Parliamentary Finance: Three challenges surrounding the parallel market

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Parliamentary Finance: Three challenges surrounding the parallel market

On Monday, Representative Mudar Al-Karawi, a member of the Parliamentary Finance Committee, identified three challenges related to the parallel market in Iraq.

Al-Karawi stated that the decrease in the US dollar exchange rate in the parallel market was anticipated for three months due to the Central Bank’s measures. He highlighted three challenges that require attention, which include the balance of imports, smuggling, and speculation. Additionally, corruption is attempting to hinder any reforms in the financial sector.

Al-Karawi stated that the decrease in the black market exchange rate could be temporary, and a sudden increase may occur soon. This is because Iraq heavily relies on foreign imports for 90% of its needs, which requires hard currency and puts a strain on the market. As a result, there might be a slowdown in the decline of the central bank rate.

He emphasized that if the Iraqi industry does not receive a dose of hope, by achieving flexible production rates and meeting market demand in a way that reduces imports, the parallel market will continue to be under pressure. He stressed the need to diversify the basket of currencies and not limit it to the US dollar.

The country’s black market has seen a 5% drop in recent weeks, with expectations of a further decline to 145,000 dinars per $100 by the end of January.