Iraq's Auctions: Currency, Corruption, and Closure in 2024 BY DINAR REVALUATION, 19 AUGUST

Iraq's Auctions: Currency, Corruption, and Closure in 2024

In 2024, Iraq's auction scene has been marked by significant events, ranging from a historic currency rarity to the central bank's efforts to stabilize the economy and combat corruption, all culminating in the anticipated closure of the dollar selling window by year-end. 2

Currency Auctions: A Rarity Leads the Way

A rarity from Iraq, a 1931 1 Dinar note graded PMG 64 Choice Uncirculated, was a highlight in the Crown Currency auction, scheduled to conclude on May 31, 2024. 1 This vibrant blue note, featuring King Faisal I, was created late in his reign and is among more than 600 world banknotes certified by Paper Money Guaranty® (PMG®) offered in the auction. With only one higher-graded example out of 72 in the PMG Population Report, this rare note underscores the historical and numismatic significance of Iraqi currency.

Central Bank's Forex Auctions: Managing the Economy

The Central Bank of Iraq (CBI) has been actively managing the country's monetary policy through its foreign currency auctions. In March 2024, CBI's US dollar sales exceeded 4,086,748,847—92% of the total sales. These auctions enable banks and financial organizations to buy and sell foreign currency, primarily the US dollar, to meet various needs and stabilize the local currency exchange rate.

On May 31, 2024, CBI auctioned over $274 million, with remittances significantly outweighing cash sales. 2 The bank covered these transactions at a base exchange rate of 1,310 dinars per dollar for documentary credits and international settlements, while the rate for cash transactions stood at 1,305 dinars per dollar.

Corruption and Reforms in Iraq's Banking System

Iraq's banking system has faced significant challenges, including corruption and money laundering, despite ongoing reforms.  4 In May 2024, the central bank banned 197 companies from participating in foreign currency auctions as a measure against money laundering and terrorism financing. 2 These measures, along with the adoption of the SWIFT system, reflect efforts to control inflation, manage liquidity, and maintain confidence in the national currency.

The Dollar Auction's Gradual Closure

By the end of 2024, the central bank plans to completely cancel the dollar auction, maintaining it only for audit and statistical purposes. 2 This move is aimed at enabling Iraqi banks to establish stronger relationships with the global and regional banking sector, adhering to international standards. The cancellation of the dollar auction marks a significant step towards enhancing the sobriety of the Iraqi banking sector and its commitment to international requirements.

Conclusion

Iraq's auction landscape in 2024 has been a mix of historical currency rarities, efforts to stabilize the economy through forex auctions, and significant reforms aimed at combating corruption. The anticipated closure of the dollar selling window by year-end signals a new phase in the country's banking and financial systems, reflecting ongoing efforts to align with international standards and practices.