"A Call For An Emergency Plan"... The Dollar In Iraq Is Entering A Dangerous Turning Point And An Unprecedented American Decision, 6 OCT

"A Call For An Emergency Plan"... The Dollar In Iraq Is Entering A Dangerous Turning Point And An Unprecedented American Decision

Baghdad Today – Baghdad   Professor of International Economics, Nawar Al-Saadi, said on Thursday (October 5, 2023), that the US Federal Bank refused to provide the Iraqi Central Bank with one billion dollars in cash, “a dangerous precedent that must be taken seriously by the Iraqi government.”

Al-Saadi said in a post on his Facebook page, “Enough of the drumming by the economists who drum on the channels day and night and claim that the dinar is strong and that there are strict measures.”

He added, "Now the trust between the Iraqi Central Bank and the (American) Federal Reserve has deteriorated. The Americans cannot tolerate procrastination and prevarication any longer."

Al-Saadi stressed, "An emergency plan and comprehensive reforms must now be announced in cooperation with the Ministry of Interior to control speculators in the market, control borders, and prevent currency smuggling, otherwise undesirable consequences will happen."

"A call for an emergency plan"... The dollar in Iraq is entering a dangerous turning point   PIC

One of the advisors to the government of Muhammad Shiaa Al-Sudani had previously revealed that “the United States of America warned the Sudanese government eight times, publicly and clearly, against the continued sale of the dollar in large quantities through the currency auction window of the Central Bank.”

He said that the American side "has provided ample evidence that the majority of buyers of the dollar are smuggling it to Iran, Syria and Lebanon," explaining that "this sale led to the monopoly of the dollar among merchants, and a decline in its presence in local and private banks."

Last February, the Central Bank of Iraq decided to raise the value of the official exchange rate of the dinar against the dollar by 10 percent in a measure aimed at reducing the devaluation of the currency that accompanied the adoption of more stringent regulations regarding financial transfers outside the country.

The government then agreed to the Central Bank’s proposal to raise the value of the exchange rate from about 1,470 dinars to 1,300 dinars per dollar, which had a clear impact on the exchange market at that time by reducing prices that reached the level of 1,700 dinars in the parallel market.

For several months, the value of the Iraqi dinar has fluctuated sharply, losing on some days 15 percent of its value against the dollar, which sparked sporadic demonstrations by Iraqis worried about losing their purchasing power.

What made things even more unclear was after Reuters quoted the Director General of the Investment and Transfer Department at the Central Bank of Iraq, Mazen Ahmed, as saying that Iraq would ban cash withdrawals and transactions in US dollars starting from the beginning of next year and not immediately, a step that was interpreted by some experts as a “delay.” “For depositors if they want to withdraw their money.

However, the central bank official quickly issued a clarification regarding his statements to Reuters, saying that they “included inaccurate journalistic formulations.”

 He said in a statement published on the Central Bank of Iraq's Facebook page, "The Central Bank guarantees dollar deposits, and the citizen who deposited his money in dollars with any Iraqi bank previously or by 2024 has an inherent right to receive these amounts in cash and in dollars."

He pointed out that the date of next January 1 “will be the beginning of stopping cash withdrawals for incoming remittances only from outside Iraq, according to certain arrangements that guarantee the sustainability of business and does not in any way include citizens’ balances in dollars.”

Independent MP in Parliament Hadi Al-Salami says, “The current failure in the dollar issue is borne by all the Iraqi governments that have ruled the country since 2003 until now. The government of Muhammad Shiaa Al-Sudani pledged to solve the crisis by establishing mechanisms to prevent the smuggling of hard currency, but it did not succeed in doing so.” This file."

He pointed out, "Reforming the banking system and the dollar crisis requires controlling the currency auction, which is still selling large amounts of dollars, and we do not know where it is going," noting that "the problem is big in Iraq, and we are facing huge challenges that may lead to a crack in the current system." Especially since the United States of America has warned many against smuggling the dollar to neighboring countries.”    Source: Baghdad Al-Youm + Agencies   LINK