What is the relationship between regional tension and the rise of the dollar in Iraq?

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[size=52]What is the relationship between regional tension and the rise of the dollar in Iraq?[/size]

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2024-10-07
Baghdad
The Iraqi market witnessed a noticeable rise in the exchange rate of the dollar against the dinar, until it exceeded 155 thousand dinars for every 100 dollars, coinciding with the intensification of the war in Lebanon, and the growing expectations of an Israeli strike against Iraq or Iran. Observers attributed this rise to several reasons, the first of which is the state of panic among citizens from the outbreak of a comprehensive war, which prompted them to store the dollar, in addition to the increased demand for it by Iran and armed factions, in anticipation of what is coming.[/size]
[size=45]Economic expert Nabil Al-Tamimi said in an interview with “Al-Alam Al-Jadeed” that “the dollar exchange rate crisis is temporary, and it is not economic. There is no defect or crisis within the Central Bank of Iraq. Rather, its cause is due to the existence of fears among citizens, which made them store the dollar, in addition to the media hype and the state of panic regarding the events of the war in Lebanon.”[/size]
[size=45]Al-Tamimi added, “The talk about Iraq entering a state of war with Israel and the possibility of targeting Iraqi sites and facilities has led to citizens’ lack of confidence in the dinar or in banking transactions, and this is the main reason for the dollar crisis. In this case, the crisis is temporary and not ongoing, and the market needs confidence from the government to return prices to their previous state.”[/size]
[size=45]The price of the dollar rose in the Iraqi markets to 155,750 dinars for every 100 dollars, according to today's price, Monday, after it began to rise to more than 150,000 dinars, following the assassination of Hezbollah Secretary-General Hassan Nasrallah in an Israeli strike in Lebanon. This rise came after the exchange rate had been stable at 148,000 dinars for every 100 dollars.[/size]
[size=45]The region is witnessing great tension, as Iran bombed Israeli military bases near Tel Aviv, during a large-scale missile attack, in response to the assassination of the former head of the political bureau of Hamas, in addition to the Secretary-General of Hezbollah, Hassan Nasrallah.[/size]
[size=45]Since last week, Israel has intensified its attacks on Lebanon, especially the southern suburb, destroying most of the infrastructure and buildings, amid expectations of an Israeli response to Iran, as well as an Israeli response to Iraq, after it announced that two Israeli soldiers were killed by a drone launched from Iraq.[/size]
[size=45]For his part, financial expert Abdul Rahman Al-Mashhadani explained, during an interview with “Al-Alam Al-Jadeed”, that “the current rise in the dollar exchange rate is not economic, as the dollar was stable for a long time, and the Central Bank was selling in large quantities that covered the volume of Iraqi trade, reaching 270 million dollars per day.”[/size]
[size=45]Al-Mashhadani continues, “The political situation and the crisis that threatens the outbreak of war and its expansion, including Iraq and Iran, and the reactions towards the countries that support Israel, are the main reason behind the rise in the price of the dollar.”[/size]
[size=45]He confirms that “there are two reasons behind the increase, the first is that a large number of traders have obligations with suppliers outside Iraq, and when the economic and security situation deteriorates, the obligations remain on them, and they try to fulfill their obligations as soon as possible, because the trade process is linked to the reputation of the trader, so he wants to pay it, and tries to obtain the dollar in an unofficial way.”[/size]
[size=45]“The other reason is due to the fears among citizens, who, with the intensification of the crisis and daily news about the worsening situation, want to keep their dollar reserves in anticipation of travel or any emergency,” the financial expert added, “Also, due to the current security crisis, there is no trust in banking transactions, and citizens want to store dollars in their homes or with them personally, and there are 50 billion dollars stored inside the country, because there is a fear of banking transactions, as a result of fear of economic sanctions that may be imposed on certain banks or the deterioration of events, and thus the collapse of banks, as happened in Lebanon.”[/size]
[size=45]For months, Iraqi factions have been launching missile and drone attacks on Israel in support of the Palestinian resistance in the Gaza Strip, but the escalation began to intensify since the Lebanese Hezbollah entered into the mutual shelling with Israel until the escalation reached its peak with the assassination of Nasrallah.[/size]
[size=45]Last week, Asharq Al-Awsat newspaper quoted informed sources as saying that Tel Aviv had identified 35 targets inside Iraq that could be struck at any moment, including targeting prominent political leaders and faction leaders, similar to what happened in Lebanon. At the same time, it indicated that Prime Minister Mohammed al-Sudani had asked prominent Shiite figures to mediate to rein in the factions and prevent Iraq from being dragged into the war between Lebanon and Israel.[/size]
[size=45]In addition, economic expert Jawad Malekshahi stated, during an interview with “Al-Alam Al-Jadeed”, that “since Mohammed Shia Al-Sudani assumed the position of Prime Minister until today, the crisis has continued, and it is being manipulated by suspicious hands linked to regional agendas.”[/size]
[size=45]He points out that “the main problem at the present time behind the crisis is Iran’s need for hard currency, and the more Iran needs hard currency as a result of the siege imposed on it, the more dollars are accumulated in the Iraqi market to save the Iranian economy, which causes a shortage in the Iraqi market and an increase in the price against the dinar.”[/size]
[size=45]He explains that “this scarcity benefits the parties linked to the Iranian axis from two sides: on the one hand, supporting the Iranian economy and preventing its collapse, and on the other hand, using it as a pressure card against Al-Sudani’s government to remain under the control of Iran and the political forces loyal to it in the government and the House of Representatives, so that it does not rebel against Tehran’s instructions.”[/size]
[size=45]The expert added, “The main reason for the current rise is due to Iran and the armed factions’ need for the dollar, due to the crisis in Lebanon, and also to finance themselves, as well as due to their fears of the ongoing targeting.”[/size]
[size=45]Al-Alam Al-Jadeed was one of the first newspapers to reveal that currency smuggling was continuing, despite controls on banks, and was being carried out via bags transported overland to Turkey and Iran, after the dollar was withdrawn from the local market and not through the official dollar selling window. Specialists at the time called it “black transfers.”[/size]
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