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By John Lee.

The Central Bank of Iraq (CBI) has reported that 22 banks and 2 remittance companies took part in its currency auction on Monday.

A total of $290,914,740 was sold  at a price of 1166 Iraqi Dinars (IQD) per dollar.

(Source: Central Bank of Iraq)

By Mark DeWeaver.

This has been quite a year for the Iraqi dinar. From a level of IQD 1,217: USD 1 at the end of 2014, the market rate for the currency weakened steadily during the first quarter, penetrated a key support level at 1,290 in late April, and reached a low of 1,379 on June 16. By that point the dinar had lost 11.7% year-to-date and appeared to be in free fall.

Last week, however, the exchange rate rebounded sharply. As of June 25, it was back at 1,258, bringing the year-to-date loss to just 3.3%. (See chart. Exchange rates are from the CBI and Rabee Securities.)

Like the currency’s last big moves in 2013 and 2014, this year’s action seems to have been driven primarily by changes in the rules for the central bank’s dollar auctions, where qualifying buyers (e.g. importers making wire transfers to vendors) can buy the dollar for IQD 1,166. (This rate has been unchanged since the beginning of 2014.)

The last two times, the rule change involved new measures to combat money laundering. This time the trouble resulted from an attempt to collect income and customs taxes directly from outgoing remittances, combined with a reduction in the daily supply of dollars auctioned (an apparent attempt to conserve the CBI’s dwindling forex reserves).

Collecting taxes directly from importers’ payments to their suppliers sounds like a good idea in theory. Rather than trying to collect these amounts at border crossings, where there will be many ways for importers to avoid paying, why not simply add an extra charge—8% of the total—to their wire transfers and have their banks remit this to the government?

If importers were going to be stuck with this 8% charge regardless of how it was collected, it would have no effect on the exchange rate at all. Apparently many of them aren’t used to paying anything, which meant they were facing a de facto 8% deprecation in the auction rate—from 1,166 to 1,259.

Had the market rate remained at the year-end 2014 4.4% premium to the auction rate, it would have peaked at 1,314. But the central bank’s decision to limit the supply of dollars available to auction participants put the currency under even greater pressure. The resulting dollar shortage ended up pushing the dinar to its lowest level since 2006.

In the end, the government was forced to give up on the scheme to collect taxes on remittances. On June 18 the CBI announced that it was cancelling the 8% charge, at which point the dinar appreciated rapidly, regaining the 1,250 level by June 21.

Since 2011 there have been four major peaks in the IQD/USD exchange rate. The last three times, the dinar eventually returned to IQD 1,200: USD 1. This time the outcome is less certain. The 8% charge may have been cancelled but the CBI’s forex reserves are still falling. As of April 23 (the last reported date) they had dropped to USD 68 billion, down from USD 83 billion at the end of April, 2014, mainly as a result of lower oil prices and increased imports of military hardware. Until this trend reverses, the currency will continue to be weak.

The dinar’s wild ride may not be over yet.

By John Lee.

The Central Bank of Iraq (CBI) has reported that 22 banks and 2 remittance companies took part in its currency auction on Thursday.

A total of $203,545,125 was sold  at a price of 1166 Iraqi Dinars (IQD) per dollar.

(Source: Central Bank of Iraq)

By John Lee.

The Central Bank of Iraq (CBI) has reported that 22 banks and 4 remittance companies took part in its currency auction on Wednesday.

A total of $257,651,600 was sold  at a price of 1166 Iraqi Dinars (IQD) per dollar.

(Source: Central Bank of Iraq)

By John Lee.

The Central Bank of Iraq (CBI) has reported that 24 banks and 4 remittance companies took part in its currency auction on Tuesday.

A total of $234,961,582 was sold  at a price of 1166 Iraqi Dinars (IQD) per dollar.

(Source: Central Bank of Iraq)

Advertising Feature

Rabee Securities Iraq Stock Exchange (ISX) market report (week ending: 11th June 2015).

Please click here to download a table of listed companies and their associated ticker codes.

The RSISX index ended the week at ID1,366 (+0.6%) / $1,319 (-0.5%) (weekly change) (-1.9% and -11.0% YTD change, respectively). The number of week traded shares was 19.1bn and the weekly trading volume was IQD16.0bn ($11.9mn).

ISX Company Announcements

• According to ISX letter to ISC no. (1125) dated on 11/6/2015 about completing Al Khatem Telecom (TZNI)’s requirements of listing and start trading, following are the details: 1) Al Khatem Telecom (TZNI) started their advertisement campaign on May 18, 2015. It was revised according to ISX request to advertise specifically about Al Khatem Telecom (TZNI) activities and not Zain Iraq. The new campaign started on May 25, 2015 according to ISX advice to attract investors and they are still advertising. 2) According to Article 3c of the listing procedures approved by the ISC of Al Khatem Telecom Company (TZNI), the first trading session will be on Jun 23, 2015 (1 month after the advertising campaign). 3) The shareholders book submitted to IDC on Jun. 9, 2015. It is reviewed and approved by the IDC and depositing the shares started from Jun. 10, 2015. 4) Atheer National Company (the seller) shares deposited through Rabee Securities on Jun. 11, 2015.
• According to ISX announcement no. (1130) dated on 11/6/2015, Al Khatem Telecom (TZNI) will start trading on Tuesday, Jun. 23, 2015 after completing all the requirements and depositing shareholders book in the IDC. Please consider the following procedures: 1) Atheer National Company (Shareholder of Al Khatem Telecom (TZNI)) will offer 25% of the capital of Al Khatem Telecom (TZNI) (457,445,663,350) shares. The seller is not allowed to buy any shares of Al Khatem Telecom (TZNI) until they finish the above shares. 2) The selling procedures will be through Rabee Securities. 3) The share will trade at free price at the first trading session. The closing price of the first trading session will be the average price of this session. 4) The percentage of change after the first trading session will be +/- 10% of the first trading session closing. 5) The seller will continue offering until they fill the number of shares above. Al-Mansour Pharmaceuticals Ind. (IMAP) will resume trading on Jun. 14, 2015 after they approved 2014 annual financial results and distributing 4.6% cash dividend (IQD0.046 cash dividend per share). The opening price will be IQD0.68 per share with +/-10% limit for the first session.
• CBI has decided on its session no. 1525 held on May 18-19, 2015 to reduce the time period of deposing the amounts of Iraqi Dinar to implement the foreign transfers to be 10 days instead of 15 days.
• Iraqi Agricultural Products (AIRP) will hold its AGM* on Jun. 21, 2015 to discuss 2014 annual financial results and distributing IQD180mn cash dividend (corresponding to IQD0.5 cash dividend per share). ISX will suspend trading of AIRP starting on Jun. 14, 2015.
• Al-Mansour Pharmaceuticals Ind. (IMAP) will resume trading on Jun. 14, 2015 after they approved 2014 annual financial results and distributing 4.6% cash dividend (IQD0.046 cash dividend per share). The opening price will be IQD0.68 per share with +/-10% limit for the first session.
• A cross transaction occurred on 5.4bn Ashur Bank (BASH) shares on Jun. 11, 2015, corresponding to 2.2% of BASH capital. A cross transaction occurred on 6.3bn Iraqi Islamic Bank (BIIB) shares on Jun. 9, 2015, corresponding to 2.5% of BIIB capital.
• ISC has issued a letter no. (9/1117) on Jun. 9, 2015 to ISX about Dar Es Salaam Investment Bank (BDSI) situation. They noted that the adjusted price is 0.95 and the shares will not resume trading before capital increase until they get the approval of the registrar about the capital increase that was listed in the subject of the AGM as following: 1) Listing new shares for subscription with 45bn share. 2) Selling 50bn share for IQD1.100 for the new investors. 3) Distributing bonus shares to the shareholders with value IQD5bn.
• According to ISX letter no. (1100) on Jun. 8, 2015, sent to ISC about listing of Lo’Lo’ For Money Transfer, the company didn't complete the deposit procedures; therefore it has not listed yet. According to ISX letter no. (1101) on Jun. 8, 2015, sent to ISC about listing of Immortal River Corporation For Money Transfer (MTRV), the company didn't complete the deposit procedures; therefore it has not listed yet. According to ISX letter no. (1099) on Jun. 8, 2015, sent to ISC about listing of Ataa Al-Garri Company For Money Transfer (MTAG), the company didn't complete the deposit procedures; therefore it has not listed yet.
• According to central bank letter no. (9/2/8970) dated June 7, 2015, the bank is going to abolish the following banks from foreign currency auction due to not paying the taxes and custom ratios to the tax and custom directorates. CBI will freeze funding the overseas accounts of those banks until they pay them off. The following are those banks: Investment Bank of Iraq (BIBI), Gulf Commercial Bank (BGUC), Iraqi Middle East Bank (BIME), Union Bank (BUOI), Sumer Commercial Bank (BSUC), Bilad Islamic Bank, Lebanon France Bank, Byblos Bank, International Development Bank, Bank of Beirut and Arab Countries, Cihan Bank, France Bank, TBI, Al-Huda Bank.

By John Lee.

The Central Bank of Iraq (CBI) has reported that 16 banks and 4 remittance companies took part in its currency auction on Sunday.

A total of $112,250,000 was sold  at a price of 1166 Iraqi Dinars (IQD) per dollar.

(Source: Central Bank of Iraq)

By John Lee.

The Central Bank of Iraq (CBI) has reported that 20 banks and 4 remittance companies took part in its currency auction on Monday.

A total of $289,350,650 was sold  at a price of 1166 Iraqi Dinars (IQD) per dollar.

(Source: Central Bank of Iraq)

By John Lee.

The Central Bank of Iraq (CBI) has reported that 18 banks and 4 remittance companies took part in its currency auction on Tuesday.

A total of $232,814,397 was sold  at a price of 1166 Iraqi Dinars (IQD) per dollar.

(Source: Central Bank of Iraq)

By John Lee.

The Central Bank of Iraq (CBI) has reported that 21 banks and 1 remittance company took part in its currency auction on Monday.

A total of $172,610,000 was sold  at a price of 1166 Iraqi Dinars (IQD) per dollar.

(Source: Central Bank of Iraq)