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Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Established in 2006 as a Community of Reality

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Established in 2006 as a Community of Reality

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    After Iraq's adoption of the yuan in its dealings with China... experts warn of "twisted attempts"

    Rocky
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    • Post n°1

    After Iraq's adoption of the yuan in its dealings with China... experts warn of "twisted attempts" Empty After Iraq's adoption of the yuan in its dealings with China... experts warn of "twisted attempts"

    Post by Rocky Thu 23 Feb 2023, 4:40 am

    After Iraq's adoption of the yuan in its dealings with China... experts warn of "twisted attempts"
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     Baghdad today - follow-up 
    Yesterday, Wednesday, the Central Bank of Iraq announced a plan to allow trade with China in Chinese yuan instead of dollars, in an apparent attempt to improve access to foreign currency and reduce dependence on the dollar, the government says, while observers warn of "devious attempts" by Smugglers may take advantage of it.
    The bank said in a statement, "The financing of foreign trade from China will be organized directly and in the Chinese yuan currency through two options. The first is strengthening the balances of Iraqi banks that have accounts with Chinese banks in the Chinese yuan currency. Chinese yuan through our accounts with JPMorgan and the Development Bank of Singapore. 
     He said that facilities for financial transfers will be provided to the United States and Europe, using the same mechanism later.
    However, the third point in the statement, which indicates that the documents required to apply for external financial transfers will consist of “a commercial list (invoice) only, or the initial documents of credit, provided that the customer later provides the bank with proof of entry of the goods.” 
    Salem al-Asadi, an economist and businessman, says that this mechanism "can be easily circumvented." 
    Al-Asadi added that the bank "seems to be opening an outlet for the same old practices that relied on forged import receipts to smuggle currency after US compliance instructions closed this outlet." 
    The imposition of compliance instructions by the US Federal Bank and the US Treasury led to a crisis in providing dollars in Iraq, which greatly affected the market, which relies almost entirely on the dollar in its trading.
    Last Saturday, US Secretary of State Anthony Blinken confirmed his country's readiness to support Iraq's efforts to achieve stability and growth in the country's economy, including by combating corruption and money laundering.
    Blinken's assurances came during his meeting with the Iraqi Prime Minister, Muhammad Shia' al-Sudani, on the sidelines of the Security Conference in Munich.
    Iraq is witnessing a financial crisis related to the shortage of foreign currencies in the local markets, which led to a decrease in the price of the Iraqi dinar in the parallel market, despite the increase in its official value at the Central Bank.
     The compliance instructions aim to counter the risk of currency smuggling from Iraq, a practice that is usually done by presenting receipts for the purchase of counterfeit goods to the bank and obtaining the dollar at the official subsidized rate, then taking the dollar out of Iraq and selling it at its original price.
    Washington believes that Iran, which is under sanctions that limit its access to the dollar, is the beneficiary of this process, according to Al-Hurra.  
    The economic advisor to the Iraqi government, Mazhar Muhammad Salih, said that this is the first time that imports from China are financed in yuan, as Iraqi imports from China were financed in US dollars only.
    The move is the latest sign of the yuan's growing role on the international stage as China gradually opens up its financial markets and some countries look to diversify their exposure to the currency.
    Saleh said, "The step is logical because of" the superiority of trade between Iraq and China compared to the countries of the world. 
    He revealed that "import and export trade of goods and services exceeds $53 billion annually, as China is Iraq's first trading partner." 
    He continued, "Because the Central Bank of Iraq is diversifying its reserves in foreign currency, including the Chinese yuan, it will undoubtedly feed Iraqi bank accounts with Chinese correspondent banks in the Chinese yuan currency for the purposes of meeting the requirements of Iraqi imports from China and paying their dues in Chinese currency." 
     Saleh says, "The second package launched by the Central Bank (Wednesday) regarding external transfer instructions will help bring exchange rates in the parallel market closer to the official rate, perhaps by more than 50 percent, immediately, and with the submission of compliance documents provided by Iraqi banks on behalf of their customers." From importing merchants and the increasing launch of facilitated external transfer packages, especially that of assistance to small trades, the exchange rate gap will undoubtedly close in the coming days at an accelerated rate. 
    And he played down concerns about the expected smuggling operations by saying that "international compliance standards through the central bank platform will regulate the financing of trade exchange with China similar to financing in dollars in terms of identifying the last beneficiary." 
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