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- WEDNESDAY, SEPTEMBER 27, 2023, PM 7:36
- KARAR AL-ASSADI
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Specialists and representatives downplayed the impact of [You must be registered and logged in to see this link.] to prevent commercial dealings in dollars and limit banks authorized to carry out financial transfer operations, stressing that all decisions issued by the bank and the government will not control the exchange rate, or restore its stability in the local market, unless “remittances” are controlled. "Black people."
Economic affairs expert Nabil Al-Marsoumi says, “The decision of the Central Bank of Iraq to dispense with external transfers and to rely on banks licensed in Iraq on correspondent banks for external transfer operations is a measure to regulate the money transfer process, and has absolutely nothing to do with the issue of reducing the price of the dollar.”
The Governor of the Central Bank, Ali Al-Alaq, announced last Sunday that the bank would proceed to dispense with external transfers “next year” and that banks licensed in Iraq would rely on correspondent banks in external transfer operations, while he indicated that transfers through correspondent banks amounted to 60 percent of the total transfers ( Outside the electronic platform of the Central Bank), Al-Alaq confirmed that this came after an agreement between the Central Bank of Iraq and the US Federal Bank, similar to countries around the world, where central banks do not carry out executive work, and their role is focused on supervision and control.
Al-Alaq also revealed that the bank seeks to open channels of direct communication for Iraqi banks with their foreign counterparts in correspondence and commercial exchange, and to open transfer channels in different currencies, including (the Emirati dirham, the Turkish lira, the Indian rupee, the euro), in addition to his emphasis that the coming year will witness the inventory of all transactions. Domestic trade and other transactions are in Iraqi dinars, instead of dollars, except for those delivered to travelers.
Al-Marsoumi explains, “The Central Bank’s decision to limit internal commercial and other transactions to the Iraqi dinar instead of the dollar will not have any impact on the issue of reducing the price of the dollar in the parallel market, but the Central Bank wants this step to eliminate the phenomenon of dollarization, which is preventing dealing in dollars in the country.” The local market through purchasing goods, cars, or real estate, and we believe that this matter is difficult to implement, and therefore the Central Bank wanted this step to create a media show and nothing more.”
He confirms that “the Central Bank of Iraq issued a directive to make transfers from Iraq in the currencies of the euro, the Emirati dirham, the Turkish lira, or the Indian rupee, and this is the practice in many countries in the region and the world, but the problem with Iraq remains that its oil exports are delivered in dollars and therefore Its revenues are in dollars, and converting this money to other currencies loses its importance, and Iraq’s stock of these currencies is very limited due to the lack of any revenues from non-oil exports by dealing in such currencies.”
The expert in economic affairs continues, “The rise in dollar prices in the parallel market is due to the process of transferring money in order to pay commercial dues between Iraq and Iran, especially since Iran exports to Iraq annually more than 10 billion dollars, in addition to Iraqi travelers to Iran. They understand They take dollars exclusively from the parallel market, because they are prohibited from receiving dollars through banks for travel purposes, due to the sanctions on Iran.”
US Assistant Secretary of the Treasury, Elizabeth Rosenberg, arrived in Baghdad on the 13th of this month, and held a meeting with the Governor of the Central Bank, Ali Al-Alaq. According to the official statement, the outcomes and results of previous meetings were followed up between the Central Bank of Iraq on the one hand, and the US Department of the Treasury and the US Federal Bank on the other. Others, in addition to the possibility of providing technical support in the field of financing foreign trade through reliable banking channels with mechanisms that enable the financing of legitimate foreign trade, in various currencies, including the euro, the Chinese yuan, and the UAE dirham, as well as organizing trade movement with Turkey.
Prime Minister Muhammad Shiaa Al-Sudani also met with Rosenberg, and discussed with her joint cooperation between financial institutions in Iraq and the US Department of the Treasury, and discussed the government’s measures in implementing financial and banking reforms, to reduce corruption operations in all its forms.
It is noteworthy that the exchange rate of the dollar jumped about two weeks ago in the local market to 156 thousand dinars per 100 dollars, after it was about 153 thousand dinars per 100 dollars during the last period.
For his part, financial affairs expert Nasser Al-Kanani explains, “All the decisions taken by the Central Bank of Iraq, from the beginning of the dollar crisis until today, are patchwork measures and do not contain any solutions to the real crisis. That is why we see the dollar rising on an almost daily basis, and we expect it to rise further during next period".
Al-Kinani continues, “The dollar crisis is mainly caused by black remittances, especially with the Iranian side, and that is why small merchants are working to collect dollars from the parallel market in order to pay the money for those goods, and for this important issue the government or the central bank have not found any solutions, despite it.” The main cause of the crisis.
He points out that "the dollar has not witnessed any decline, with the continuation of black remittances. On the contrary, it may witness an increase, and this fluctuation in the exchange rate in the local market will certainly have repercussions in raising the prices of various goods, especially since there are merchants who always take advantage of such circumstances." In order to increase their profits by manipulating prices.”
It is noteworthy that news was received, during the presence of the US Assistant Secretary of the Treasury in Baghdad, about an unannounced meeting being held between the Deputy Governor of the Central Bank of Iran, the US official, and Iraqi officials in Baghdad, to resolve the issue of dealing in the dollar between Iraq and Iran, but this information has not been confirmed.
Despite the controls on banks, currency smuggling operations continue, and are carried out through bags transported overland to Turkey and Iran, after withdrawing the dollar from the local market and not through the official dollar selling window, and specialists call them “black transfers.”
Earlier this week, Representative Hadi Al-Salami sent a request to host the Prime Minister in the House of Representatives to explain the reasons for not ending the assignment of the governor of the Central Bank and not controlling the rise in the exchange rates of the dollar against the Iraqi dinar in the parallel market.
In addition, the independent representative in Parliament, Sajjad Salem, believes that “Prime Minister Muhammad Shiaa Al-Sudani’s promises regarding controlling the dollar crisis in Iraq are still just promises, despite the government and the Central Bank announcing many decisions and directives during the past periods.”
Salem points out that “the dollar is still smuggling from Iraq via black remittances to Iran, Syria, Turkey and other countries, especially since the smuggling routes have become many. In contrast, we do not see government measures to limit these operations, which have caused damage to the internal Iraqi economy and the fluctuation of local market prices.” ".
He stresses that "the request to host Prime Minister Muhammad Shia al-Sudani in the Iraqi parliament is normal and is part of the tasks and work of the representatives and the council. Parliament must listen to the government’s decisions regarding the dollar crisis that has not been resolved for months, and know the government’s ability to implement its promises in this regard."
Months ago, Washington intervened to limit the smuggling of the dollar from Iraq, which led to a rise in the price of the dollar in the local market to a record level of 170 thousand dinars per hundred dollars, due to the decline in the Central Bank’s sales of the dollar, due to its submission to the international “SWIFT” financial system.
The Central Bank has issued three packages of measures to control the sale of the dollar and ensure that it is not smuggled abroad. At the beginning of the crisis, it reduced currency auction sales, and then recently returned to its previous level of about $250 million per day.
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