Two days ago
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Sales of the Central Bank of Iraq witnessed a great turmoil in the past weeks, after the decline in the sale of the currency by a rate ranging between 40% and 50%, which led to a rise in the exchange rate to more than 1500 dinars per dollar, at a time when the central bank sells one dollar for 1460 dinars.
The economic researcher, Manar Al-Obaidi, explained in an explanation, the mechanism for converting the dollar into the dinar, in response to the reasons for the decline of the Iraqi dinar, and if it will witness a rise again.
Al-Obeidi said, “Iraq sells its oil in dollars and the dollar currency is owned by the United States of America, and through the Central Bank, Iraq also sells dollars to the local market in exchange for an Iraqi dinar owned by the Iraqi state, either through direct sales through exchange shops or through external transfers and credits for import purposes.”
The researcher added, "The production authorities are the destination to which the transferred money is supposed to go, in order to exchange the products that they sell in dollars, which are originally owned by the United States of America."
And Al-Obeidi indicated the American role in determining the parties to whom they want their currency to go and from the parties that do not want to own their currency because they own the dollar, and therefore they define criteria for the parties to which the money must be transferred by knowing the owner of the money and knowing the final beneficiary.
The researcher explained the reason for the existence of a middle station to which the money is transferred, and then these funds are distributed to various countries and companies, because there are no correspondent banks for Iraqi banks in many countries from which Iraq imports.
Al-Obeidi said, “During the last period, the United States of America set additional criteria for being the owner of the dollar, and refused to pass any transfer from Iraq unless it was sure that the amount goes directly to the beneficiaries, and that because many importers do not deal with direct parties in purchasing goods, it could not.” Banks pass their remittances on.”
This led, according to the researcher, to an increase in the demand for dollars for external transfers, meaning that the importer is looking for dollars outside Iraq, not inside it. Which led to a rise in the price of the dollar against the dinar, which is required externally, not internally.”
He added, "This demand, along with the lack of confidence in the Iraqi currency, led to the fear of the public, which led to the transfer of a lot of their money in Iraqi dinars to the dollar, which led to an increase in demand and a lack of supply, which contributed to adding another factor that contributed to the high price of the dollar."
Al-Obaidi justified all importers - and accordingly - their attempts to work on the behavior of banking outlets and to adopt banking dealings with various suppliers instead of adopting the middleman.
He said, "It may take a few months until the papers are rearranged and the mechanisms are arranged, and the exchange rate will return to its normal state, but we may witness a rise in the dollar against the dinar during the coming period."
And Al-Obeidi indicated that “the problem of lack of dollar sales will lead to a scarcity of the dinar at the central bank, which requires it to increase the cash currency issued to compensate for the demand for the dinar from the Iraqi government, which may lead to an increase in inflation rates.”
The researcher considered that the current dinar crisis is a temporary issue that may need three months or less, and he is optimistic that the exchange rate will return to its normal position once the transfer mechanisms are modified in accordance with the requirements of the US Treasury.
Al-Obaidi concluded by saying, stressing his optimism that “the financial situation of Iraq is good, and the banking sector is able to adjust its mechanisms, and there is a financial abundance that may be slightly affected by an expected drop in oil prices and the rise in the operating bill of the Iraqi government, and we will witness close rises of the dollar against the dinar during the coming period that may exceed the barrier of 1600 dinars, and it has We are witnessing a scarcity of some imported materials and a rise in their prices as a result of the inability of importers to import, but things will return to normal within the next three months or less.”
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