government issued and 97.5% of 6.6 billion in one-year bills, according to the Finance Ministry, cited by Bloomberg. And these foreign yield chasers are doing what they’re doing everywhere: driving down the yield.
But these bonds are denominated in Egyptian pounds, and no one knows what inflation will do to the currency over the next 12 months.
Being long oil is a very “crowded trade,” but who’s on the other side of that trade, and what do they know that speculators don’t? Read… Why a NYMEX Veteran is Getting Nervous about Oil
hello again my friends. its your bud here with another worth of a take on what i see happening within the borders called iraq. and it is really good news from my vantage point! the topic of this opinion piece is the '6 major factors that influence an exchange rate'. i will cover each factor briefly in reference to iraq and hope to derive whether or not those invested are either in a good or bad position.
as many know, the importance of an exchange rate revolves around one country's trading relationships with other nations. trade relationships is the sole purpose of an exchange rate. where there is no international trade, an exchange rate tied to a currency has no domestic significance. with this in mind lets peer into the 6 factors of exchange rate influence between iraq and its trading partners.
1) Inflation - iraq has done a fantastic job steering its inflation rate. the latest report (aug 2015) has inflation at 2.2%. some economists would mark this as the ideal inflation rate. this places iraq is a great position with trading partners for determining a strong exchange rate to the iqd.
2) Interest Rates - iraq has maintained a steady interest rate of 6% over the last 5 years. compared to other nations, it is a phenomenal rate. the importance here is the attractiveness it has to foreign investors. should iraq sure up the security situation with daesh and clean up political corruption, foreign investors might feel confident enough to pour funds into iraq at these rates.
3) Current-Account - iraq has done quite well between trading partners and has held a positive current account balance (exports vs imports) over the previous 9 years except for 2010. oil is its primary export and it has been strong enough a commodity to keep iraq experiencing gains in its current accounts. as iraq build its non-oil sector through the plan for increased industry and agriculture, exports should increase and it will be reflected in the current account.
4) Public Debt - this is where the hidden gem is revealed and the reason for the title of my opinion piece. everything in the papers speak to iraq's "deficit financing". however for some reason it appears to be seen in a negative light. my opinion is much different. not all debt is good but in this instant i definitely believe it is. when most developing nations look to expand its economic markets as iraq is doing, there will be an inevitable deficit to fiscal policy (the budget). in the short term, this is a very very good thing! where most under developed nations utilize deficit financing for payment of domestic and foreign loans, this does not hold true for iraq. iraq is using this tool as developed nations would, for capital formation for economic growth and boosting the private sector. this type of debt is the best stimulate for the economy in the short term. (here is a good slide-show presentation explaining deficit financing.)
5) Terms of Trade - balance of trade for iraq is simply outstanding and last reported at approximately $40B usd ($44B previous year). compared to turkey (-$6B usd), japan (-$268B yen), germany $24B eur. i would say that iraq comparatively has a case for a strong dinar. its current accounts and balance of trades are unbeatable (maybe a little exaggeration there).
6) Political Stability & Economic Performance - well, you can't shine everywhere . unfortunately this important piece is dragging iraq down.....and i mean wayyyyyyyy down. nobody in their right mind want to stick hundreds of millions in an environment like this. this area alone is holding iraq back the most. all things considered, if this one area is corrected there is no reason why foreign investment wont flood the country and the domestic currency surge in demand.
there you have it gang. hopefully this piece wasn't too long. this should give us all a solid overview of the factors that influence the dinars TRUE exchange rate the most. from it we should be able to make a sound judgement on where the currency is headed and whether or not we want to remain involved.
Testing the Rocker Badge!
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