Iraq: a broad governmental and parliamentary movement to confront the decline in the value of the dinar

Iraq: a broad governmental and parliamentary movement to confront the decline in the value of the dinar

July 24, 2023

For the fourth day in a row, the Iraqi dinar continues to decline against the dollar in currency market trading, after US sanctions against 14 private banks, due to violations related to their dealings with entities imposed by Washington, most notably Tehran, while the Iraqi government and parliament are moving to find solutions to the new crisis.

Today, Monday, the Baghdad and Erbil stock exchanges recorded a new decrease for the dinar, to 1530 dinars per dollar. Yesterday, Sunday, Prime Minister Muhammad Shia’ al-Sudani held a meeting that included the governor of the Central Bank, Ali Al-Alaq, the bank’s advisors and the head of the investment department in it, to discuss the measures taken with regard to the stability of the currency in the Iraqi market.

According to an Iraqi government statement, “During the meeting, Al-Sudani directed the Central Bank to make greater efforts to simplify procedures for citizens, and to emphasize the continuation of the procedures that the Central Bank will take, regarding compensation for citizens and companies who buy dollars at the unofficial price, through the Central Bank deducting the financial difference from banks and exchange companies that sold the dollar at more than its price specified in the bank, after proof of purchase from those companies.”

Demands for the Minister of Finance, Taif Sami, and the Governor of the Central Bank, Ali Al-Alaq, to ​​attend Parliament to explain the reason for the inability to raise the value of the dinar

For his part, a member of the Finance Committee in the Iraqi parliament, Mueen Al-Kadhimi, said that they demanded that the Minister of Finance, Taif Sami, and the Governor of the Central Bank, Ali Al-Alaq, attend the parliament to explain the reason for the inability to raise the value of the dinar.

Al-Kazemi said in statements to reporters yesterday, Sunday: “We are waiting for them to attend this week to discuss factors and ways to raise the value of the dinar in the future.”

For his part, a member of the Finance Committee in the Iraqi parliament, Jamal Cougar, mentioned yesterday, Sunday, about summoning the Minister of Finance and the Governor of the Central Bank: “We submitted this request last week, and the date for their attendance has not been set yet, so we are still awaiting the response of the two institutions.”

In the context, informed sources told Al-Araby Al-Jadeed that Prime Minister Muhammad Shia’a Al-Sudani was subjected to “pressures” by the ruling coalition, the “Coordination Framework”, in order to find quick solutions that contribute to raising the exchange rate of the dinar against the dollar.

According to the sources, “Al-Sudani is working continuously with his government team to find these solutions, including making administrative changes to the executive staff within the central bank, in the event that the dinar continues to decline against the dollar and the bank is unable to face this rise, which contributed significantly to raising food prices in the market again.”

For his part, economic expert Nasser Al-Kinani told Al-Araby Al-Jadeed that “US sanctions against 14 private banks have a significant impact on the rise in the exchange rate of the dollar in the local market, especially since those banks were working on black transfers to finance some imports from the Iranian side.”

Muhammad Shiaa al-Sudani was subjected to “pressures” by the ruling coalition, the “coordinating framework”, in order to find quick solutions that contribute to raising the exchange rate of the dinar against the dollar.

And Al-Kinani indicated that “the current rise in the exchange rate of the dollar occurred due to banks, entities and personalities that relied on black remittances to finance some imports, and which began withdrawing dollars from the market in order to finance and pay those imports, and this rise will not stop, and it will be gradual, and it is not excluded that it will reach 2000 Iraqi dinars to the dollar during the coming days, if the crisis remains without real solutions by the government and the central bank.”

The economist added, “All government solutions, during the past months, to control the exchange rate of the dollar were formal and unreal, and for this reason the market witnessed great confusion after imposing sanctions on a number of Iraqi banks, and we believe that these sanctions are not the last, but there will be new sanctions during the coming period against new banks working on black transfers to Iran and countries that have an American ban.”

Punishing Iraq’s banks: a shake-up in the financial sector and expectations of dollar scarcity
Last Wednesday, the US Treasury Department imposed sanctions on 14 Iraqi banks for dealing with US sanctioned parties, in reference to Iran.

The Wall Street Journal, quoting US officials, said that the move came after information was revealed that the targeted banks were involved in money laundering and fraudulent transactions.

The sanctions included the “Musharsar Islamic Bank for Investment and Finance,” “Al Qartas Islamic Bank for Investment and Finance,” “Taif Iraq Company,” “Elaf Bank,” “Erbil Bank for Investment and Finance,” “International Islamic Bank,” “Trans Iraq Bank,” “Mosul Bank for Development and Investment,” “Al Rajeh Bank,” “Sumer Commercial Bank,” “International Islamic Trust Bank,” “Ur Islamic Bank,” “Islamic World Bank for Investment and Finance,” and “Zain Iraq Bank.” Islamic Investment and Finance.

The US decision comes after a similar decision several months ago, in which several similar banks were placed on the sanctions list, namely, “Al-Ansari Bank”, “Middle East”, “Al-Qafed” and “Asia”.

alaraby.co.uk