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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

Many Topics Including The Oldest Dinar Community. Copyright © 2006-2020


    "The crisis is reeling." The Iraqi government's moves collide with the wall of the dollar

    rocky
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    • Post n°1

    "The crisis is reeling." The Iraqi government's moves collide with the wall of the dollar Empty "The crisis is reeling." The Iraqi government's moves collide with the wall of the dollar

    Post by rocky Fri 24 Mar 2023, 4:42 am

    "The crisis is reeling." The Iraqi government's moves collide with the wall of the dollar

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    Baghdad today - Baghdad
    On the seventh of last month, the Iraqi authorities decided to raise the value of the official exchange rate of the dinar against the dollar by 10 percent, from about 1470 dinars to 1300 dinars per dollar, but after weeks of the decision, the exchange rate in the local market is still very high and far from official price.
    The exchange rate in what is known as the parallel market (private exchanges and currency dealers) currently exceeds the barrier of 1550 dinars to one dollar, which made many question the Iraqi authorities' measures to control the market.
    The Iraqi currency crisis began last November when the Federal Reserve (US Central Bank) in New York approved stricter controls on international transactions in dollars for Iraqi commercial banks.
    The move was aimed at stemming the illegal flow of dollars into Iran and putting more pressure, along with US sanctions over Tehran's nuclear program and other disputes, making it more difficult for Tehran to obtain dollars.
    Under the new restrictions, Iraqi banks must use an online platform to disclose their transactions and details about the sender and recipients.
    US officials can intercept suspicious transfer requests.
    Financial experts and officials confirm that these measures created a gap, as banks, which were reluctant to register on the electronic platform, resorted to free markets in Baghdad to buy dollars, which created a deficit and exceeded demand for supply.
    Economic expert and academic Abdul Rahman Al-Mashhadani says, "There are two main problems that caused the continuation of the crisis. The first is to punish some private banks and remove them from the currency window, and the second is to implement the electronic platform in which an audit takes place in several stages."
    Al-Mashhadani adds, "The unwillingness of Iraqi private banks to work according to the electronic platform or to deal with the requirements of the Federal Reserve has caused many foreign transfers to be rejected."
    And he continues, "At one stage, the rejection rate, whether by the Federal Reserve Bank or the Central Bank of Iraq, reached about 80 percent of the transfers required to finance foreign trade."
    Al-Mashhadani points out that "the exchange rate of the dinar will not stabilize soon, given that the government's measures are far from resolving the crisis and were not serious," describing them as the closest thing to a "patchwork" and aimed at solving the problem "temporarily and not radically."
    In late December, the Central Bank of Iraq approved a package of measures to control the stability of the exchange rate against the dollar, including facilitating the financing of private sector trade in dollars through Iraqi banks, and opening outlets for selling foreign currency in government banks to the public for travel purposes.
    The bank called on merchants at the time to deal "with banks directly and not to resort to brokers and speculators to avoid charging their imports with undue commissions and expenses." 
    And Iraqi government officials confirmed on more than one occasion that achieving stability in the exchange rate will not last long.
    In subsequent statements, the Advisor to the Prime Minister for Financial Affairs, Mazhar Muhammad Salih, confirmed that "the central bank's packages will speed up the levels of meeting the demand for foreign currency," explaining that the rise in prices in the parallel market is "artificial and based on false information that is called colored noise and does not match the strength of the situation." financial".
    But Al-Mashhadani believes that "the estimates of the Central Bank of Iraq were wrong when it talked about the return of the exchange rate and its regularity within a month of applying the new rate." He predicted that "Iraq will need at least three to four months to achieve this."
    Last Tuesday, the governor of the Central Bank of Iraq, Ali Al-Alaq, said that "a decrease in the exchange rate of the parallel dollar will occur during the coming period."
    Al-Alaq stated that "the Central Bank launched several packages of measures, and that the packages that were launched are being dealt with seriously to control the parallel dollar exchange rate."
    However, a member of the Parliamentary Finance Committee, Jamal Cougar, has a different opinion, as he believes that "government measures are not sufficient to reduce the gap between the market price and the official price."
    Cougar says, "The disparity is very large, and the government's steps did not have much impact on the value of the dinar, and it is useless so far."
    He adds that "the Iraqi government has not been able to overcome the obstacles faced by merchants in order to ensure the speedy arrival of their remittances to the final beneficiary."
    He pointed out the existence of "significant corruption operations in private banks, which began to deal with owners of large capitals in order to divide the profits generated from the difference between the two prices, the official and the parallel."
    The Central Bank of Iraq allowed banks and private exchange companies to buy dollars at the official rate and sell them to merchants who meet the conditions at a small profit margin.
    However, what is happening on the ground is that some banks buy millions of dollars from the Central Bank in cooperation with some merchants, and then sell it in the local market at a profit margin of more than two hundred and fifty dinars per dollar, according to Cougar.
    Cougar also referred to "the continuation of dollar smuggling, with the complicity of large investors, merchants, and some banks."
    Cougar said, "Members of the Finance Committee sat down with the governor of the Central Bank and other officials, and we told them about these concerns, but they have not been resolved until today."
    Cougar believes that "the exchange rate crisis will continue to fluctuate between advancing one step and retreating two steps back," stressing that the country "needs strong and deterrent government measures to control borders to prevent smuggling."
    Cougar accused "influential political parties of standing behind currency smuggling operations in cooperation with large banks that represent fronts for political parties and figures."
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