An Economist Identifies The “Most Important Reason” Behind The Dollar’s Decline In Iraq
Buratha News Agency1512025-05-09 Economist Nabil Al-Marsoumi said on Friday (May 9, 2025) that progress in the Iranian-American negotiations is the most important reason behind the rise in the exchange rate of the Iraqi dinar against the dollar.
Al-Marsoumi said in an analysis he published, “Although the rise in the dinar’s exchange rate against the dollar is linked to many factors, I believe the most important reason is the progress in the Iranian-American negotiations.”
He added, “If the negotiations lead to an agreement between Iran and the US, the exchange rate of the dollar against the dinar on the parallel market will be very close to the official rate between them.”
The Iraqi dinar’s exchange rate against the dollar has risen relatively over the past few days on the parallel market, while the official market rate has remained stable. The selling price for $100 reached 142,000 dinars.
The Prime Minister’s financial advisor, Mazhar Mohammed Saleh, said in a press statement that demand for dollars declined for three main reasons: “The Central Bank’s success in financing and encouraging small businesses immediately after lifting restrictions, and facilitating travelers’ access to dollars via cards and at airports at the official exchange rate.” https://burathanews.com/arabic/economic/459908
The Dollar’s Exchange Rate Is Stabilizing Towards Its Target: Adaptation Or Adjustment?
Dr. Haitham Hamid Mutlaq Al-Mansour It became clear in the period from last April until this May that the dollar exchange rate in Iraq began to stabilize, declining towards the (official) target level. Therefore, a question may be raised in this context: Is this stability the result of “adaptation” or “adaptation”?
To answer this question, we examine the reality of monetary policy measures that strengthened the foreign exchange signal’s response to the downward trend, which can be described in the following paragraphs:
1. The Central Bank’s restrictive policy of controlling dollar sales to banks through transparency measures for transfers of unclear origin aimed at combating smuggling. This increased the official supply and eased pressure on the exchange rate.
2. The effectiveness of monetary policy in financing foreign trade through highly rated correspondent banks, within the framework of the US Treasury and Federal Reserve’s conditions. This is in addition to the trend toward settlement in euros, yuan, and UAE dirhams, which has facilitated remittance transactions in our trade with China, Turkey, and the UAE.
3. Added to this is the decline in demand for the dollar due to the increased level of banking compliance with international conditions on dollar transfers to prevent their smuggling to Iran, Syria, and Turkey via Iraq. As a result, suspicious transfers have decreased, and illicit demand for dollars has declined, contributing to the stability of the dollar exchange rate.
4- The effectiveness of the Central Bank’s foreign reserves management to compensate for the decline in the dollar supply in the parallel market, thus curbing the exchange rate towards the target.
5- The effectiveness of the inflation targeting policy led to a slowdown in the rise in the general price level (inflation) in Iraq, which limited the phenomenon of dollarization and raised the real value of the dinar.
6- Decline in speculation in the parallel market. Following the regulatory measures, the activity of unlicensed money changers and speculators who artificially raised prices declined.
7- The effectiveness of financing travelers in dollars through the official rate using payment cards at reduced costs and at the official exchange rate of 1320 dinars per dollar, in addition to collecting cash dollars through Iraqi airports, in the amount of 3000 dollars at the official rate for each traveler per month who carries an electronic payment card.
8- External international factors related to a general weakness in purchasing power in global markets and a decline in stocks, which caused a decline in the value of the dollar and a rise in gold, leading to a decline in demand for it globally and locally.
From the above-mentioned reasons, we find that exchange rate stability, despite its importance as a short-term objective of monetary policy, was achieved through “adjustment,” i.e., a short-term price adjustment trend resulting from short- or medium-term measures and treatments for exchange rate fluctuations.
The aim was to restore temporary economic equilibrium without changing the basic structure of the economy and without deep-rooted long-term policies, which reduces the effectiveness of targeting the exchange rate at the long-term target level. Stability could have been achieved as a result of long-term structural “adjustment” by following long-term policies as follows:
1- Decrease in demand for the dollar due to the availability of agricultural or industrial GDP revenues as a substitute for imports.
2- Improvement in the balance of payments thanks to non-oil agricultural and industrial exports.
3- Structurally reforming the banking system and activating the role of monetary tools, especially the interest rate structure, in a way that restores the overall balance to its natural state without a split between what is real and what is monetary.
4. Reducing rentierism by diversifying the economy through allocating resources based on foreign trade to generate national surplus value. The result: more sustainable stability, as the economy becomes less dependent on external factors.
If the current balance remains in place, the dollar supply will still be vulnerable to depletion within a year of imports if oil exports cease due to wars and threats, for example, or if the economy is exposed to similar external shocks. Furthermore, reliance on reserve management and other stringent measures will not be sufficient to ensure long-term exchange rate stability.
In conclusion, while ensuring that the exchange rate stabilizes near its target level is a significant achievement for monetary policy, the absence of structural reforms, economic diversification, improving the business environment, combating corruption, and other factors will make any exchange rate stability vulnerable to reversal, particularly with oil price fluctuations, political crises, and external shocks. This underscores the importance of planning for long-term structural adjustment at the macroeconomic policy level. https://economy-news.net/content.php?id=55289
The Central Bank Announces More Than 41 Billion Dinars In Fines Against Banks And Companies
Buratha News Agency1762025-05-09 The Central Bank of Iraq announced on Thursday that the value of fines imposed on banks and non-banking institutions, including exchange companies, amounted to more than 41 billion dinars during the first three months of the current year.
According to a table issued by the bank, the fines imposed on these entities from January to the end of March amounted to 41 billion, 268 million, 578 thousand and 75 dinars, noting that this value decreased compared to the same period last year, which recorded fines amounting to 138 billion, 377 million, 321 thousand and 527 dinars.
The bank explained that the fines were accompanied by 54 administrative penalties, including warnings, notices, and grace periods, and were distributed to a number of banks and non-banking financial institutions.
The table also showed that March saw the highest value of fines, amounting to 28 billion, 759 million, 847 thousand, and 795 dinars, with 14 administrative penalties, while February recorded the lowest value of fines, approximately 4 billion, 628 million, 140 thousand, and 368 dinars, despite witnessing the highest number of administrative penalties, with 25 penalties.
The table did not mention the names of the banks or companies that were subject to fines and administrative penalties. https://burathanews.com/arabic/economic/459899
Gold Rises Amid Buying And Anticipation Of US-China Trade Talks
Friday, May 9, 2025 12:39 | Economic Number of reads: 185 Baghdad / NINA / Gold prices rose on Friday as investors rushed to buy the precious metal after its earlier decline, while markets awaited US-China trade talks scheduled for early next week.
By Friday morning, spot gold rose 0.3% to $3,316.29 per ounce. US gold futures rose 0.5% to $3,321.60.
Spot gold fell about 2% yesterday to $3,274.38 after US President Donald Trump announced a trade deal with Britain, according to Reuters.
The agreement maintains a 10% tariff on goods imported from Britain, while Britain agreed to reduce its tariffs from 5.1% to 1.8% and further open its market to US goods.
Trump also stated that he expects the United States and China to hold substantive trade negotiations early next week and that the 145% tariff imposed on Beijing is likely to be reduced.
Several Federal Reserve officials are scheduled to speak later today to offer further insights on the economy and the central bank’s policy path. The Fed held interest rates steady on Wednesday and warned of rising inflation and unemployment risks.
Among other precious metals, spot silver was steady at $32.48 an ounce. Platinum rose 0.5% to $980.55, and palladium gained 0.2% to $978.21. https://ninanews.com/Website/News/Details?key=1225718
An Expert Sounds The Alarm: The Monopoly Of Foreign Banks Operating In Iraq Over Remittances Must Stop Immediately.
May 9, 2025 Baghdad/ Iraq Observer The expert on financial and banking, Mustafa Hantoush, said that the control of Jordanian and Gulf banks on Iraqi remittances, is something that cannot be tolerated, ignored or continued, and needs immediate and rapid treatment from the Central Bank of Iraq.
Hantoush expressed in an interview with Iraq Observer that “the remedies that require the Central Bank to take towards this file are almost non-existent,”
calling for the need for
the Central Bank to conduct a detailed study to review the financial situation in the country by creating a policy to strengthen Iraqi banks at the expense of foreign.”
“At the very least, it is possible for Iraqi foreign banks to participate and be dealt with Iraqis in conjunction with the work of radical steps to develop monetary policy,” pointing out that
“as long as convictions are directed towards not developing the banking system in Iraq,
it is difficult to control the work of those banks during their foreign dealings on behalf of Iraqi banks.”
Experts and specialists have long criticized foreign banks operating in Iraq, in that they
do not provide development plans, especially in poor areas in Iraq, but
focus their activity in commercial areas where traders are present for the purpose of foreign transfers, and
foreign banks operating in Iraq
do not provide real electronic applications that serve citizens and
do not contribute to vital projects such as oil banks.
Thus, all international banks operating in Iraq
are linked to the American correspondent bank and
their activity is centered on making profits from remittances and
when the remittances are closed,
their branches are closed and
returned with profits to their countries.
https://observeriraq.net/خبير-يدق-ناقوس-الخطر-احتكار-المصارف-ال/
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