The Central Bank and the dollar... ill-considered measures, and worse is coming

by **Rocky** Sun 15 Oct 2023, 4:34 am

Rocky: Admin Assist; Posts : 280892
Join date : 2012-12-21

Post n°1

The Central Bank and the dollar... ill-considered measures, and worse is coming

by Rocky Sun 15 Oct 2023, 4:34 am

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

SATURDAY, 10-14-2023, PM 7:37
KARAR AL-ASSADI

[You must be registered and logged in to see this link.]
In a repeat of the scenes of objection faced by Lebanese banks, a bank inside the capital, Baghdad, last week witnessed screaming and shouting from some customers, after it refused to hand over citizens their money in dollars, even though their bank accounts were in dollars, which raised questions about the feasibility of the Central Bank of Iraq’s procedures and what It will cause it in the future.
Specialists and observers confirmed that the Central Bank’s decisions were flawed, including violations, the most notable of which was preventing the receipt of remittances in dollars. While they warned of the rise in the dollar exchange rate in the parallel market to more than it is now, due to those measures, they held the government responsible for not controlling the markets, desiring the step of reducing the official price. , to her search for only a quick "achievement".
Banking expert Nasser Al-Kinani says, “All the Central Bank’s decisions regarding confronting the dollar crisis are all decisions devoid of solutions, but rather decisions that exacerbated the crisis, especially with regard to preventing the receipt of the dollar for remittances.”
Al-Kinani adds, “Such measures will push many citizens to resort to the parallel market in order to buy the dollar, and this will certainly increase the demand for the dollar and lead to a new crisis, in which the dollar’s exchange rate will rise, and this is what is expected during the coming period.”
He continues, "The banks' refusal to deliver dollars to citizens with dollar accounts is against the laws. The transfer must be delivered to any citizen in the currency that reaches him, especially since handing citizens the Iraqi dinar exposes them to a great loss due to the large difference in the exchange rate with the parallel market."
Last week, local media circulated a video clip from inside an Iraqi bank, in which there was commotion and screaming as the bank refused to hand over to citizens their money deposited with it in dollars, even though they had deposited it in dollars.
Last week, Reuters published a report in which it quoted the Director General of Investment and Transfers at the Central Bank of Iraq, Mazen Ahmed, as saying that Iraq will ban cash withdrawals and transactions in US dollars as of January 1, 2024, with the aim of eliminating the illegal use of about 50 percent of... The amount of $10 billion that Iraq imports in cash from the Federal Reserve Bank of New York every year.
According to Ahmed, “Banks are suffering from the decline of the dollar, because many people are trying to withdraw the dollar at once amid a feeling of unease about the financial system,” while “We have no problem with the exchange rate reaching 1,700 dinars per dollar.”
The exchange rate of the dollar in the local market is about 161 thousand dinars per 100 dollars, and has been rising continuously for nearly two weeks, while its official price is 132 thousand dinars per 100 dollars.
For his part, financial affairs expert Mustafa Akram Hantoush says, “The Central Bank’s decision to refrain from handing over dollars to citizens who have bank accounts in dollars violates the law, and these decisions do not contribute at all to resolving the crisis.”
Hantoush points out that “the Central Bank of Iraq has become confused in many decisions regarding confronting the rise in the dollar, and all the decisions it took did not succeed in reducing the price, and the difference is still very large between the parallel price and the official price, and this matter greatly affected the local market in many transactions.” ".
He continues, “The dollar crisis in Iraq and its continued rise means the continuation of black remittance operations outside the platform, with the continuation of the dollar’s exit in many illegal ways to Iran, Syria, and other countries. The dollar crisis cannot be resolved unless solutions are found for black remittances and the ongoing smuggling operations are stopped.” And on a daily basis.”
The official at the Central Bank, Mazen Ahmed, after the spread of the Reuters report, issued a statement in which he denied the statements attributed to him at the agency, and confirmed that they “included journalistic formulations reported by the agency in an inaccurate form,” indicating that the Central Bank guarantees dollar deposits and for the citizen who deposited his money in dollars with... Any Iraqi bank previously or by 2024 has an inherent right to receive these amounts in cash and in US dollars, and no reference was made in the press interview to expectations that the exchange rate would reach 1,700, and there are no indications that the exchange rate in the parallel market would reach this level.”
On September 24, the Governor of the Central Bank, Ali Al-Alaq, announced 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 via correspondent banks amounted to 60 percent of the total. Transfers (outside the electronic platform of the Central Bank), and Al-Alaq confirmed that this came after an agreement between the Central Bank of Iraq and the US Federal Bank, similar to countries of the world, where central banks do not carry out executive work, and their role is focused on supervision and control.
It is noteworthy that the Central Bank had issued a decision on August 17, requiring banks to meet the dollar demands of customers who have dollar accounts.

Propaganda and justification
For his part, political analyst Ahmed Al-Sharifi confirms that “the Iraqi government’s decision to reduce the official exchange rate of the dollar was political and propaganda, and was not taken in accordance with economic studies aimed at reducing the price in the parallel market, and therefore the price in the market remained high without any decrease.”
Al-Sharifi added, “For many months, the government has failed significantly to reduce the exchange rate of the dollar in the parallel market, especially since operations to take out hard currency abroad are continuing, despite all the measures announced by the government and the Central Bank. There is a lack of real control over this file.”
He points out that "there are private banks affiliated with influential entities and figures that manipulate the price of the dollar without any accountability or oversight, to the point that these banks have begun stealing the quotas of the dollar allocated to travelers, with the aim of taking it out to some countries illegally, and outside the platform imposed by the US Federal Bank to prevent smuggling operations." .
On February 7, 2023, the Council of Ministers approved the decision of the Board of Directors of the Central Bank to amend the exchange rate of the dollar against the dinar, so that the price would be: 1,300 dinars per dollar.
US Assistant Secretary of the Treasury, Elizabeth Rosenberg, arrived in Baghdad on September 13, and held a meeting with the Governor of the Central Bank, Ali Al-Alaq, and 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 Treasury Department and the US Federal Bank on the other hand. 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.
In addition, a member of the coordination framework, Aed Al-Hilali, believes that “the Sudanese government and the monetary authority from the Central Bank and others are still working to control the dollar crisis, which existed before the formation of the current government, and many measures have been taken to resolve it.”
Al-Hilali confirms, “Ending the dollar crisis and controlling the parallel price takes time, and the government is working on that and continues to take many decisions that strengthen the strength of the Iraqi dinar, and eliminate the need for the dollar in any local dealings, and this strengthens the national economy.”
He points out that "all countries with strong economies are working to prevent any transactions in any foreign currency and limit local dealings to the national currency. Iraq is working on this and has succeeded in imposing this matter. The majority of transactions currently are in the Iraqi dinar, including the sale of cars, real estate and various electronic devices." ".
Local media reported in previous reports about currency smuggling continuing, despite controls on banks, and it is 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 at the time called it “black transfers.” .
Months ago, Washington intervened to limit the smuggling of the dollar from Iraq, which led to the price of the dollar rising in the local market to a record level of 170,000 dinars per 100 dollars, due to the decline in the Central Bank’s sales of the dollar, due to its subjection 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 300 million dollars per day.

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

Established in 2006 as a Community of Reality

Established in 2006 as a Community of Reality

Established in 2006 as a Community of Reality

The Central Bank and the dollar... ill-considered measures, and worse is coming

The Central Bank and the dollar... ill-considered measures, and worse is coming

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

Similar topics

Similar topics

Latest topics

World Headline News

Board Rules Click Below

Most active topic starters

Top posters

Top posting users this week

Top posting users this month

Disclaimer

Keywords

Search Query

Display results as : Posts Topics
Tags
Advanced Search