An invitation to re-examine the outside of government investment

1/2/2016 0:00
The impact of the Federal Reserve to raise interest rates on Iraq
BAGHDAD - Mostafa Hashemi

At a time when the country's need to maximize the show and diversification of financial resources, a banking consultant called for a review of foreign investment laws (the government) to Iraq whether this investment is directly or indirectly what would contribute to overcome the financial crisis.

In view of the current situation, such a type of investment in global markets is an important topic and serves the national economy, especially after the US Federal Reserve (the US central bank) to raise interest rates mid-last month.

According to economic experts, the local economic laws allow the entry of foreign investment into the country for the reconstruction of infrastructure, but they are asking at the same time allow those laws Iraqi funds direct investment in the countries and world markets.

In this regard, the banking advisor Dr. Essam Mohammed said: »if Iraq were investors in US Treasury bonds, is not different from many countries have done so may be reaped from behind that huge profits when the Federal Reserve to raise interest rates».

He called Mohammed in his speech for »morning» bodies legal competent to express an opinion on the subject of Iraqi investments abroad, whether direct or indirect, economic importance and the benefits that will enter the treasury Iraq due to that fact that the financial circumstances faced by the country require search for opportunities that that will maximize the diversity of Iraq and financial resources in order to overcome the crisis caused by falling oil prices.

He explained that this monetary entity (the US central bank) is the one who draws the monetary policy of the banking system the US, which puts the outline of her, and in front of banks Alamirkahhailh number should implement monetary policy determined by the Federal Reserve, which he said, adding it could get away with that policy if the large banks and a large and highly liquid, so it did not need to apply that policy.

And the most important and the most prominent of those policies said Mohammed: raising the interest rate the borrowing banks it -mn Ctaati- (in the case of re commercial paper pieces) for the purpose of reducing inflation, because raising interest rates may cause a rise in the cost of loans provided by banks to their customers reduces the demand for loans .

He Reserve banks may be required to directly raise the interest rate loans (especially short-term) and provided by banks to their customers, but highly liquid banks may not also care about that policy.

On the other hand Reserve may issue government bonds (which represents the government debt) with prices relatively high interest rates, this could lead to Iqbal banks and the public to buy these bonds because they will generate good income because of high Alvaidh.obin price it at the same time these bonds may lead high Alfoaidh to withdraw excess liquidity from the market decreases inflation too, as is the government bonds of the most important elements of the diversification of the portfolio of banks being 100 guaranteed Palmih.wachar he reversed all this what might result from lowering interest rates as the least turnout by spin liquidity on its way to bank lending, and this is happening in the case of the economic downturn, according to equations conducted by the Federal Reserve.

As the US economy is an open economy in the world - as the banking adviser - the higher interest rate on lending and on the dollar in global markets may lead to investment in the US economy and the dollar shrinking because of high Alklvh.kma to raise interest rates on US government bonds, the price could lead to increase investment in.

But on the other hand leads to low investment in a US investment areas Akhary.oother US Federal Reserve Board's decision to raise interest rates, positive investor sentiment in global markets pushed higher.

And decided the US Federal middle of last month raised its key interest rate by a quarter point (0.25 percent), ending several years of near-zero rates, the investors saw an indication of the confidence in the world's largest economy.

This comes at a first increase of its kind since 2006 as the Federal Reserve lifted its forecast for economic growth in 2016 from 2.3 percent to 2.4 percent. And interest rates remained in the United States at the level of the asymptotic from scratch since 2008.

The bank pointed out that the decision was due to increased household spending and business investment as well as the continuing decline in the rate of inflation.

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