US control of transfers raises Iraq’s reserves and plunges the Iranian currency
US control of transfers raises Iraq’s reserves and plunges the Iranian currency
2-21-2023
Observers attributed the coincidence of the increase in Iraqi dollar reserves with the collapse of the Iranian riyal to the effectiveness of the strict US control over the movement of the dollar in Iraq, which prevented the flow of more hard currency towards Iran, and led to the collapse of its currency.
On Monday, Iraqi Foreign Minister Fouad Hussein revealed that the Iraqi Central Bank’s dollar reserves exceeded $100 billion. This statement comes after Hussein’s return from the United States at the head of a financial and economic delegation, in which the issue of currency was one of its main elements, as Washington has implemented, since last November, strict control over financial transfers.
The movement of the dollar and the last beneficiary was determined according to an electronic platform system that is placed in many banks and border crossings to control the dollar and manage it properly in Iraq.
He added, “The negotiations were successful, good, and advanced in order to protect the joints of Iraq’s economy and fight smuggling.”
And he stressed that “there will be stability in the exchange rate of the dollar in the Iraqi market, and what is happening now in terms of rise and fall is a matter of time.”
Observers believe that the optimistic tone of the Iraqi foreign minister regarding the exchange situation shows that he received a positive assessment during his visit to Washington regarding the success of the American plan to track the movement of remittances and prevent manipulation that was taking place between parties inside Iraq in order to secure the smuggling of currency to Iran, which suffers from severe US sanctions. .
And the Federal Reserve Bank of New York began last November to impose stricter restrictions on international transfers in dollars to Iraqi commercial banks, in a move that US and Iraqi officials said was “aimed at reducing money laundering and the illegal transfer of dollars to Iran and other countries that are subject to severe penalties.”
Iraqi banks must now record their “transfers (in dollars) on an electronic platform that checks the requests.” The Federal Reserve checks it and if it has doubts, it stops the transfer,” said Mazhar Salih, adviser to the Iraqi prime minister on financial affairs.
Iranians are seeking safe havens in order to preserve their savings by buying dollars, due to an inflation rate of about 50 percent.
And Iraq has begun to comply with the standards of the international transfer system (Swift), which Iraqi banks must apply since mid-November to access Iraq’s dollar reserves in the United States.
Since the implementation of the restrictions, the Federal Reserve has rejected “80 percent of requests” for financial transfers to Iraqi banks, according to Salih, due to doubts about the final destination of those amounts being transferred.
The strictness in monitoring transfers and blocking money smuggling by bypass routes made Iran a complicated situation, and they stressed that the Iraqi financial crisis is due in large part to the Iranian role, which was carried out through local political agents, militias, and merchants.
The results of US supervision appeared quickly, as the local currency in Iran fell below a basic moral level, retreating from 500 thousand riyals against the dollar on Monday, as market participants do not see an end to the sanctions.
Because of an inflation rate of about 50 percent, Iranians seek safe havens in order to preserve their savings by buying dollars and other hard currencies or buying gold, indicating more headwinds that will face the Iranian riyal.
Over the past six months, the Iranian currency has lost about 60 percent of its value, according to the website.
It was remarkable that Iran’s allies were disturbed by the American control over the movement of funds in Iraq, which was reflected in the statements of more than one figure affiliated with Tehran.
“The World Bank and the US administration are using the SWIFT platform to impose their will and blackmail Iraq,” said Aqil al-Fatlawi, a deputy from the Al-Fatah Alliance, adding that the United States has passed the stage of military domination and moved towards economic domination through those institutions under the international cover.
And he considered that “those institutions are a bad example of domination and starvation of peoples,” and continued that “the United States at the present time is still the restrictive and pressing element on the Iraqi economy, especially after Iraq’s exit from the seventh and sixth items.”
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