Iraq Economic News and Points to Ponder Saturday Afternoon 10-7-23
Banning The Dollar In Iraq: Difficult Choices For The “Coordinating Committee”
Posted On2023-10-07 By Sotaliraq Political parties running dollar speculation and smuggling operations received a “major blow” after the Iraqi authorities banned foreign transfers in the American currency starting next January, while a government official confirmed to Asharq Al-Awsat that Washington wants to reduce the circulation of cash dollars “so that it does not leak into… Entities involved in suspicious acts, even months after the implementation of the US Federal Reserve’s restrictions.”
Companies and individuals in Iraq will have to make financial transfers in local dinars at the official exchange rate, but this process will require a long time before the Iraqi market reaches the adjustment stage, unless political forces benefiting from smuggling discover a new way to circumvent it, according to an Iraqi banking official.
According to press and financial sources, Washington rejected a request from Iraq to obtain one billion dollars in cash from the Federal Reserve Bank, against the backdrop of conflicts with efforts to curb Baghdad’s use of cash dollars and stop illicit flows to Iran.
Washington periodically and regularly sends shipments of dollars to Iraq via US army aircraft, but since the end of last year it has stipulated restrictions and mechanisms that allow it to track transactions in them electronically.
As a result, the Central Bank of Iraq was forced to reduce banking companies’ shares of the cash dollar by more than half, which will affect the exchange rate of the dinar against the dollar in the parallel market in the future, and will reduce Iraq’s imports from Iran by approximately half.
This outcome in particular has motivated political parties in the “Coordinating Framework” coalition to discuss “ideas on how to make a rapid change in the leadership of the Central Bank,” according to Iraqi representatives whom Asharq Al-Awsat spoke with. However, what stands as an obstacle to this decision is the political timing that It will arouse American suspicions.
The Central Bank of Iraq was supposed to succeed in restricting dollar sales through the official sales window, but political parties running banking and commercial interests found an outlet for dollar trading in a parallel market outside the control of the state, and from there smuggling operations abroad take place.
The parallel market is a group of financial exchange houses that do not sell the dollar at the official price set by the Central Bank of Iraq at about 1,331 per dollar. While the Iraqi government is trying to find out the financial sources of this market, the banking official confirmed that “the exchanges of this market have succeeded in hoarding the dollar.”
In this way, political parties were able to maintain their financial sources of hard currency through the parallel market, without stopping the smuggling operations, as the Iraqi banking official indicates that the American financial authorities are fully convinced that “the dollar being traded in the parallel market is a profitable source for illegal operations.” It is legitimate for politicians involved in smuggling.”
However, Iraqi financial experts and politicians believe that the Central Bank’s recent decision reflects evasion of confronting political parties that manipulate the dollar, as they should have pursued smuggling operations without interfering in the financial interests of citizens.
The head of the “Extended” parliamentary bloc said, in a statement, that “controlling the dollar begins from the borders and not from fighting exchange companies and confiscating citizens’ remittances and their deposits in banks,” calling on Prime Minister Muhammad Shiaa Al-Sudani to make urgent changes in the management of the Central Bank.
Al-Salami explained that “the government is watching the collapse of the dinar, the central bank’s inability to control the dollar exchange rate, and the banks forcing citizens to receive their deposits and transfers in Iraqi dinars.”
But the Assistant Director of Foreign Transfers at the Central Bank, Muhammad Yunus, confirmed in a previous televised statement that “the decision to prevent dealing in the dollar is not new, as the Prime Minister obligated at the beginning of this year all departments and the private and public sectors to deal in the Iraqi dinar, but there is an exception for companies and departments that have contracts.” In dollars, such as oil companies and others. LINK
A New Rise In Dollar Exchange Rates In Iraqi Markets
Economy 2023-10-07 | 1,428 views Alsumaria News – Economy Alsumaria News publishes the exchange rates of the dollar against the Iraqi dinar in Iraqi local markets for Saturday, October 7, 2023.
Dollar prices rose with the opening of the Al-Kifah and Al-Harithiya stock exchanges to record 157,500 dinars for 100 dollars, while selling prices in exchange shops in local markets in Baghdad also rose, as the selling price reached 158,500 Iraqi dinars, while purchasing prices reached 156,500 dinars for every 100 dollars.
For more than 8 months, and specifically since the Central Bank began operating the electronic platform and the international financial transfer system ““SWIFT,” the dollar exchange rates in Iraq have not witnessed stability despite the attempts of the government and the Central Bank to control the exchange rate in the parallel (black) markets.
The Central Bank of Iraq [/url] decided earlier to adjust the exchange rate of the dollar against the Iraqi dinar, as the price of buying the dollar from the Ministry of Finance reached 1,300 dinars per dollar and selling it at (1,310) dinars per dollar to banks through the electronic platform, and it is sold for (1,320) dinars per dollar. Dollars from banks and non-banking financial institutions to the final beneficiary. LINK
The Dollar Continues To Rise In Baghdad Markets And Money Exchangers
Economy | Baghdad today – Baghdad Dollar prices rose today, Saturday (October 7, 2023), in the markets and exchange offices of the capital, Baghdad, to record a record after a slight decline over the past weeks.
According to “Baghdad Today” monitoring, the selling prices on the Al-Kifah and Al-Harithiya stock exchanges recorded 158,500 Iraqi dinars for every 100 US dollars, while the prices last Thursday were 156,600 dinars for every 100 dollars.
While purchasing prices recorded 156,500 Iraqi dinars for every 100 US dollars in the Al-Kifah and Al-Harithiya stock exchanges, and the same in banking shops in the local markets in Baghdad.
Private banks are accused of taking over the largest part of the currency selling window, especially for the cash dollar, which has become extremely difficult for travelers to obtain, which forces them to buy the dollar from the parallel market, while the travelers’ share of the dollar in these banks goes for the purpose of speculation. Source: Baghdad Today LINK
Finance: Issuing Bonds Under The Name “Construction Bonds” And Making Them Available For Sale To Citizens
Al-Ghad Press/Baghdad The Ministry of Finance announced today, Friday, the issuance of bonds called “reconstruction bonds,” and made them available for sale to citizens, starting on October 10 and for a period of one month.
The Ministry stated in a statement, a copy of which was received by Al-Ghad Press, that “the Public Debt Department, in cooperation with the Central Bank of Iraq, has announced the availability of bonds for sale to citizens in the name of reconstruction bonds, for the period from October 10 to November 9, 2023.”
The statement added, “The first issuance of bonds worth one and a half trillion Iraqi dinars is tradable in the Iraq Stock Exchange.”
He explained, “The issuance will be available in two categories: the first at a price of 500,000 dinars with an annual interest of 6% for a period of two years, and the second at a price of 1,000,000 million dinars with an annual interest of 8% for a period of 4 years.”
The Ministry stated, “Citizens can apply for purchases exclusively through approved banks registered with the Central Bank of Iraq.”
She pointed out that “purchasing and trading of the bonds offered are exempt from taxes, according to what is stated in the General Federal Budget Law No. 13 of 2023.” https://alghadpress.com/41405–.html
Points to Ponder :
Some people change their ways when they see the light, others when they feel the heat. –Caroline Schoeder
It is unwise to be too sure of one’s own wisdom — It is healthy to be reminded that the strongest might weaken and the wisest might err – Mahatma Gandhi
We can do whatever we wish to do provided our wish is strong enough. What do you want most to do? That’s what I have to keep asking myself, in the face of difficulties. – Katherine Mansfield
Where the willingness is great, the difficulties cannot be great. – Niccolo Machiavelli
