Iraq’s Central Bank Boosts Foreign Exchange Sales Amidst Global Currency Woes, 19 OCT
In a recent auction for buying and selling the US dollar, the Central Bank of Iraq (CBI) reported a 78% increase in foreign exchange, as its cash sales reached $163 million. The total amount sold in this auction was $199,123,090, with the majority of sales aimed at reinforcing foreign balances via transfers and credits.
Boosting Foreign Balances
The net amount of $163,593,090 funneled into foreign balances marked a significant increase from the cash sales that totaled $35,530,900. The auction saw five banks purchasing cash dollars while 21 others met requests to enhance foreign balances abroad. In addition, 60 exchange and intermediary companies participated in the auction. The exchange rate for all transactions was pegged at 1,305 Iraqi dinars per dollar, applicable for documentary credits, international settlements for electronic cards, foreign remittances, and cash transactions.
Stabilizing the Currency
The notable rise in foreign exchange sales by the CBI represents an effort to stabilize Iraq’s currency and bolster its foreign reserves. The auction enabled banks to acquire cash dollars, which can be utilized for various purposes ranging from financing imports and facilitating international transactions to meeting the foreign currency demand from individuals and businesses.
(Read Also: Stability Amid Chaos: The US Dollar’s Dance with the Iraqi Dinar)
Global Tensions and Currency Depreciation
The increase in foreign exchange sales comes at a time when numerous countries grapple with currency depreciation amidst escalating global tensions. For instance, the Chilean central bank plans to address its recent currency depreciation in the upcoming monetary policy meeting. The peso has experienced significant depreciation, and long-term interest rates have risen. Such factors will play a critical role in the bank’s decision-making process.
In a similar vein, the Indonesian central bank raised its policy rate unexpectedly by 25 basis points, as the rupiah plunged to its lowest level since 2020. This measure is intended to stabilize the currency and curb inflationary pressures. Meanwhile, the Bank of Israel finds itself under pressure to stabilize the Israeli shekel, which has been weakening against the dollar. Traders have heightened their bets against the shekel, urging the central bank to intervene and stabilize the currency.
Overall, the recent increase in foreign exchange sales by the Central Bank of Iraq mirrors efforts by central banks in other countries grappling with currency depreciation and intensifying global tensions. These institutions are employing various measures to stabilize their currencies and mitigate the impact of external factors on their economies.
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