Iraqi-Iranian negotiations to solve the problems of dealing with the dollar…an official reveals the details
Iraqi-Iranian negotiations to solve the problems of dealing with the dollar…an official reveals the details
01-06-2024 | 04:18
The head of the Iran-Iraq Joint Chamber of Commerce, Yahya Al-Ishaq, said that the Iraqi government and economic activists are trying to resolve the relationship between the dinar and the dollar with regard to Iran and other countries, indicating that there are negotiations between the Central Bank of Iran and its Iraqi counterpart in this regard.
The Iraqi government banned dealing in the dollar with five countries, including Iran, which means that Iranian merchants and businessmen can only buy the currency they need from the Iraqi market at a price higher than the exchange rate in this country’s official market.
In an interview with the ILNA Labor Agency, Al-Ishaq considered these developments to be temporary and not new for Iran, and he explained: What is happening today in trade relations between Iran and Iraq is not a new thing. About three months ago, the Iraqi government established rules to regulate the relationship between the dinar and the dollar. Under which all importers of goods into Iraq are obligated to obtain their currency from the Central Bank of Iraq at the official rate, as this was previously done through exchange offices in the country.
He added: Given the limitations faced by importers of goods from Iran in obtaining the dollar in the official market, they buy the dollar from the free market and exchange it through exchange offices, where the price difference is about 20%, and this may increase the problems for Iranian merchants.
Al-Ishaq confirmed that the Iraqi government is trying to resolve the relationship between the dinar and the dollar with regard to Iran and other countries, noting that there are negotiations between the Central Bank of Iran and its Iraqi counterpart in this regard.
He continued: Iraq’s problems with Turkey in this regard have recently been resolved, and with regard to Iran, it is very likely that they will be resolved as well, so that the commercial flow of Iranian merchants to Iraq will not face any problem. These solutions will help the Iraqis achieve the desired system and consolidate the trade flow for the Iranians at the same time.
The head of the Joint Iran-Iraq Chamber of Commerce denied reports about the impact of these developments on the local currency market in Iran and said: The monetary relationship between Iran and Iraq is divided into two parts. The first includes financial exchanges for the public sector in Iran and Iraq, which includes gas and electricity exports and the like, and the other is The monetary relationship between the private sector in the two countries.
He concluded by saying: The private sector in Iran and Iraq has not faced a crisis in trade so far and has suffered few losses. Currently, the level of export flows to Iraq is almost stable, and even in the past eight months, Iran’s exports to Iraq increased by 34% compared to the same period last year and reached 6 billion dollars, and this number is expected to rise to 11 billion. By March 20 (the beginning of the Iranian New Year).
A few days ago, a member of the Iranian-Iraqi Chamber of Commerce said that the Iraqi Central Bank’s law to control the dollar and the announced restrictions do not mean the end of trade exchanges between the two countries.
Hamid Hosseini believed that Iranian businessmen and merchants should not worry too much about the consequences of the new Central Bank of Iraq law, because other countries such as Russia, Syria, Venezuela, and others are also facing similar problems, but they have managed to solve them.
Iranian experts believed that the Iraqi government’s new law could have an impact on the local currency market in Iran.
The Iraqi government’s new law prohibits activists in the Iraqi market from conducting any small or large exchange in foreign currencies.
Other countries are considered an important source of foreign exchange for Iran, as all non-oil trade transactions in recent years have been carried out in dollars due to economic sanctions.
Analysts believe that under the aforementioned law, the Central Bank of Iran must make efforts to enhance the entry of foreign currency into the country, otherwise the market balance rate will be disturbed and losses will be covered from the pockets of market makers.
At the beginning of this year, the Central Bank of Iraq revealed the mechanism for delivering incoming remittances in the US dollar currency.
A statement by the Central Bank of Iraq stated, “In implementation of the objectives of the monetary policy and to enable banks to meet the needs of their customers for foreign currency, the Central Bank of Iraq has determined the entities covered by receiving its external transfers in cash in the US dollar, as of January 2, 2024, according to the following:
– Diplomatic missions, organizations and agencies.” All international organizations operating in Iraq.
– Non-governmental civil society organizations registered in the General Secretariat of the Council of Ministers, in the event that the foreign donor stipulates that the amounts of incoming foreign transfers be paid in the dollar currency inside Iraq.
– Government contracts in force in the US dollar currency, and ongoing contracts for grants, loans, and foreign agreements. –
40% of the remittances received by Iraqi exporters resulting from their exports abroad.
The statement continued, “With the exception of what is mentioned above, banks are allowed to deliver to their customers the amounts of their remittances received from abroad in cash, and from the personal resources available to the bank, and according to the agreement between the bank and the customer.” According to the statement ,
the Central Bank of Iraq confirmed that banks continue to open bank accounts for customers in foreign currencies in exchange for (interests/returns), and that the customer has the right to withdraw deposits and interest/returns deposited in cash.
The Central Bank of Iraq noted that, “Banks are not allowed to automatically transfer customer funds received from outside Iraq in the US dollar currency to the dinar currency except with the customer’s approval, stressing the decisions of the Council of Ministers to prevent internal transactions in foreign currency and to enhance confidence in the Iraqi dinar.”
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