Economic analysis: New procedures and ongoing challenges in the exchange market in Iraq

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Economic analysis: New procedures and ongoing challenges in the exchange market in Iraq

On Tuesday, economic expert Nabil Al-Marsoumi suggested that the decline in exchange rates on the black market was due to a recent agreement between the US Central Bank and the Federal Reserve.

The recent increase in the exchange rate of the dinar against the dollar, up to 1,560 dinars, was caused by positive market sentiment and optimistic expectations arising from the agreement between the US Federal Reserve and the Central Bank of Iraq on a combination of policies and procedures.

According to the speaker, the effectiveness of the measures taken to narrow the gap between official and parallel prices has yet to be tested on the ground. As a result, the US dollar exchange rate is expected to continue declining for a while, then stabilize at around 1,500 dinars, and eventually rise again. The speaker noted that the recent treatments and procedures failed to address the root cause of the problem, which is trade with Iran and Syria, as well as the issue of Iraqi travelers to these countries who are unable to obtain dollars at the official rate.

He continued, “There is a fatal duality in Iraq. This is represented by the presence of two tax and customs tariff systems, illegal ports, weak control over official border crossings, and goods that are not financed through the electronic platform. Instead, they are financed through the parallel market, which includes items like alcoholic beverages, cigarettes, and drugs.”