Forex Licenses in Iraq: Importance and Future Prospects

Economic

Summary:

As Iraq seeks to diversify its economy and modernize its financial sector, regulating and licensing Forex activities becomes increasingly important...

As Iraq seeks to diversify its economy and modernize its financial sector, regulating and licensing Forex activities becomes increasingly important. The Forex market offers substantial opportunities for investment and profit-making, which can help reduce reliance on oil, attract foreign investments, improve financial infrastructure, and create new job opportunities. Despite the potential benefits, challenges such as infrastructure development, international and local cooperation, and the role of the Ministry of Finance and the Central Bank of Iraq need to be addressed. This article reviews the significance of Forex licensing in Iraq, the potential benefits, challenges, and recommendations for the success of this initiative.

Potential Benefits for Iraq

Diversifying the Economy and Reducing Dependence on Oil

Iraq heavily relies on oil, which constitutes approximately 90% of its government revenue and 65% of its GDP. Fluctuations in oil prices have historically caused economic instability. By developing and regulating the Forex market, Iraq can create new and sustainable sources of income, helping to reduce dependency on oil and enhance economic stability. An open Forex market allows for greater economic diversification by facilitating various forms of trade and investment, which in turn makes the economy more resilient to oil price volatility.

Attracting Foreign Investments

A regulated Forex market can attract foreign investors looking for new investment opportunities. A flexible and open Forex market facilitates free currency exchange, making it easier for investors to move capital in and out of the country. This increased liquidity and ease of transactions boost investor confidence, encouraging them to enter the Iraqi market. As a result, this can lead to a significant influx of foreign currency, strengthening the national economy and improving foreign currency reserves.

Improving Financial Infrastructure

Regulating the Forex market necessitates developing advanced financial and technological infrastructure. Investments in financial technology, transparency, and efficient transaction systems enhance confidence in the financial system. Improving financial infrastructure not only supports the Forex market but also strengthens the entire financial sector, making it more resilient and capable of withstanding systemic risks. This integration is essential for a robust and adaptable financial system that can support economic growth and stability.

Job Creation

Developing the Forex market can lead to the creation of new job opportunities in various sectors such as financial technology, legal services, and financial compliance. A report by the World Bank suggests that well-regulated financial markets can lead to significant job creation. For Iraq, this could mean thousands of new jobs, contributing to reducing unemployment and improving the standard of living for citizens. These jobs range from IT and software development to financial analysis and regulatory compliance.

Challenges of Opening Up Forex Licenses

Creating a Regulated Forex Market

Establishing a regulated Forex market requires Iraq to learn from the experiences of other countries that have successfully implemented such markets. Cooperation with international bodies to adopt best regulatory and supervisory practices is crucial. For example, countries like South Korea and India have successfully regulated their Forex markets, providing valuable lessons on the importance of robust regulatory frameworks and international cooperation. This process requires time and effort to ensure the establishment of a robust and integrated regulatory environment.

Infrastructure Development

The Forex market demands advanced technological infrastructure to ensure quick and secure transactions. Iraq needs to invest in communication and information technologies, as well as develop financial systems that support this market. Developing this infrastructure will not only facilitate Forex trading but also enhance overall financial inclusion and digital transformation in the country, which are critical for long-term economic development.

Role of the Ministry of Finance and the Central Bank

The Ministry of Finance and the Central Bank play a critical role in developing financial policies that support the Forex market. These policies should include stimulating investment and providing a stable financial environment. Additionally, the Central Bank must ensure continuous oversight and compliance with international standards. Case studies from countries like Singapore and the United Arab Emirates highlight the importance of coordinated monetary and fiscal policies in managing the complexities of an open Forex market.

Education and Awareness

To ensure the success of the Forex market, awareness and training campaigns must be launched for Iraqi traders and investors on how to trade legally and safely. These campaigns should focus on educating investors about potential risks and how to avoid them, as well as providing ongoing technical support and training. Building a knowledgeable investor base is essential for the healthy development of the Forex market and to prevent common pitfalls associated with inexperienced trading.

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Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

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Alex

Economic

Commodity

The price of front-month wheat for September on Euronext remained unchanged at 215.00 Euros ($234.63) per metric ton.

The contract recovered from the four-month low on Tuesday of 211.50 euro, but was still facing technical resistance due to a chart gap that had been opened following a decline on Monday.

Euronext's deferred positions ended a little lower.

Chicago wheat eased after a bounce a day earlier petered out.

Egypt and Algeria, who have made large purchases of wheat this week, helped to support the market.

The west European wheat crop was to be left out.

One German trader commented: "It's encouraging that Algeria and Egypt, the two biggest importers in the world, bought together around 1.5 million tonnes of wheat this week through tenders. That is a large amount to be removed from market supply."

The low Black Sea prices dampened the optimism, particularly in Algeria's purchases, as the west EU appeared too expensive to win many sales.

Algeria bought between 700,000 and 750,000 tons Wednesday of wheat with an optional origin. Traders estimated that approximately 550,000 tons were sourced from Russia. 120,000 tons came from Ukraine, while the remainder was sourced from Bulgaria.

On Thursday, the price of Russian protein wheat 11.5% for August Black Sea shipment came to around $207 per ton FOB. The price of Ukrainian 11.5% was at around $215 per ton FOB. This was about $20 cheaper than west EU.

The price of Russian wheat with 12.5% protein was $217-218 per ton FOB. This is also $20 below the west EU prices.

France, which is the EU's largest wheat exporter was concerned about a lack of demand for exports, even though harvest supplies were expected to shrink.

Sebastien Poncelet, Argus analyst, said: "We will have to start exporting at some point."

The International Grains Council (IGC), on Thursday, increased its forecast for the 2024/25 global wheat crop. This underscores ample global supplies in the short-term.

The IGC revised its forecast for world corn production, but traders are concerned about weather-related losses in the Black Sea Region, which could impact the wheat market.

Poncelet stated that "the heatwave in the Black Sea area is destroying corn crops, and could be a game changer for the grain markets."

Source:Marine Link

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Cohen

Economic

Stocks

Japan's Nikkei share average ended marginally lower on Tuesday, extending its losing run to a fifth consecutive session, as caution over a strengthening yen overshadowed gains in chip stocks.

The Nikkei .N225 finished the day down 0.01% - less than 5 index points - at 39,594.39. It rose as much as 0.8% earlier in the session, but failed to reach the psychological 40,000 mark.

A stronger yen threatened to weigh on corporate bottom lines among the Nikkei's exporter-heavy constituents, just as the earnings season begins to gather pace this week.

The Japanese currency last traded at 156.20 per dollar JPY=EBS on Tuesday, after ending last week at 157.50.

The Nikkei sank to a three-week low of 39,519.39 on Monday, after reaching a record peak of 42,426.77 on July 11.

"The market was a little overextended, so some kind of temporary adjustment is to be expected," said Masayuki Kichikawa, chief Japan macro strategist at Mitsui Sumitomo DS Asset Management.

"There's been a very visible sectoral rotation since the middle of last week, and tech shares are in an adjustment phase while others are gaining momentum," he added.

"We think this adjustment will continue for some time, but we don't think there's a change in the trend higher."

Evincing this dynamic, the broader Topix index .TOPX rose 0.21%, with a subindex of value shares .TOPXV gaining 0.48% while growth shares .TOPXG added just 0.1%.

Chip sector stocks made up the Nikkei's top two points gainers, tracking a rally in U.S. peers overnight.

Chip-testing equipment maker and Nvidia supplier Advantest 6857.T advanced 2.87%, followed by a 1.32% rise in chip-making machinery giant Tokyo Electron 8035.T.

The best performer among the Tokyo Stock Exchange's 33 industry groups was shipping .ISHIP.T, which jumped 6.62%, far outpacing second-place banking's .IBNKS.T 1.59% advance.

Nippon Yusen 9101.T was the Nikkei's biggest percentage gainer, soaring 8.16% after raising its profit forecast. Peers Kawasaki Kisen Kaisha 9107.T and Mitsui O.S.K. Lines 9104.T rallied 6.44% and 5.27%, respectively.

Source:Reuters

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Warren Takunda

Economic

Broadening pay hikes among smaller firms is crucial, said Japan's top government spokesperson, Yoshimasa Hayashi, underscoring the administration's drive to achieve sustained wage gains.

Such gains have been a policy priority for Prime Minister Fumio Kishida's government, in its effort to prevent rising living costs from hurting consumption and derailing a fragile economic recovery.

Hayashi's remark came in a Reuters NEXT Newsmaker interview ahead of the Bank of Japan's policy meeting on July 30 and 31, when the board is likely to discuss whether conditions allow it to lift interest rates from current levels near zero.

It was crucial for Japan to achieve a "positive" cycle in which firms can pass on higher costs through price hikes, so that they can earn enough to keep raising pay, Hayashi added.

"We expect the Bank of Japan to decide specific monetary policy with an eye on what's happening in the economy, and through close dialogue with markets," Hayashi, who is the chief cabinet secretary, said on Friday.

"What's important is for a positive cycle to spread a bit more among smaller firms," he said, when asked about the expectations of some market players that the central bank could raise interest rates this month.

The government may compile a fresh fiscal stimulus package later this year to cushion the blow to households if inflation rises further, Hayashi added, with the size of spending to hinge on economic conditions in coming months.

In a shift away from a decade-long programme of radical stimulus, the Bank of Japan (BOJ) exited negative interest rates and bond yield control in March. Markets are warming to the idea of a rate hike at this month's policy meeting.

BOJ Governor Kazuo Ueda has signalled the bank's readiness to hike rates if there is sufficient evidence that wage hikes will broaden, and keep inflation durably around its 2% target.

While big firms have offered bumper pay hikes in annual wage negotiations this year, it is unclear whether their smaller counterparts can keep up.

Asked about recent yen declines and their impact on the economy, Hayashi said it was desirable for currency rates to move in a way that reflected fundamentals, but declined to comment on whether recent levels were out of line with them.

The yen has fallen more than 10% against the dollar this year to languish around 38-year lows, weighed down by the wide difference in interest rates between the U.S. and Japan.

Tokyo is suspected to have stepped into the market this month to prop up the yen, which has hovered around 157.50 to the dollar , after touching a six-week high of 155.375 last week in the wake of suspected intervention.

Hayashi said he saw no immediate need to revise a joint statement between the government and the BOJ in 2013 that commits the central bank to meeting its inflation target of 2% "at the earliest date possible".

The joint statement served as the backbone of former BOJ governor Haruhiko Kuroda's radical monetary stimulus and justification for keeping Japan's interest rates ultra-low.

Critics have said its focus on the need to beat deflation has become outdated at a time when Japan has faced inflation exceeding the BOJ's 2% price target for more than two years.

Source: Reuters

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Warren Takunda

Economic

Forex

Auckland Savings Bank (ASB) says it has again revised its expectations for an RBNZ cut, bringing forward the start date to October, with a swift follow-up cut in November.

This is the second revision to the bank's RBNZ rate cut call this July, reflecting a broader reappraisal of RBNZ expectations that has weighed on the NZD.

"NZD eases on lower NZ interest rate expectations," says Chris Tennent-Brown, Senior Economist at ASB. "Inflation pressures are falling fast enough that the RBNZ doesn’t need to wait for the release of the Q3 CPI data."

Last week, New Zealand reported that its headline inflation rate fell to 3.3% year-on-year in the second quarter from 4.0% in the first quarter. ASB notes that various measures of core inflation, "including in the RBNZ’s sectoral factor model, fell noticeably."

Foreign exchange markets are sensitive to shifting interest rate expectations. New Zealand has the highest base rate in the G10, but markets think it also has the greatest scope to cut.

The quantum of incoming cuts is being reassessed, and for the NZD, this is a headwind.

The New Zealand Dollar has already fallen 4.3% against the British Pound in July, putting it on course to register its largest monthly loss since September 2022. Against the Euro it is 3.72% lower and against the U.S. Dollar the monthly loss stands at 2.10%.

New Zealand Dollar Selling Off on Rising Rate Cut Odds and Concerns Over China_1

Above: Key NZD exchange rates in 2024.

The New Zealand Dollar started the new week with fresh losses as investors expressed disappointment that Chinese authorities did not announce any significant new steps to boost the economy, which is a key source of demand for Kiwi exports.

"Markets are underperforming on continued disappointment following the Third Plenum and also concern over the rationale for the PBOC’s surprise interest rate cut yesterday," says Jim Reid, an analyst at Deutsche Bank.

The plenum is a five-yearly top-level meeting which, on occasion, has delivered important signals of Beijing's grand economic strategy. The Third Plenum was seen to offer continuity and was therefore short on any major stimulus initiatives.

The PBoC, meanwhile, cut interest rates, but markets think the cut is a sign of weakness, as it suggests that Chinese authorities are worried about the economy.

The PBoC cut the 7-day reverse repo rate, together with the 1-year and 5-year loan prime rate.

"The move was somewhat of a dovish surprise to markets, given that most participants expected the PBOC to wait for better clarity from the Fed or the July Politburo meeting before cutting, and was also somewhat unusual given it was announced much earlier at 8AM," says Michael Wan, Senior Currency Analyst at MUFG Bank Ltd.

"The surprise rate cuts by the PBoC on Monday can be seen as a signal that Beijing is concerned about the economy and is actively trying to support growth and meet the 5% target for this year," says Tommy Wu, Senior Economist at Commerzbank.

Source: Poundsterlinglive

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Samantha Luan

Economic

Commodity

Among industrial metals, copper prices fell on Tuesday, extending steep losses in recent sessions amid growing economic uncertainty over top copper importer China.

Spot gold rose 0.1% to $2,398.38 an ounce, while gold futures rose 0.2% to $2,399.40 an ounce by 00:33 ET (04:33 GMT).

Gold tumbles from record highs; rate cuts, politics in focus

The yellow metal was nursing a sharp drop from record highs over the past week, as uncertainty over U.S. politics weighed.

Spot prices had surged to around $2,470 an ounce earlier in July, before pulling back sharply. Some resilience in the dollar, amid speculation over a Donald Trump presidency, also weighed on bullion prices.

Uncertainty over the U.S. presidential race rose this week after President Joe Biden withdrew his reelection bid, and instead endorsed Vice President Kamala Harris. Harris was seen gaining enough Democratic delegates to become the party’s presidential nominee, although she is yet to be formally nominated.

Still, Trump was seen polling ahead of Biden and Harris, according to CBS and HarrisX polling data from last week. But polls are yet to reflect the impact of Biden’s dropping out.

While this political uncertainty fueled some safe haven flows into gold, resilience in the dollar limited these flows.

Still, gold was sitting on strong gains this year, amid growing optimism that the Federal Reserve will begin cutting interest rates from September. The central bank is set to meet next week and is widely expected to keep rates steady then.

Other precious metals retreated on Tuesday. Platinum futures fell 0.1% to $959.65 an ounce, while silver futures fell 0.5% to $29.188 an ounce.

Copper nurses steep losses as China sentiment worsens

Among industrial metals, benchmark copper futures on the London Metal Exchange rose 0.2% to $9,234.50 a tonne, while one-month copper futures fell 0.3% to $4.1873 a pound.

Both contracts were at over 3-½ month lows as worsening sentiment towards top importer China sparked deep losses in the past week.

Data from China showed economic growth slowed in the second quarter, with an unexpected interest rate cut on Monday doing little to lift spirits.

The Chinese Communist Party’s Third Plenum yielded scant details from Beijing on plans for more economic support.

Concerns over stricter U.S. monetary policy, stemming from a potential Trump presidency, also kept traders wary of China-exposed assets.

Source:Investing

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Cohen

Cryptocurrency

Why Bitcoin Could Rise To As High As $90,000

RLinda mentioned in a post on TradingView that fundamental and technical preconditions support further price growth for Bitcoin, which could send its price to as high as $90,000. On the Fundamental side, she noted that the market is waiting for the Spot Ethereum ETFs launch, which would be “another positive lever for the cryptocurrency market.”

Furthermore, RLinda stated that Donald Trump, who already affirmed his support for cryptocurrencies, is increasing his chances of being reelected. According to her, the market will react positively if he eventually wins. The crypto analyst highlighted “other local nuances” that could propel Bitcoin to such heights.

She noted that other high-ranking US politicians are reconsidering their stance on Bitcoin, and the US Securities and Exchange Commission (SEC) is also “smoothly changing its position on cryptocurrencies.” This includes SEC Commissioner Hester Peirce’s recent statement that the Commission is open to reconsidering the inclusion of staking plans for the Spot Ethereum ETFs.

BTC From A Technical Perspective

On the technical side, RLinda revealed that a classic bullish flag pattern is forming on Bitcoin’s daily chart. She further remarked that at the moment, there is a “high probability” of Bitcoin retesting the strong resistance at $71,700 or even going higher to restest its current ATH of $73,794.

Will Bitcoin Reach A New All-Time High? Crypto Analyst Reveals Why $90,000 Is Possible_1

She added that only after Bitcoin retests these zones will it become possible for the flagship crypto to “follow the formation of prerequisites for the breakout of global resistance” at $73,800. RLinda mentioned that $67,250 and $71,750 are resistance levels that Bitcoin should look to break. Meanwhile, $63,800 and $59,300 are support levels that the flagship must remain above.

Furthermore, RLinda revealed that Bitcoin’s current price range is favorable for a resistance breakout, which she claimed will “open a new way to the nearest resistance.” In the short term, she expects Bitcoin to break out from the $67,250 resistance level and experience further growth to between $71,700 and $73,800.

With Bitcoin already retesting the $67,250 resistance level, RLinda provided an update on her trade idea. She highlighted a cup-and-handle pattern on Bitcoin’s weekly timeframe. The crypto analyst stated that this bullish pattern is in the last stage of “its formation before realization.” From the chart she shared, this cup-and-handle formation supports a potential price surge to $90,000 for Bitcoin.

At the time of writing, Bitcoin is trading at around $67,300, up almost 1% in the last 24 hours, according to data from CoinMarketCap.