The dollar crisis...the pharaoh that the government and the central bank were unable to confront

POSTED ON[You must be registered and logged in to see this link.] BY [You must be registered and logged in to see this link.]

[size=52]The dollar crisis...the pharaoh that the government and the central bank were unable to confront[/size]

[size=45]Bright news[/size]
[size=45]The dollar exchange rates in Iraq have witnessed an increase for more than 7 months, specifically since the Central Bank began working on the electronic platform and the international financial transfer system “SWIFT”, and despite attempts to control the exchange rate in the parallel (black) markets by the government and the Central Bank, However, the Great Pharaoh of Iraq increased his power to destroy the Iraqi dinar, and with it the market.[/size]
[size=45]The exchange rate in the parallel markets is still recording a significant increase compared to the official rate, as the capital, Baghdad, recorded, on Sunday, 154,100 Iraqi dinars for 100 dollars, while the official exchange rate stands at 1,320 dinars to the dollar. As for the Central Bank, it sold more than $200 million daily, despite the approval of the country’s tripartite general budget.[/size]
[size=45]The people and their government[/size]
[size=45]The government has repeatedly confirmed, through Iraqi Prime Minister Muhammad Shiaa Al-Sudani, that the exchange rate will decline immediately after the approval of the country's general budget, which was also confirmed by many government officials over the past months, but that has not happened yet. While the rise in the exchange rate of the dollar against the Iraqi dinar raised concerns among official and popular circles in Iraq, after the US Federal Bank set strict regulatory conditions requiring the currency selling window to display lists of dollars sold that include the names of the people and beneficiaries to indicate the Federal Bank’s position on the safety of the purchasing process for the party presented. The request was not linked to entities subject to international embargoes or sanctions by the US Federal Reserve. This procedure prompted the Central Bank to wait a period of seven days at the minimum to complete the sale process, according to economic specialists. Representative Raed Al-Maliki explained to (Al-Mada), that “the solutions proposed by the government regarding exchange rates did not contribute to addressing the root of the problem, and it was expected that the government’s determination of the exchange rate was what determined the price, and what happened in the budget in terms of approving the price, but in the market the price was Differently and there was a gap.” Al-Maliki pointed out that “the real cause of the problem, which will solve the exchange rate crisis, is related to trade, as a large part of Iraqi trade and imports are not covered by dollars, and the reason for this is that they occur unofficially, through unofficial outlets, and countries that refuse to deal with the United States.” “American.” He stressed, “The state’s continued lack of control over trade and the continuation of informal trade that takes place without knowledge and passes through official ports,” noting that “this trade has deprived Iraq of many revenues related to the economic situation.” Al-Maliki pointed out that “the real cause of the problem, which will solve the exchange rate crisis, is related to trade, as a large part of Iraqi trade and imports are not covered by dollars, and the reason for this is that they occur unofficially, through unofficial outlets, and countries that refuse to deal with the United States of America.” He stressed, “The state’s continued lack of control over trade and the continuation of informal trade that takes place without knowledge and passes through official ports,” noting that “this trade has deprived Iraq of many revenues related to the economic situation.” Al-Maliki pointed out that “the real cause of the problem, which will solve the exchange rate crisis, is related to trade, as a large part of Iraqi trade and imports are not covered by dollars, and the reason for this is that they occur unofficially, through unofficial outlets, and countries that refuse to deal with the United States of America.” He stressed, “The state’s continued lack of control over trade and the continuation of informal trade that takes place without knowledge and passes through official ports,” noting that “this trade has deprived Iraq of many revenues related to the economic situation.”[/size]
[size=45]sanctions[/size]
[size=45]Economic experts suggested that the reason for the rise in the exchange rate of the dollar against the dinar to a higher price was due to the decrease in the amount of currency that the Central Bank sells to merchants and banks. They also indicated that the sanctions that recently affected several Iraqi banks were one of the reasons for this decrease. While these record highs come despite the fact that the Central Bank of Iraq is trying to control the dollar exchange rate to ensure financial stability in the Iraqi markets. The Central Bank of Iraq confirms that it is a temporary rise, while economists warn that the price will not quickly return to its previous state at the threshold of 147 thousand dinars approved over the past two years, and that the exchange rate continues to rise in this way, according to them, will lead to higher inflation and price increases.[/size]
[size=45]Discussions by the US Treasury began with the Central Bank of Iraq and even direct discussions with private Iraqi banks, and the Treasury delivered a kind of threat to these banks by imposing sanctions, and this is what prompted the banks to take new mechanisms in dealing with the dollar in order to protect themselves, and among these measures is to reduce the purchase of the dollar, Any questionable transaction is not passed on by these banks, for fear of US sanctions, and this measure contributed significantly to the decline in the Central Bank’s sales, and this decline reached more than (60%), especially with the suspension of the sale of currency by the Central Bank to more than four banks. It has great weight in purchasing the currency from the central bank, which led to a gap in demand, and for this reason there was an increase in the exchange rate in the local market, and despite the central bank issuing new instructions by increasing sales to money exchangers, the price of the dollar has not stabilized yet.[/size]
[size=45]deterministic relationship[/size]
[size=45]In the opinion of parliamentary committees, the rise in oil prices will not change anything in the issue of restoring the dollar exchange rate because there is a political will to keep the situation as it is now, and that the only hope is to change the current faces and parties during the elections, as the decision to raise the price of the dollar had adverse results for the citizen. Simple, none of the government’s promises regarding reviving the private sector, providing job opportunities, etc. have been fulfilled. While economic expert Zuhair Al-Hassani explains to (Al-Mada), “Given that oil payments are made in dollars, the relationship between them is (an inevitable relationship), so if oil prices rise, the dollar exchange rate rises, and vice versa.” Al-Husseini adds, “The Iraqi dinar is strong because its cover of foreign currencies is high. As for attempts to reduce the dinar’s exchange rate, they are internal attempts before they are foreign, because the decline in the dinar’s exchange rate is due to the introduction of a counterfeit dollar from abroad into the Iraqi market, which affects the value of the dinar’s exchange rate.” Exchange dollars and dinars.[/size]
[size=45]Currency Bank[/size]
[size=45]A Western website specialized in Iraqi economic affairs stated that one of the reasons for the rise in the dollar exchange rate in Iraqi markets is that what is happening in Iraq is the “largest difference” between market prices and the official “window” price of the Central Bank of Iraq. He also urged the Central Bank to activate the steps of selling foreign currency at official prices to citizens through purchases with electronic cards, opening sales outlets for travelers or patients outside Iraq, or financing foreign trade, in accordance with fundamentalist contexts and international standards for opening documentary credits and remittances. The Finance Committee hosted the Governor of the Central Bank, Ali Al-Alaq, on July 24, to discuss the banking sector, the high exchange rates of the dinar against the dollar, and the reasons for the sanctions imposed on a number of Iraqi banks.[/size]
[size=45]The relationship between “there is optimism in the process of reforming the economic reality and money management, and the process of controlling the exchange rate,” adding: “We hope to achieve economic stability and improve performance,” pointing out that there is a problem related to the presence of sanctions imposed on some banks, which leads to challenges that must be faced. There is a need to find sufficient measures to control the labor market and the exchange rate. Specialists have confirmed that opening outlets to sell the dollar on a monthly basis to every citizen does not have any positives. Rather, this matter will lead to an increase in currency smuggling operations and an increase in black transfers, and this matter will raise the dollar more in the market, as the citizen will sell the dollar to speculators, with the aim of making black transfers, and for this reason There is no such government approach.[/size]
[size=45]From time to time, “proposals and demands” come out to sell the dollar directly to all citizens, to eliminate the dollar crisis and its rise in the parallel market, which is rejected by experts.[/size]
[size=45]smuggling[/size]
[size=45]The government took a decision last February to raise the value of the Iraqi dinar against the dollar after its price reached 1,470 dinars per dollar at the end of 2020. It was implemented by the previous government to fill the deficit in expenses and salaries due to the decline in oil prices in global markets. While the Ministry of Interior prevented merchants and citizens from dealing in dollars in markets and shops, and limited transactions to the Iraqi dinar.[/size]
[size=45]Economic specialists point out that the market requires many measures to maintain currency stability, most notably preventing smuggling.[/size]
[size=45]It seems that the economic and security solutions to the rise in the price of the dollar in the parallel market inside Iraq did not achieve any significant results, but rather complicated the scene and led, in part, to an increase in prices in the Iraqi markets.[/size]
[size=45][You must be registered and logged in to see this link.]