The citizen wonders: When will exchange rates be controlled

The citizen wonders: When will exchange rates be controlled

10-12-2023

Dr. Basil Abbas Khudair
Citizens in general do not have direct interests with the dollar and its associated exchange rates or other details. The vast majority of the population consists of employees, retirees, earners, those covered by social protection, the unemployed, those with special needs, or those who do not have the ability to work, and most of them manage their livelihoods with the dinar. Through the salaries, wages, subsidies, or other methods they receive, which are often limited and approach or move away from the requirements of subsistence living, they constitute a large percentage of the country’s population, but they do not need the dollar except in specific cases such as travel, study, immigration, or treatment. Or other cases, and although the dollar has witnessed important events since 2003 until today, including smuggling, waste, and money laundering operations, most citizens had nothing to do with the issue of the dollar. The Central Bank opened the currency window with the aim of protecting people from dollarization, and through it business owners trade dollars. AsThe tool used is import, which constitutes an important percentage of consumption. In light of this, it is assumed that the majority of Iraqis will obtain their needs for local and imported goods and services at almost stable prices because the dollar is insured for those who need it, which means the poor give up the dollar in exchange for the relative stability of prices in the markets.

It was Mr. Al-Kadhimi’s government that lit the fuse of the people’s livelihood crisis, which created difficulties in obtaining the minimum or acceptable requirements for many categories of the people, when his government, in a joint agreement with the Central Bank and some politicians, changed the exchange rates to 1,450 dinars per dollar, and this change was not accompanied by Measures to compensate for the decrease in purchasing power that occurred due to the rise in prices once and without any compensation by a rate of no less than 25%. What this change means is forcing the destitute and limited-income people to live within the new reduction in the price of the dinar without this being accompanied by a change in the salaries of employees and retirees who constitute a percentage An important part of the population, and this change made it possible for many weak-minded sellers and exploiters to greatly manipulate prices, even though the exchange rates were no more than 1,480 dinars per dollar on the black market. When the Al-Kadhimi government changed and the new government came, many breathed a sigh of relief, and their first demand was a return to the exchange rates. Previous, Sima OneOil prices witnessed increases and the state treasury became saturated with money and reserves of gold and currencies. After the government of Mr. Sudan took over the reins of executive authority and announced its government program and initiated a series of reforms that would affect the citizen’s livelihood, it decided to reconsider the exchange rate to be 1320 dinars per dollar, a measure that was not It represents all wishes because it is more than the price before the previous change, but many considered it a good sign to reduce prices and reach the break-even point between family income and spending requirements.

Oil is increasing and it is assumed that their living standards will improve by lowering prices. According to the Information Agency, revenues from selling oil amounted to $9.494 billion for the month of last September. Is it possible for the country to have such revenues and the price of the egg layer shift within days from 6 to 8 thousand dinars? The salaries of employees and retirees have not changed in dinars, and the incomes of workers in the private sector tend to decrease due to the recession in the markets?! .

It is true that the government and the Central Bank have taken a package of measures to control the dollar exchange rates on the black market, but the situation has not changed and is heading for the worse. The exchange rate at the moment of writing these lines is 1640 in the markets compared to 1320 for the official rate, and this corresponds to sales from the Central Bank of more than 240. A million dollars a day to meet import needs, and the logic of reason says that if the markets need 50 million dollars to meet the demand for the dollar outside the window, then where is the impact of sales with remittances that amount to ten times the demand in black, and where do the billions go when the state covers travel needs and other cases? Is it reasonable for these millions to be smuggled in cash while the state has a flag, a constitution, security, judicial and regulatory apparatuses, and trillions are spent on it? How long will we continue in this situation? Some expect that the price will exceed 1,700 within days and may cross the 2,000 dinar barrier days or weeks later. The issue bears dozens or even hundreds of questions, and the citizen does not accuse him.

What excites the minds and emotions of those affected by the rise in the dollar exchange rate are those expectations that are reassuring and then the situation gets worse, which is what happened from last February until today. The economic advisor expected, but the expectations did not come true, and yesterday the Prime Minister’s Advisor for Investment Affairs expected the return of stability to the dollar exchange rates. against the Iraqi dinar in the parallel market within a maximum period of two months, and he pointed out that what we were supposed to do in six years, we are trying to accomplish in one year, and this greatly affected the dollar exchange rate, adding: The second thing that happened was the presence of great corruption within a group From the banks and banking companies that led to the smuggling of the dollar, and he went on to ask: Will the price of the dollar continue to rise? The answer:Yes, it is possible that this rise will continue for a certain period of time, but we expect that within a month or two the exchange rate will begin to decline because 70% of trade in Iraq has moved to the electronic platform. In a related context, the State of Law coalition revealed a new government project related to trade exchange between Iraq and three countries. A leader in the coalition said in an interview with the Information Agency:There is a new government project to adopt currencies other than the dollar to deal with several countries, including China, Iran, and Russia, stressing that this project, if implemented correctly, will work to reduce the demand for the dollar in Iraqi markets, stressing that the current rise in dollar exchange rates in Iraq will not be able to be reduced by any party, whether it is The Central Bank or others, as long as the demand for it is high. Regarding America’s position on the new project, he made it clear that America has no relationship with this project, and it does not matter whether or not it agrees to the project to create a currency other than the dollar for Iraqi commercial transactions, provided that there is a will from Iraq and these countries.

If reliance is placed on the statement that expects that prices will be controlled after two months, or the statement that heralds to the people the new plan for dealing in trade in non-dollar markets, the duration of which has not yet been determined, then it is right to ask how the (simple) citizen will live with the dinars he receives or obtains. Does he manage his affairs day by day or month by month? Who can guarantee that the prices of goods and services will stop at a time when there is no hope of increasing the salaries of employees and retirees in the near term? Any increase is related to the budget that was prepared for three years, and it suffers from an annual deficit of more than 60 trillion dinars, and when taking into account that most of our economy depends on oil exports, the value, quantity, and prices of oil have no security because they are dependent on international variables and events that are becoming more and more complicated. We will find that we need practical solutions to answer all questions, and when the question is asked, the goal is not to give in to despair, but to formulate actual solutions to what is happening and not to fill pockets with an air of wishful thinking.

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