CONCERNS ABOUT THE DINAR.. WHAT IS THE BENEFIT OF IMPORTING THE DOLLAR FROM OUTSIDE IRAQ?
Continuing controversy in economic circles after the decision of the Central Bank of Iraq to import the dollar from outside Iraq according to certain controls, and the purpose of this decision and the possible benefits, in light of the continuing dollar crisis with measures to restrict its circulation outside government platforms.
(Yes, Change is hard to take! )
On November 8, the Central Bank allowed Iraqi banks to “import foreign currency” for the purpose of “meeting the requests of companies, organizations, bodies and individuals working for foreign companies or institutions,” by importing it from “exclusively through air ports,” in an attempt to control … Dollar crisis in Iraq .
Immediately after that announcement, leaks continued, transmitted by the government news agency, citing sources that did not indicate her job or the entity for which she worked, starting with “intensive meetings between a delegation from the Central Bank of Iraq and the American side responsible for foreign transfer operations to cover imports” in the Emirati city of Abu Dhabi. It concluded with several decisions, including “an agreement to enhance the advance balance of five Iraqi banks in their dollar accounts with Jordanian banks and transfers via (JP Morgan).” Then I talked about an agreement on five more through Citibank.”
Is there a benefit from importing the dollar?
The Central Bank’s decision to import the dollar from outside Iraq came in the context of the rise in the exchange rate of the dollar against the dinar in local markets, until it reached 167 thousand dinars per 100 dollars a few days ago, compared to the official price that was set at 132 thousand dinars per 100 dollars, before it fell to Around 160k at the moment.
Ahmed Saddam, professor of economics at the University of Basra, explains, “The Central Bank’s decision to allow the import of the dollar aims to raise the level of the supply of the dollar from sources outside the framework of the Central Bank in a new attempt to reduce the dollar exchange rate in the parallel market . ”
(In other words the dollar does not come out of the CBI reserves. Get it? It is not stealing from the CBI anymore if they steal the dollars. It will be stealing from the local banks directly. So do you think the banks are going to be more carful with use of these dollars? Just asking…… 
)
)As for the consequences of importing the dollar at the practical level, Saddam rules out that the decision will achieve a “tangible benefit,” and the main reason, in his opinion, is that “most countries in the world impose restrictions on the exit of the dollar from their markets, just as Iraq is trying to do.”
Economic experts spoke about the benefits of the recent decision of the Central Bank of Iraq regarding importing the dollar currency from abroad, or not the economic expert, in an interview with “Ultra Iraq”, raises a second issue in this regard, through questions such as: “In what currency will this dollar be purchased? Will it be in the Iraqi currency?” He goes on to say: “The Iraqi currency is not accepted in most countries except Iran, which does not It absolutely allows the dollar to be sold due to its urgent need for it, as is known.”
Saddam continues his questions: “Do Iraqi banks own the currencies of other countries so that they can be exchanged for dollars?” And he answers: “If we assume that Iraqi banks own the currencies of other countries , then this measure will be temporary due to the exhaustion of existing foreign currencies for the purpose of purchasing the dollar within the short term.”
Indeed, among the news reported by the official agency, the “sources” spoke of meetings between “ one of the Emirati banks, the Central Bank of Iraq, and the American side, to implement a mechanism for enhancing balances in the UAE dirham for Iraqi banks (UAE Dirham pilot),” as well as “negotiations to enhance the balances of some Iraqi banks in euros at UBAF Bank to finance trade with the European Union,” as well as “increasing the number of banks whose balances in Chinese yuan are enhanced through the Singapore Development Bank,” and “beginning to open bank accounts in Indian rupees for a number of Iraqi banks in the same correspondent Bank.” Singaporean Development.
Economics professor Ahmed Saddam concludes by saying that “the Central Bank’s decision is difficult to achieve on the ground, and perhaps it can be implemented for a limited period by banks that own other foreign currencies,” but all of these measures “will not contribute to reducing the dollar exchange rate due to the state of heavy reliance on the dollar in foreign trade transactions, with the US Federal Reserve’s restrictions, speculation, and smuggling operations that cannot be solved by importing the dollar.”
The central bank is not an intermediary!
Despite this, “government sources” continued to speak to the official agency about proceeding with procedures for importing the dollar from outside Iraq , and the latter on November 15, 2023 quoted a “government source” talking about issuing official approvals from the Central Bank “for three Iraqi private banks.” To import the US dollar to meet their customers’ need for this currency in amounts amounting to $100 million.
The decision to import the dollar from abroad was issued at the request of merchants to feed the local market
The Central Bank’s approach is not considered a new measure, as the advisor to the Iraqi Banks Association, Abdul Rahman Al-Sheikhli, says, as “it was previously implemented in 2010 under the direction of the Central Bank,” but what is new now, according to Al-Sheikhli, is that “the decision was issued based on the desire of traders from… In order to meet the needs of the local market.
The banking expert believes in an interview with “Ultra Iraq” that “the central bank will not be an intermediary in the process of importing the dollar, but rather the banks will play this role in their relations with banks outside Iraq, relying on their reserves of the dollar.”
The Central Bank’s exit from the mediation process comes despite its official statements rejecting the existence of the “parallel market” under the pretext that it – that is, the bank – is the only source of dollars in the country.
Refund, not import… and fears for the dinar.
A few days ago, news from the “Sources” news series reported an announcement about the arrival of a shipment from one of the three private banks to Iraq as part of the operations of “importing the US dollar,” but the advisor to the Iraqi Banks Association, Abdul Rahman Al-Sheikhli, says that “the entry of the dollar from abroad will generate competition in transactions.” The street, in addition to the current fears that precede this step about its negative impact on the limited monetary supply of the dinar in Iraq.”
“The process of importing the dollar from abroad in this announced manner,” according to the expert, “is dominated by a state of ambiguity in the application,” as Al-Sheikhli raises the same question raised by economics professor Ahmed Saddam, about the way to buy the dollar from abroad and pay its value in dollars.
Economists describe the process as recovery, not importing the dollar from abroad. He points out that “the clear process for this issue will be called the recovery of dollar funds belonging to companies or banks abroad, and not the import of dollars, and therefore the funds will enter through an accounting process through bank accounts and not a cash process.”
He adds: There is also a government proposal, which is that the funds of foreign parties, including companies and others operating in Iraq, will be paid the amounts due to them in their accounts outside the country and not inside, and therefore these companies may want to bring their funds into Iraq, and they will go towards recovering those funds and not importing them as announced.
The parallel market, the federal market, and the central “palaces”.
The parallel market is still working according to local stock market indicators, and the Central Bank has not yet limited its measures to stopping it, at a time when Prime Minister Mohamed Al-Sudani says that what is happening in the currency market “is not a crisis, but rather a battle between the state that insists on implementing procedures for building a banking system.” Sober, and speculators.”
In any case, the dollar exists in the parallel market so far, and it is of two types, according to the advisor to the Iraqi Banks Association, Abdul Rahman Al-Sheikhli, “The first is legitimate, and the second is through acquisition.”
In the details of this, he says, “The cash dollar is now officially available to travelers, students, and those who wish to receive treatment outside Iraq, while the reality requires more than that, by opening other internal sources to give it to citizens,” adding, “But the Central Bank has gone towards opening imports through the ports.” Air exclusively.
The current crisis – according to the banking expert – is borne by the Ministry of Finance , “through its intervention in raising the exchange rate,” which “created a major problem.” Therefore, Al-Sheikhli recommends that the Central Bank “take full independence and exercise its powers to control and stop the dollar crisis,” as the expert believes that the bank “The Central Bank continues to fail in developing radical solutions to some of the ongoing problems.”
Economists hold the Ministry of Finance responsible for the problem and diagnose shortcomings in the performance of the central bank
Speaking about the role of the United States, the advisor to the Association of Banks stresses the need to “take into account the lack of guardianship by the US Federal Reserve over the Iraqi Central Bank , as much as it issues recommendations to clarify the violations occurring in the work of banks.”
According to specialists in Parliament, “US sanctions prevent the issuance of remittances to some merchants wishing to import from Iran, Lebanon, and Syria because the SWIFT system has been stopped there, which leads some merchants to resort to illegal methods to transfer their money and complete their imports.”
The banking expert believes that “the US Federal Reserve is now not delaying dollar transfers, as much as it is auditing them in accordance with international controls and standards for combating money laundering and supporting terrorism, because some banks practice unprofessional actions that have led citizens to hoard hard currency and even the dinar due to the loss of confidence in the banks,” according to Al-Sheikhly.
BY DINAR IRAQ & DONG VIETNAM
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