Iraqi Budget Tests Relationship between Sudani, Political Parties

Iraqi Prime Minister Mohammed Shia al-Sudani (Reuters)
Iraqi Prime Minister Mohammed Shia al-Sudani (Reuters)
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Iraqi Budget Tests Relationship between Sudani, Political Parties

Iraqi Prime Minister Mohammed Shia al-Sudani (Reuters)
Iraqi Prime Minister Mohammed Shia al-Sudani (Reuters)

Controversy over Iraq’s budget has resurfaced, but this time from a political aspect.

As the government of Mohammed Shia al-Sudani insists that no major changes should be made in the budget for the current year 2023, the political parties see the budget as a gateway to stand up to the government, especially following the premier’s recent announcement of a cabinet reshuffle.

The budget suffers from a large deficit, but the political blocs found in this an opportunity for more quarrels with the government. In addition, setting the price of oil at $70 per barrel is considered by the political and parliamentary blocs as a risk with unsafe consequences. If prices fall, the deficit will increase.

Nonetheless, the most important political aspect for the political forces, including Sudani’s partners, is setting a budget for a period of three years, which would give the government absolute powers in terms of financial spending, perhaps without returning to parliament.

Sudani, for his part, seems self-confident, but not very assured about his partners. In his last television interview, he spoke about restoring the Iraqi people’s trust in the political system.

In fact, the measures that the prime minister initiated at the level of services and economic reforms began to yield positive results, the most important of which is the US dollar price, which has started to decline against the Iraqi dinar.

In this context, Economist Bassem Antoine told Asharq Al-Awsat that the exchange rate of the US dollar against the Iraqi dinar “will return to the official rate set by the government after the approval of the financial budget.”

He added: “There are those who exploited the dollar file over the past months,” noting that the measures adopted by the government and the central contributed to stopping the rise of the dollar.



Japan's Nikkei Falls, Australia and New Zealand Dollars Tumble amid Israel's Strike on Iran

Arrangement of various world currencies including Chinese Yuan, Japanese Yen, US Dollar, Euro, British Pound, Swiss Franc and Russian Rouble pictured in Warsaw, January 26, 2011. REUTERS/Kacper Pempel
Arrangement of various world currencies including Chinese Yuan, Japanese Yen, US Dollar, Euro, British Pound, Swiss Franc and Russian Rouble pictured in Warsaw, January 26, 2011. REUTERS/Kacper Pempel
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Japan's Nikkei Falls, Australia and New Zealand Dollars Tumble amid Israel's Strike on Iran

Arrangement of various world currencies including Chinese Yuan, Japanese Yen, US Dollar, Euro, British Pound, Swiss Franc and Russian Rouble pictured in Warsaw, January 26, 2011. REUTERS/Kacper Pempel
Arrangement of various world currencies including Chinese Yuan, Japanese Yen, US Dollar, Euro, British Pound, Swiss Franc and Russian Rouble pictured in Warsaw, January 26, 2011. REUTERS/Kacper Pempel

The Australian and New Zealand dollars tumbled on Friday as Israel's strike on Iran hammered global stocks and drove investors into safe-haven assets, with domestic bond yields diving to over a month lows.

The commodity-sensitive currencies often track global risk sentiment and tend to take a hit when equity markets slide.

The Aussie plunged 0.9% to $0.6474, having risen 0.5% overnight to as high as $0.6534. It was already showing signs of fatigue as the currency has been unable to break a key resistance level of $0.6550 overnight even as the greenback slid due to another round of soft data.

For the week, it is down 0.3%.

The kiwi dollar dropped 1% to $0.6011. It gained gaining 0.7% overnight, hitting a high of $0.6071. Support comes in around $0.5990, while resistance is at the multi-month top of $0.6080. For the week, it is down 0.1%.

Israel said early on Friday that it struck Iran. Oil prices jumped over 6%, Wall Street futures dropped over 1%, while safe-haven currencies like the Japanese yen and Swiss franc rose.

Local bonds also rallied. Australia's ten-year government bond yields slid 11 basis points to 4.133%, the lowest since May 1, while New Zealand's ten-year government bond yields dived 8 bps to a six-week low of 4.529%.

Sean Callow, a senior analyst at ITC Markets, said the trend for the Aussie is still up given the pressure on the US dollar from a sluggish US economy and investor unease over the U. policy outlook.

"Investors are likely to expect that Israel's strikes will be contained to a relatively short period, not something that will dictate market direction multi-week," he said.

Also, Japan's Nikkei share average fell on Friday, mirroring moves in US stock futures, oil and other stock markets on news that Israel had conducted a military strike on Iran.

As of 0106 GMT, the Nikkei was down 1.5% at 37,584.47.

The broader Topix fell 1.28% to 2,7473.9.

"The market was selling stocks on caution for geopolitical risks, but the news was not driving a fire sale because investors still wanted to monitor the development of the attacks," said Naoki Fujiwara, a senior fund manager at Shinkin Asset Management.

Chip-making equipment maker Tokyo Electron fell 5.5% to drag the Nikkei the most. Uniqlo-brand owner Fast Retailing lost 2.1%.

Exporters fell as the yen strengthened, with Toyota Motor and Nissan Motor falling 2.75% and 1.5%, respectively.

All but three of the Tokyo Stock Exchange's 33 industry sub-indexes fell.

Energy sectors rose as oil prices jumped, with oil explorers and refiners gaining 3.6% and 2.2%, respectively.

The utility sector rose 0.7%.