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Baghdad today - Baghdad
Today, Wednesday (October 4, 2023), economic expert Nabil Al-Marsoumi identified two options to address the dollar problem in Iraq, while confirming that the exchange rate is on its way to rising during the coming period.
The dollar exchange rates in Iraqi local markets are witnessing unstable jumps until they approached 160 thousand dinars for every 100 dollars, in conjunction with information about American intentions to impose sanctions on new banks that are not committed to the terms of transferring and financing trade using the dollar.
The key to the solution
Al-Marsoumi said in an interview with “Baghdad Today” that “the key to resolving the crisis and the dollar problem in Iraq exists and is not far away,” pointing out that the Central Bank’s current sales are to cover external transfers and documentary credits, and therefore their numbers are reasonable and proportional to the volume of foreign trade.
He added, “The main problem is that the Central Bank financed trade with Iran, which amounts to $10 billion, through external transfers to Emirati banks, before it adopted the electronic platform, and after it was cut off, merchants and companies began to finance imports through the parallel market to obtain the US dollar.” This means that it is not for smuggling or money laundering, but rather for real trade.”
Al-Marsoumi pointed out, “The more the electronic platform tightened its procedures in terms of reducing the shares of banking offices and companies, the more the scarcity of cash dollars increased, in addition to the fact that the volume of tourism between Iraq and Iran is large and amounts to huge sums of money that are covered through the parallel market because travelers are deprived of obtaining dollars.” Via the official price.
He continued, "The dollar is on its way to rise, especially with the Central Bank's action to reduce banks' shares of the cash dollar by half, accompanied by the imminent release of budget funds, which will lead to an increase in the import of consumer and investment materials because the volume of internal production does not cover the need."
The economic expert stated, “There are two options to end the dollar problem in Iraq, which are either to cancel the sanctions imposed on Iran or to cut off trade with it because adopting other currencies may fall under the heading of American sanctions,” pointing out that the adoption of bartering Iraqi oil for Iranian gas has not been implemented. "Actually because of the sanctions."
On Monday (September 25, 2023), the American newspaper The Cradle described the recent measures of the Central Bank of Iraq as “severe,” by restricting dealing in the dinar and preventing the circulation of the dollar within the country, while noting that these measures came after American warnings against the Central Bank of Iraq due to continuing violations. .
The newspaper said, according to a report translated by “Baghdad Today,” that the new measures come against the backdrop of “warnings” issued by the US Federal Reserve against the Central Bank of Iraq, announcing the continuation of what it described as previous “violations” on the basis of which sanctions were imposed on 14 Iraqi banks, threatening to implement more. Sanctions on other banks.
The newspaper also confirmed that the dollar smuggling operations from inside the country led directly to “reducing the value of the Iraqi dinar and exposing it to significant inflation,” explaining that the measures of the Central Bank of Iraq come as another step to ensure the stability of the Iraqi dinar, especially in the current stage, which the newspaper described as “sensitive” as a result of American pressure on the central bank.
Penalties and bans
It is noteworthy that a third of Iraqi banks are now exposed to US sanctions and a ban on dealing in dollars, which the Iraqi authorities are trying to avoid expanding due to its significant negative impact on the Iraqi economy, according to the newspaper’s description.
On Sunday (September 24, 2023), the Central Bank of Iraq announced the issuance of new instructions for selling the dollar, indicating that it seeks to open direct channels of communication for Iraqi banks with their foreign counterparts in correspondence and commercial exchange.
He pointed out, "The coming year will witness the restriction of all internal commercial and other transactions to the Iraqi dinar instead of the dollar."