Iraq stops dealing with the Chinese yuan...and the currency basket is an alternative

  The Parliamentary Finance Committee revealed that Iraq has decided to stop dealing with the Chinese yuan in financial transfer

Committee member Moeen Al-Kazemi said in a press statement that "the US Federal Bank imposed on Iraq to stop dealing in the Chinese yuan, under the pretext that there was manipulation in some transfers or certain problems occurred."

He believed that "many decisions by the Central Bank are imposed by the US Federal Bank," according to him.

Al-Kazemi pointed out that "Iraq's money, as we know, is placed in the US Federal Bank as a result of the sale of oil at a rate of 3.5 million barrels per day, and this money enters the US Federal Bank and is not transferred to Iraq in cash, but is transferred to Iraq through transfers issued by the Central Bank and the Federal Bank is notified and then the Federal Bank is convinced of this transfer and commercial transaction and on the basis of it releases amounts to the relevant parties exporting to Iraq."

He noted that "many of the Central Bank's procedures are governed by the American will, and this will may be explained for administrative and financial reasons, non-financing of terrorism, and others," believing that "the reasons are political with the aim of pressuring the Iraqi government," according to his expression.

Regarding the impact of canceling dealing in the Chinese currency, Al-Kadhimi pointed out that "the merchant and the Central Bank have multiple options and not to deal only with the dollar, so this suspension is temporary and not permanent."

As for what the Parliamentary Finance Committee will do in this regard, a member of the committee explained, "We will ask the Central Bank to address the issue and for the currency basket to be diverse, so that the options are more for the Central Bank and Iraqi merchants."

It is noteworthy that Iraq has strengthened its assets denominated in yuan through the Singapore Development Bank to finance Iraqi trade and imports with China by about $ 12 billion annually. 

Iraq has also moved to strengthen its assets in the Emirati dirham and negotiated an increase in its assets denominated in euros to finance trade with the European Union, and Iraq has also begun opening bank accounts in the Indian rupee for a number of Iraqi banks .

Since the beginning of 2023, the Central Bank of Iraq has issued several decisions aimed at maintaining the stability of the general monetary and economic situation and confronting the risks of fluctuations in the exchange rate of the Iraqi dinar against the US dollar, in addition to facilitating import and export operations by opening new horizons with international banks, including Chinese banks.

Among the decisions of the Central Bank of Iraq is to enhance the balances of Iraqi banks that have accounts with Chinese banks in Chinese yuan, as dealing in yuan directly without the mediation of the US dollar contributes to facilitating and accelerating financial transactions, and will reduce import costs and protect against the risks of fluctuating exchange rates within Iraq. LINK