The Iraqi dinar is between the hammer of the US Federal Reserve and the anvil of smuggling the dollar abroad
The Iraqi dinar is between the hammer of the US Federal Reserve and the anvil of smuggling the dollar abroad
2023-08-20
Ali Al-Zubaidi
The dollar crisis raises the fears of the poor class in Iraq for fear of rising prices of consumer goods, which complicates the lifestyle in Iraq for this segment, and they are the majority, and the high exchange rate of the dollar against the Iraqi currency, which is the dinar
The US Federal Reserve has set strict control conditions that oblige the currency sale window to display lists of sold dollars that include the names of the persons and beneficiaries to indicate the Federal Bank’s position on the soundness of the purchase process for the party submitting the request, and that it is not linked to entities subject to international embargoes or sanctions by the US Federal Reserve (Iran, Syria, Lebanon and Yemen). (This procedure prompted the central bank to wait a maximum of seven days as an estimate for the completion of the sale process, according to economists.
And the exchange rate of the dollar continued its rise against the Iraqi dinar in the main stock exchange in the capital, Baghdad, since days, as it approached the barrier of 160 thousand dinars for the $100 category, and this rise is the first of its kind since 2003 until now. And then he went back down
The rise of the dollar in the Iraqi local markets caused an increase in the prices of commodities and foodstuffs.
In an attempt to limit this crisis, the Central Bank of Iraq announced a package of decisions to control the exchange rate of the dollar. The Board of Directors of the “Central Iraqi” discussed the repercussions and indicators of the rise in exchange rates in the local markets and the temporary pressures the foreign currency exchange rate has been exposed to for days resulting from internal and external factors, given the adoption of mechanisms to protect the banking sector, customers and the financial system, and since the requirements of foreign trade (for the purposes of Documentary credits or transfers) are fully covered by the official rate, i.e. 1465 dinars to the dollar for documentary credits and 1470 dinars to the dollar for transfers.
Banks review
The Central Bank of Iraq called on merchants to review banks directly and not resort to brokers and speculators to avoid charging their imports with undue commissions and expenses, referring in this regard to what was issued by the Council of Ministers in its Resolution 351 of 2022 regarding non-payment of customs duties and amounts of tax secretariats in advance, which will lead to a reduction Excess loops, easing procedures, and removing costs resulting from pre-demarcation problems. In the latest decision, the Central Bank of Iraq announced the facilitation of procedures for travelers to obtain foreign currency (dollars), and said, in a statement, that “the procedures were facilitated by expanding the outlets for selling foreign currency in cash by increasing the shares of bank outlets, and an increase in their shares will be initiated.” “.
On Tuesday, December 27, Prime Minister Muhammad Shia al-Sudani met with the Governor of the Central Bank of Iraq, Mustafa Ghaleb Makhaif, and al-Sudani listened to a detailed presentation from the governor regarding the rise in the foreign currency exchange rate and the most important measures taken by the bank in this field.
The Prime Minister urged the Central Bank to achieve general stability of prices and the exchange rate in accordance with the tasks stipulated in Articles Two and Three of the Iraqi Central Law, which stipulate that the Central Bank aims to achieve stability in the local exchange rate, organize and monitor the work of banks, enhance the safety and efficiency of payment systems, and develop the payments system, and stressed Al-Sudani stressed the need to take the necessary measures to prevent illegal speculation and everything that harms the local market and leads to higher prices.
electronic cards
He also urged activating steps to sell foreign currency at the official prices to citizens through buying with electronic cards, opening sales outlets for travelers, or clients outside Iraq, or financing foreign trade, according to the fundamentalist contexts and international standards for opening documentary credits and remittances.
The governor of the bank presented the Prime Minister with a positive position on the financial situation, stressing that the crisis regarding foreign currency is an emergency crisis for technical reasons, and coincided with the work on the new electronic platform and the delay in transfers due to the Christmas holidays, and the governor praised Cabinet Resolution No. Customs for goods entering from government ports, preventing double taxation and collecting it according to the approved contexts at border crossings.
A major economic recession, and the reason for this is the fluctuation of the exchange rate, and at the same time, this fluctuation will leave a great impact on the investors’ appetite for implementing projects in Iraq.
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