Home
[size=39]Raising the value of the dinar .. Will Iraq back down from the decision to reduce the value of its local currency?
Free / Special - Washington
February 18 2022
[/size]
[url=https://media.voltron.alhurra.com/Drupal/01live-106/styles/sourced/s3/2022-02/000_DV594866 %281%29.jpg?itok=6b2iTi0M][/url]
[You must be registered and logged in to see this image.]
[url=https://media.voltron.alhurra.com/Drupal/01live-106/styles/sourced/s3/2022-02/000_DV594866 %281%29.jpg?itok=6b2iTi0M]The Central Bank of Iraq was devaluing the official currency against the US dollar in December 2020[/url]
Free / Special - Washington
February 18 2022
[/size]
[url=https://media.voltron.alhurra.com/Drupal/01live-106/styles/sourced/s3/2022-02/000_DV594866 %281%29.jpg?itok=6b2iTi0M][/url]
[You must be registered and logged in to see this image.]
[url=https://media.voltron.alhurra.com/Drupal/01live-106/styles/sourced/s3/2022-02/000_DV594866 %281%29.jpg?itok=6b2iTi0M]The Central Bank of Iraq was devaluing the official currency against the US dollar in December 2020[/url]
A slight decrease in the exchange rates of the US dollar against the Iraqi dinar in the local markets, on Friday, one day after the Iraqi parliament announced its intention to hold a meeting with Minister of Finance Ali Allawi and Central Bank Governor Mustafa Ghaleb Makheef to discuss the exchange rate of the dollar.
The Iraqi parliament decided to summon the officials based on "the direction of the leader of the Sadrist movement, Muqtada al-Sadr," according to a statement issued by the media office of the Deputy Speaker of Parliament, Hakim al-Zamili, who belongs to the Sadrist movement.
On Thursday, Al-Sadr presented six proposals regarding the dollar exchange rate, including summoning the Minister of Finance and the Governor of the Central Bank under the dome of Parliament, organizing the Iraqi currency market centrally and enacting "some laws that increase the value of the Iraqi dinar exchange rate."
As soon as the recall decision was announced, the selling prices of the dollar in the local market recorded a slight decrease, as the price of the 100-dollar banknote reached 147.5 thousand dinars, compared to 148 thousand dinars the previous day.
The Central Bank of Iraq had devalued the official currency against the US dollar in December 2020, in the first such measure in half a decade, and coincided with a stifling financial crisis afflicting the country as a result of the collapse of oil prices at the time.
The exchange rate set by the Central Bank amounted to 1450 dinars to the dollar, instead of the previous rate of 1190 dinars, which sparked a series of criticisms from politicians, economists and citizens alike.
The Iraqi government attributed the decision to cut at the time to the stifling economic crisis that the country, the second largest oil producer in OPEC, is going through, as a result of the drop in crude prices.
But the recent rise in the price of oil in global markets to record levels not seen in seven years, has sparked controversy recently regarding the decision to devalue the Iraqi dinar and the possibility of reconsidering it.
Iraqi researcher and economic expert Salam Sumaisem says that "any decision to raise the value of the dinar against the dollar may achieve some benefit, but it will not necessarily lead to the return of inflation levels to what they were in the past."
Sumaisem, who previously worked as a consultant in the Iraqi government, added in an interview with Al-Hurra that "the dinar reduction came within an agreement with international bodies, and it lasted for 5 years, and it cannot be easily reversed."
She notes that "unfortunately, the government did not implement the rest of its commitments that it set in the white paper, including diversification of revenues and governance in taxes, fees and border crossings, and it was satisfied only with devaluing the currency."
In October 2020, the Iraqi Council of Ministers approved new mechanisms for economic reform, which it called the "White Paper", which he said includes "hundreds of measures to revive the Iraqi economy" and invest the country's "enormous resources" in the "scientific method".
The "white paper" included proposals, including reducing government salaries by 12-25 percent, lifting government support for some sectors, stopping funding the retirement fund from the budget, reducing government support for public companies, meeting electricity wages "according to international pricing" and increasing customs wages. and taxes."
Advisers to Iraqi Prime Minister Mustafa Al-Kazemi did not respond to repeated calls to Al-Hurra to request comment.
And the professor of international economic relations, Abdul Rahman al-Mashhadani believes that "the government is supposed to review the exchange rates after about a year of making the decision, as a result of the rise in oil prices and inflation in the Iraqi market."
But al-Mashhadani explains in his interview with Al-Hurra that "the review is very difficult at the present time, because it means that we will link the price of the dinar to oil, and this is not correct from an economic point of view."
He adds that "the decision to reduce the value of the Iraqi dinar was not successful from the beginning, because it caused a decrease in the value of the local currency by about 30 percent, and led to an economic recession that resulted in a significant increase in the prices of foodstuffs and others."
Al-Mashhadani asserts that "the current inflation rate has reached more than 10 percent in general, but on the level of some basic commodities, it has reached nearly 100 percent, such as oil, rice, flour and others."
He points out that "the return to the old exchange rate will not lead to the return of prices to their previous era" for reasons including that "traders will not venture back to the old prices, considering that they will be afraid of the government's fluctuating decisions, and the lack of guarantee that it will not return and take a similar decision to reduce the value of the dinar again."
Al-Mashhadani says that any decision to raise the value of the Iraqi currency "will lead to a new economic stagnation in the market, and make many traders refrain from importing, and thus lead to a shortage of materials that will cause prices to rise again."
She added that "the government and the central bank will work to fix the new rate that is in line with the requirements of the reform."
She pointed out that "the government will immediately support the affected sectors and the poor through measures that include increasing social welfare allocations in the general budget in order to compensate for the possible rise in the prices of some imported goods."
Even if the old exchange rates are returned, this should be done gradually, according to Al-Mashhadani.
Al-Mashhadani says that "the decision to devalue the currency from the beginning was supposed to be gradual, by devaluing the dinar little by little until the desired goal was reached, but they suddenly raised it, causing a defect."
In addition, Al-Mashhadani believes that the government could have reduced the damage caused by the devaluation of the dinar by "transferring half of what it obtained from the exchange value change, to support the weak and poor classes, so that they can face these changes."
He points out that "changing the exchange rate is the last remedy, and the government should not offer it unless there is a coverage of its negative effects by supporting agriculture and industry so that there can be local production capable of covering the local market."
Al-Mashhadani calls for "structuring the Iraqi economy in a way that allows isolating the exchange rate from the gross domestic product, and not to resort to this decision whenever oil prices fall."
In this context, Sumaisem says that "the Central Bank is the only party capable of taking the decision to change the value of the currency."
Sumaisem, who had a role in writing the Central Bank of Iraq law, adds that "the central bank must adhere to monetary policy, and its first objective is to achieve economic stability that is achieved through the exchange rate."
On the other hand, a member of the Finance Committee in the former parliament and current MP Jamal Seydou confirms that "there is currently no decision to reduce or raise the value of the Iraqi dinar."
Sido adds to the "Al-Hurra" website that "there is talk of measures to reduce corruption in the currency auction process and to control the prices of materials in the market."
He asserts that "it is not within the authority of the government to take such a decision, but the matter is subject to the central bank exclusively."
Commenting on a question about the possibility of raising the value of the Iraqi dinar against the US dollar, Seydoux said, "This issue is very unlikely."
He concludes by saying that "the move to devalue the local currency was good at the time, but it is bad now, because it greatly affected the market and the Iraqi citizen" alike.
[You must be registered and logged in to see this link.]
The Iraqi parliament decided to summon the officials based on "the direction of the leader of the Sadrist movement, Muqtada al-Sadr," according to a statement issued by the media office of the Deputy Speaker of Parliament, Hakim al-Zamili, who belongs to the Sadrist movement.
On Thursday, Al-Sadr presented six proposals regarding the dollar exchange rate, including summoning the Minister of Finance and the Governor of the Central Bank under the dome of Parliament, organizing the Iraqi currency market centrally and enacting "some laws that increase the value of the Iraqi dinar exchange rate."
As soon as the recall decision was announced, the selling prices of the dollar in the local market recorded a slight decrease, as the price of the 100-dollar banknote reached 147.5 thousand dinars, compared to 148 thousand dinars the previous day.
The Central Bank of Iraq had devalued the official currency against the US dollar in December 2020, in the first such measure in half a decade, and coincided with a stifling financial crisis afflicting the country as a result of the collapse of oil prices at the time.
The exchange rate set by the Central Bank amounted to 1450 dinars to the dollar, instead of the previous rate of 1190 dinars, which sparked a series of criticisms from politicians, economists and citizens alike.
The Iraqi government attributed the decision to cut at the time to the stifling economic crisis that the country, the second largest oil producer in OPEC, is going through, as a result of the drop in crude prices.
But the recent rise in the price of oil in global markets to record levels not seen in seven years, has sparked controversy recently regarding the decision to devalue the Iraqi dinar and the possibility of reconsidering it.
"limited interest"
It is noteworthy that the decision to reduce the value of the Iraqi dinar was taken when the price of a barrel of oil in international markets ranged between 40 and 50 dollars, compared to its price today, which reached more than 90 dollars.Iraqi researcher and economic expert Salam Sumaisem says that "any decision to raise the value of the dinar against the dollar may achieve some benefit, but it will not necessarily lead to the return of inflation levels to what they were in the past."
Sumaisem, who previously worked as a consultant in the Iraqi government, added in an interview with Al-Hurra that "the dinar reduction came within an agreement with international bodies, and it lasted for 5 years, and it cannot be easily reversed."
She notes that "unfortunately, the government did not implement the rest of its commitments that it set in the white paper, including diversification of revenues and governance in taxes, fees and border crossings, and it was satisfied only with devaluing the currency."
In October 2020, the Iraqi Council of Ministers approved new mechanisms for economic reform, which it called the "White Paper", which he said includes "hundreds of measures to revive the Iraqi economy" and invest the country's "enormous resources" in the "scientific method".
The "white paper" included proposals, including reducing government salaries by 12-25 percent, lifting government support for some sectors, stopping funding the retirement fund from the budget, reducing government support for public companies, meeting electricity wages "according to international pricing" and increasing customs wages. and taxes."
Advisers to Iraqi Prime Minister Mustafa Al-Kazemi did not respond to repeated calls to Al-Hurra to request comment.
And the professor of international economic relations, Abdul Rahman al-Mashhadani believes that "the government is supposed to review the exchange rates after about a year of making the decision, as a result of the rise in oil prices and inflation in the Iraqi market."
But al-Mashhadani explains in his interview with Al-Hurra that "the review is very difficult at the present time, because it means that we will link the price of the dinar to oil, and this is not correct from an economic point of view."
He adds that "the decision to reduce the value of the Iraqi dinar was not successful from the beginning, because it caused a decrease in the value of the local currency by about 30 percent, and led to an economic recession that resulted in a significant increase in the prices of foodstuffs and others."
Al-Mashhadani asserts that "the current inflation rate has reached more than 10 percent in general, but on the level of some basic commodities, it has reached nearly 100 percent, such as oil, rice, flour and others."
He points out that "the return to the old exchange rate will not lead to the return of prices to their previous era" for reasons including that "traders will not venture back to the old prices, considering that they will be afraid of the government's fluctuating decisions, and the lack of guarantee that it will not return and take a similar decision to reduce the value of the dinar again."
Al-Mashhadani says that any decision to raise the value of the Iraqi currency "will lead to a new economic stagnation in the market, and make many traders refrain from importing, and thus lead to a shortage of materials that will cause prices to rise again."
gradual return
In a statement issued in conjunction with the decision of the Central Bank of Iraq to reduce the value of the Iraqi dinar, the Ministry of Finance promised that "the decision to adjust the exchange rate will be for one time only and will not be repeated in the future."She added that "the government and the central bank will work to fix the new rate that is in line with the requirements of the reform."
She pointed out that "the government will immediately support the affected sectors and the poor through measures that include increasing social welfare allocations in the general budget in order to compensate for the possible rise in the prices of some imported goods."
Even if the old exchange rates are returned, this should be done gradually, according to Al-Mashhadani.
Al-Mashhadani says that "the decision to devalue the currency from the beginning was supposed to be gradual, by devaluing the dinar little by little until the desired goal was reached, but they suddenly raised it, causing a defect."
In addition, Al-Mashhadani believes that the government could have reduced the damage caused by the devaluation of the dinar by "transferring half of what it obtained from the exchange value change, to support the weak and poor classes, so that they can face these changes."
He points out that "changing the exchange rate is the last remedy, and the government should not offer it unless there is a coverage of its negative effects by supporting agriculture and industry so that there can be local production capable of covering the local market."
Al-Mashhadani calls for "structuring the Iraqi economy in a way that allows isolating the exchange rate from the gross domestic product, and not to resort to this decision whenever oil prices fall."
In this context, Sumaisem says that "the Central Bank is the only party capable of taking the decision to change the value of the currency."
Sumaisem, who had a role in writing the Central Bank of Iraq law, adds that "the central bank must adhere to monetary policy, and its first objective is to achieve economic stability that is achieved through the exchange rate."
On the other hand, a member of the Finance Committee in the former parliament and current MP Jamal Seydou confirms that "there is currently no decision to reduce or raise the value of the Iraqi dinar."
Sido adds to the "Al-Hurra" website that "there is talk of measures to reduce corruption in the currency auction process and to control the prices of materials in the market."
He asserts that "it is not within the authority of the government to take such a decision, but the matter is subject to the central bank exclusively."
Commenting on a question about the possibility of raising the value of the Iraqi dinar against the US dollar, Seydoux said, "This issue is very unlikely."
He concludes by saying that "the move to devalue the local currency was good at the time, but it is bad now, because it greatly affected the market and the Iraqi citizen" alike.
[You must be registered and logged in to see this link.]
» MM&C 11/14/24 Trump and the Iraqi Banks Puzzle
» utube 11/13/24 MM&C MM&C News-Private Sector- Electronic Payments-Reconstruction-Development-Digit
» utube MM&C 11/15/24 Update-Budget-Non Oil Resources-CBI-USFED-Cross Border Transfers-Oil
» New decline in gold in Iraq.. and globally records the worst week in 3 years
» Monitoring body approves 2023 imports annual report
» Development Road: Faw Port Ignites Regional Corridor Race
» First in Iraq... Diyala sets a plan for "rural reconstruction"
» Al-Saadi: Influential parties are working to erase the theft of the century file
» MP: Baghdad supports the "Diyala Artery" project with 40 billion dinars
» Source: General amnesty law will pave the way for the return of terrorist groups
» The Prime Minister stresses the need to expedite the completion of the requirements for restructurin
» Minister of Resources: The project to develop the left side of the Tigris River has reached its fina
» Foreign Minister: We are proceeding with implementing the associated gas exploitation program
» Swiss Ambassador Expresses His Country's Desire to Invest in Iraq
» "We left the camel and its load" .. Moroccan farmers await "imminent compensation" from Iraq
» OPEC sues Iraqi minister over oil violations.. What is Kurdistan's involvement?
» Iraq warns of 'dire consequences' of imposing barriers to plastic products
» Iranian newspaper: Iraq's development path is a step towards regional economic integration
» Al-Mandlawi discusses with the Russian ambassador developing relations in the fields of economy, inv
» Oil Minister discusses with Dutch Ambassador strengthening bilateral relations
» The Minister of Oil discusses with the companies "+dss" and "Xergy", joint cooperation to develop th
» Rafidain Bank announces a plan to include other branches in the implementation of the comprehensive
» With the presence of the opposition... Baghdad supports the partnership government in Kurdistan
» Parliamentary move to raise retirement age in state institutions to 63 years
» Through leaks.. Warnings against creating political crises as parliamentary elections approach
» Iraqi oil returns to decline in global markets
» Parliamentary Committee: Iraq uses its international relations to avert the dangers of war from its
» The value of non-oil imports for Sulaymaniyah and Halabja governorates during a week
» Rafidain: Continuous expansion in implementing the comprehensive banking system
» Planning: The population census includes residents of Iraq according to a special mechanism
» Transparency website reveals non-oil imports to Sulaymaniyah and Halabja during a week
» Al-Sudani directs the adoption of specialized international companies to prepare a unified structure
» MP warns of a move that will worsen the housing crisis and calls on the government
» Disagreements strike the Kurdish house... hindering the formation of the regional parliament and gov
» Hundreds of Moroccan farmers are waiting for “imminent compensation” from Iraq.. What’s the story?
» Iraq 10-Year Review: Spending, Imports, Unemployment in 2024 at ‘Highest Level’ in a Decade
» Call to all smokers in Iraq: Prepare for the law
» utube 11/11/24 MM&C News Reporting-IRAQ-USA-Financial Inclusion up 48%-Money Inside & Out of Iraq
» Al-Mandlawi to the UN envoy: The supreme authority diagnosed the problems and provided solutions for
» Saleh: Government strategy to boost gold reserves as part of asset diversification
» Prime Minister's advisor rules out oil price collapse: Trump's policy will not sacrifice petrodollar
» Tripartite alliance between Iraq, Egypt and Jordan to boost maritime trade
» Parliamentary Committee reveals date of entry into force of Personal Status Law
» Al-Fatah warns against US blackmail and Trump's intentions for the next stage
» A leader in the law: If the Americans do not leave on their own two feet, we will expel them in fune
» MP: Next Sunday's session will witness the passing of "important laws"
» There is a financial aspect.. Al-Zaidi rules out voting on the real estate law
» "Promising" economic opportunities in central Iraq open doors to investment, trade and unemployment
» Minister of Transport: Arab interest in the development road project
» Bitcoin Fails to Maintain Its Meteoric Rise
» Amending the retirement age on the parliament's table.. This is the latest that has been reached
» Launching the Health Unit Initiative in Iraqi Schools
» Will Iraq be the savior of the countries of the region if oil prices fall?
» Regarding electrical energy.. Government moves to meet the needs of next summer
» {Retirement age} sparks debate in parliament
» Minister of Transport to {Sabah}: Arab interest in the development road project
» Planning: Two important pre-census activities start today and tomorrow
» Next week.. contracting with 2500 applicants on a {contract} basis
» Service Effort: Opening 30 projects in agricultural areas next month
» The House of Representatives issues a clarification regarding its tenders and official invitations
» Issuance of (3000) new decisions for politically dismissed employees and non-employees
» Al-Sudani discusses cooperation in the field of energy and development of the oil and gas sector wit
» Trade: Transferring 400 billion dinars to pay farmers’ dues for the remaining wheat for the northern
» Iranian Minister of Trade and Industry Injured During Trip to Kurdistan
» Chairman of the Integrity Commission: Corruption negatively affects reconstruction and development a
» Strengthening judicial cooperation on the table of Judge Zidane and his Turkish counterpart
» Al-Sudani directs the Ministry of Oil to communicate with Shell to implement projects that serve Ira
» One of them is "protocol".. A politician determines the extent of the difference between Al-Sudani's
» Iraq confirms its keenness to support OPEC unity to ensure oil price stability
» It may drop to 40%.. Al-Kanani warns of a sharp drop in oil and directs an urgent call to the govern
» Distribution next week.. The region will receive nearly 533 billion dinars to finance its employees’
» Iraq expresses interest in cooperating with major international oil companies
» Criticism follows the performance of the Minister of Foreign Affairs in international positions.. Wi
» Al-Mashhadani's election "embarrassed him"... Will Al-Sudani implement the ministerial reshuffle?
» Will the "dollar crisis" topple the central bank governor?
» The Oil and Gas Law Returns to the Forefront... Will Al-Sudani Be Able to Resolve the Disputes Over
» Oil Licenses in Basra: An Environmental Disaster That Raises Cancer Rates and Suffocates the Populat
» Iraq begins intensive campaign to deport illegal foreign workers and regulate the labor market
» Government advisor explains Baghdad Metro project specifications and confirms its continuation witho
» Al-Mashhadani to the 188 Alliance delegation: The best solution is to give people the freedom to cho
» Parliamentarian: Ambassadors and representatives of foreign missions came to Parliament to prevent t
» Al-Sudani's advisor reveals the reasons for the lack of gold in the government's reserves
» New fortifications close the most dangerous border gaps between Iraq and Syria
» "Baghdad breathes a sigh of relief" .. Closing of 144 illegal factories that emit toxins into the ai
» Iraqi oil prices continue to decline amid global price decline
» “The War of Leaks” Confuses the Political Scene... Blackmail or Expose of Corruption?
» Government sends budget amendment to resolve differences with region
» More than 800 “dual-job” employees work at Najaf Airport
» Slight rise in dollar prices against the dinar in Iraqi stock exchanges
» Where did the parliamentary discussions on the "retirement age" reach?
» The region "mobilizes" for the first census in 37 years: It will increase the budget share and the n
» "Thousands of them are suspended" .. Draft laws challenge the remainder of the life of the current p
» Population, oil and salaries...hot files in the meeting between Al-Sudani and Barzani
» Political attempts to obstruct it.. Personal Status Law on its way to legislation
» MP: Al-Sudani has reached the conviction of the necessity of removing some ministers
» Central Bank announces progress in dollar control procedures
» Baghdad.. Closing 144 informal metal smelting factories to reduce pollution
» Private Banks Association: Iraq to adopt advanced trade finance system by end of 2024