The Iranian Riyal Instead Of The Dollar.. Who Benefits From Financing Trade Between Baghdad And Tehran?
Posted On01-04-2024 By Sotaliraq Ayoub Saad Iraq began a project to import Iranian goods in the riyal currency instead of the US dollar, as it considered this step important and would contribute to increasing trade exchange with neighboring regional countries.
According to experts, this will put a big question mark on how Iraqi merchants can buy Iranian currency, because that requires either using the US dollar or using the Iraqi dinar, which will be returned again to Iraq for the purpose of being replaced with the dollar, given the very modest volume of Iraqi exports to Iran.
Assistant Director General of the General Foodstuff Company, Muthanna Jabbar, said in an interview with (Al-Mada), “The project was adopted by the Central Bank of Iraq in coordination with Iraqi government banks, starting with the Iraqi Trade Bank, Al-Rafidain and Al-Rashid Bank, and other accredited private banks.”
He adds, “The project depends primarily on reducing the internal demand of importing merchants for the dollar currency,” noting that “imports from Turkey, Iran, Syria, and Saudi Arabia are in the internal currency. It is possible to adopt the internal currency as an alternative currency and calibrate the dollar prices within a specific mechanism in the banks.”
He continues, “Banks have a network of correspondents covering all locations of the world, and are also connected to stock exchanges. If the importer is from China or Iran, he is originally purchasing a specific commodity or commodity in that country’s currency.”
Jabbar explains, “Accreditation is opened on the basis of that country’s currency and is calibrated in dollars, so the Iraqi Trade Bank ensures through the correspondent network that it provides that country’s currency to the merchant applying for the platform for the purpose of import.”
The Assistant Director General of the General Foodstuff Company states, “This step will contribute to increasing trade exchange with regional neighboring countries on the basis of the dinar against the currency, which will help strengthen the dinar and reduce the demand for the import dollar.”[/size]
It is noteworthy that the volume of trade between Iraq and Iran reaches 10 billion dollars per year, and is divided into 95% in favor of Iranian goods, goods and services, and 5% in favor of Iraqi exports, in addition to amounts equivalent to the volume of this trade that Iraq pays to the Iranian side in exchange for importing the gas necessary to operate the stations. electrical.
For his part, economic expert Nasser Al-Kanani said, during a brief interview with (Al-Mada), that “the issue is not easy, and is in the negative interest of Iraq,” noting that “the government is forced to take this measure because it imports from countries under a blockade.”
It is noteworthy that the Central Bank of Iran confirmed the start of a project to settle its country’s exports abroad in the national currency, the riyal, and the issue of settling Iranian exports via the riyal currency outside the borders has been studied by the Central Bank for several months, and that its entry into force will address the requirements of exporters to Iraq and Afghanistan, in addition to the draft regulations. The cross-border riyal was formulated by the Central Bank, and practically two banks have started this project, and soon it will be circulated to all the country's banks.
The American magazine Forbes classified the Iranian riyal as the weakest in the world against the US dollar, as every one US dollar is equivalent to more than 422,000 Iranian riyals. “The difference is greater in parallel markets.”
Specialists believe that continuing to implement the decision to finance trade between the two countries in the Iranian currency would benefit the Iranian riyal but not the Iraqi one, due to the very modest volume of Iraqi exports to Iran.
According to statistics, Iran imported more than $263 million of various Iraqi products, witnessing a decline of 78% compared to previous years, and Iraq was one of Iran’s permanent trading partners over previous years and decades. LINK
