DINAR REVALUATION UPDATE: ECONOMISTS ARE PROPOSING DISMANTLING THE PARALLEL MARKET IN IRAQ, 23 AUGUST

Economist's Solution to Lower the Dollar Exchange Rate in Iraq

On August 22, 2024, Mustafa Akram Hantoush, a renowned expert in economic and financial affairs, offered insights into what he believes is the solution to lowering the dollar exchange rate in Iraq's markets. 1

The Parallel Market Dilemma

Hantoush emphasized that dismantling the parallel market is crucial for the reduction of the dollar exchange rate. He pointed out that small traders lacking facilitating mechanisms, unprocessed trades such as gold and cleaning materials, and substantial trade with Iran and Syria pose significant challenges.  1

Processing Unregulated Trades

The economist suggested that processing these unregulated trades by providing traders with currency or gold could help stabilize the market. He noted that several countries have successfully navigated trade with Iran, despite American sanctions, and have also resolved travel issues to those countries. 1

Fluctuating Exchange Rates

Despite the Central Bank of Iraq's selling rate of 1,320 dinars for every one dollar, the dollar exchange rate in the parallel markets surged to approximately 150,000 dinars for every 100 dollars. Although the government's efforts led to a temporary decline in rates, the exchange rate subsequently rose again, indicating a persistent economic issue.  1

Parliamentary Response

In light of these developments, parliamentarians initiated a movement to question the governor of the Central Bank. The Finance Committee in the House of Representatives submitted a request to the parliamentary leadership to hold the governor accountable for a significant flaw in the bank's management. 1

Request for Questioning

A document signed by Finance Committee members demanded the governor's questioning in the nearest session, citing constitutional and internal regulations. 1

Conclusion

Hantoush's proposal to dismantle the parallel market and regulate unprocessed trades highlights the need for comprehensive reforms to stabilize Iraq's currency. The ongoing fluctuations in the dollar exchange rate underscore the urgency of addressing underlying economic challenges.