Here we discuss the current state of the Iraqi Dinar and the challenges of the parallel market, emphasizing the impact on the economy and citizens.
Highlights
🔄 Official exchange rate vs. parallel market rates.
💰 Iraqi revenues exceed 77 trillion Dinars in 2024.
📈 The allure of US Dollars in Iraq drives parallel market growth.
⚖️ Government faces a dilemma on adjusting exchange rates.
🌍 Economic parallels drawn with Venezuela’s hyperinflation.
📚 Education is vital for addressing parallel market risks.
Key Insights
💱 The disparity between the official exchange rate and the parallel market creates distrust in the Iraqi Dinar, prompting citizens to favor the latter.
📊 Iraq’s financial landscape is heavily reliant on oil, contributing about 89% to the federal budget, showcasing vulnerability in economic diversity.
🚀 The thriving parallel market reflects a lack of confidence in the Dinar, indicating broader issues that affect everyday transactions for Iraqis.
⚠️ Government actions to raise or lower the exchange rate could lead to inflation or decreased trust, highlighting the precarious balance needed for economic stability.
🌐 Drawing lessons from Venezuela illustrates the severe consequences of currency mismanagement, serving as a cautionary tale for Iraq.
🎓 Raising public awareness about the risks of the parallel market can foster a shift back to official channels, stabilizing the economy.
🌟 The ongoing situation requires careful navigation by businesses and travelers, impacting daily life and economic sustainability in Iraq.
Winners and Losers from the Fluctuation of the Dollar Exchange Rate against the Dinar in Iraq, 2024
The fluctuation of the dollar exchange rate against the Iraqi dinar has significant impacts on various sectors and individuals in Iraq. As of September 13, 2024, the official exchange rate stands at 1,310.400767 IQD per USD. a figure that has seen considerable volatility over the past year.
Impact on Importers and Exporters
Winners: Importers
Lower Import Costs: The revaluation of the dinar in February 2023, from 1,450 to 1,310 per dollar, has made imports cheaper for Iraqi importers. Increased Competitiveness: The reduced cost of imports has allowed Iraqi businesses to increase their competitiveness in the domestic market by offering goods at lower prices.
Losers: Exporters
Decreased Revenue: Exporters of non-oil goods have been negatively impacted by the revaluation, as their products have become more expensive abroad.
Reduced Competitiveness: The stronger dinar has made Iraqi exports less competitive in international markets, potentially leading to a decrease in export volume.
Impact on Consumers
Winners: Consumers
Lower Prices for Imported Goods: With the dinar's revaluation, the prices of imported goods have decreased, benefiting consumers who rely on imported products.
Losers: Consumers
Increased Inflation: The disparity between the official and black market exchange rates has led to higher prices for some goods, causing inflationary pressures on consumers. Uncertainty in Pricing:
The volatility of the exchange rate has led to uncertainty in pricing, making it difficult for consumers to budget and plan for future expenses.
Impact on the Economy
Winners: Government
Increased Fiscal Capacity: The revaluation in 2023 was beneficial for the government as it helped in obtaining more dinars for each dollar of oil revenue.
Losers: Economy
Corruption and Black Market: The existence of dual exchange rates has encouraged corruption and facilitated the growth of the black market, as individuals and entities can profit from the difference between the official and market rates. Economic Disruption: The dual exchange rates have disrupted existing contracts and discouraged trade and investment, slowing economic growth.
Conclusion
The fluctuation of the dollar exchange rate against the Iraqi dinar presents a complex scenario with winners and losers across different segments of Iraq's economy.While importers and the government benefit from a stronger dinar, exporters and consumers face challenges due to increased competition and inflationary pressures. The long-term effects on the economy are mixed, with potential for economic disruption and increased corruption if the disparity between official and market exchange rates persists.
Regardless of the significant stretch of time starting from the beginning of the electronic stage to screen the development of the dollar, the trade paces of the dinar against the US money actually experience an enormous uniqueness between the authority cost declared by the National Bank, which is 1320 Iraqi dinars for each dollar, and the bootleg market cost, or what is known as the equal cost, which ranges somewhere in the range of 1490 and 1510 Iraqi dinars for every dollar.
In addition, he announced at the beginning of 2023 that, in response to warnings issued by the Federal Reserve (the US Central Bank), Iraq would adopt an electronic platform to monitor the movement of dollar sales and money laundering operations. Additionally, the US Treasury Department would penalize a number of local banks for their involvement in activities that appeared suspicious.
The electronic stage for moves works Unfamiliar Oversaw by the National Bank of Iraq, in its most memorable period of re-to coordinate Cash moves, guaranteeing proactive command over them as opposed to ex post control through the Central bank evaluating everyday exchanges.
Furthermore, he endorsed chamber Iraqi clergymen on February 7, 2023 on the choice gathering organization National Bank of Iraq By changing the swapping scale of the dollar against the dinar, identical to 1300 dinars for each dollar after it was 1480 dinars for every dollar.
On the fourth of this current month, it was reported National Bank of Iraq The “electronic stage” through which US dollar moves abroad are done is going to be finished, demonstrating – in a press explanation – that during the year 2024 and as of not long ago, 95% of the exchange cycle from the electronic stage to “comparing banks” has been accomplished, and that implies that just around 5% of it stays inside the stage, which will be moved utilizing a similar system before the finish of this current year and as per the arrangement.
This choice by the National Bank brought up many issues about the degree to which it has had the option to Iraq Forestalling the pirating of hard cash, halting illegal tax avoidance tasks, and the degree of the progress of financial measures in controlling money sneaking and controlling the cost on the lookout.
*Champs and failures from conversion scale changes, part affirmed committee The administration of the Iraqi Financial specialists Association, Abdul Hassan Al-Ziyadi, said that the primary recipients of the change in the swapping scale of the dollar against the dinar in Iraq are cash carrying brokers and cost examiners, adding that the first to be hurt is Ira qAnd the resident.
Al-Ziyadi said, “The dollar emergency in Iraq Impacted all joints life Business and non-business,” he added, “brokers were hurt by the ascent in the dollar conversion scale, and residents were additionally hurt in light of the fact that the precariousness of the swapping scale annihilates the family’s pay and month to month asset.”
He proceeded, “Assuming he believed Iraq Should dispose of this befuddling circumstance, he should initially dispose of the import of numerous products and depend on assembling them locally to decrease the requirement for hard money as well as creating farming,” taking into account that “the Iraqi government and the National Bank are fundamentally liable for the disappointment of the cash selling stage.”
*Depleting cash The specialist in monetary undertakings and an individual from the Overall Power of the Iraqi Bookkeepers Organization brought up HusseinNima Al-Karaawi until the section Iraq In the American “Quick” framework in 2023, it was the justification behind numerous dealers to cease from the cash offering stage and go to the underground market because of a paranoid fear of having their cash seized, notwithstanding the absence of systems to assist brokers with trying not to have their cash seized.
Al-Karawi said that “the cost contrast between the dollar and the dinar in the authority or equal cost surpasses 17 focuses per dollar, so how is the situation with extremely huge sums?” He thought about that “this matter addresses a channel on reserves.”
That’s what he added “deals have declined altogether in Iraq In light of the adjustment of the swapping scale and the absence of genuine command over the vacillations in return rates on the lookout,” clarifying that the explanation is expected for the presence of line intersections outside the control of the public authority It is taken advantage of by some dollar carrying posses.
Al-Karawi trusted that “the resident is the person who pays the expense of the swapping scale vacillations. Albeit the funding for imported merchandise is through the stage at the authority cost, as a general rule numerous products and wares are sold in the nearby market at the equal dollar cost.” He said that the stage was Sell Day to day, it comes to $280 million, however the sum has now diminished to under $240 million every day, adding that the distinction between the two sums goes to sneaking and the equal market.
“The government and the Central Bank have taken many measures internally and externally to control the smuggling process and control the exchange rate,” Al-Karawi confirmed.
He made sense of that a few banks were hurt by the boycott forced on them by the US Central bank and by pirating tasks, which added to raising the conversion standard on the underground market. He also said that the government’s revenues would suffer as a result of a decrease in the dinar’s value against the dollar because the government makes its money by selling oil and getting dollars in return, then selling it on the official platform for banks and traders.
Controlling line intersections The representative for the Baghdad Office of Business, Rashid Al-Saadi, trusted that controlling boundary intersections and computerizing the divisions worried about the import and product document are the best way to control cash carrying.
“There are parties that tried to thwart the currency selling platform in order to benefit from illegal transfers,” Al-Saadi stated.
He added, “Iraq has lost huge amounts of cash because of pirating of products and hard money and altering the valuation of merchandise at line intersections.”
Resident Ahmed Jabbar, who possesses supermarkets, required the public authority Iraq to help the economy and improve the buying force of residents by fortifying the nearby money and supporting neighborhood industry and farming.
Jabbar expressed, “Selling in dollars has impacted the Iraqi market. We urge the public authority To restrict dealings in the nearby cash, as it adds to the security of the market and the monetary circumstance of residents.
Latest updates on the Iraq Dinar revaluation, with insights from various gurus and a giveaway announcement.
Highlights
📈 Special focus on currency revaluation and investment opportunities.
🌍 Positive developments in Iraq’s banking reforms and economic stability.
📊 Iraq’s financial revenues exceeded 77 trillion dinars in 2024.
🤝 National reconciliation efforts between the Iraq Federal Government and Kurdistan.
🏦 Iraq’s foreign reserves of $113 billion signal economic stability.
🔮 Anticipation of Dinar RV window between September 11th and 15th.
Key Insights
💡 Currency Revaluation: The Iraq Dinar is poised for potential revaluation as reforms and international support strengthen its economy, enhancing purchasing power for citizens.
🔍 Economic Cooperation: The agreement between the Iraq Federal Government and the Kurdistan Regional Government marks a significant step towards national reconciliation, crucial for economic growth and stability.
💰 Revenue Growth: Iraq’s impressive financial revenues signify a robust economy, predominantly driven by oil, suggesting a solid foundation for currency strengthening.
🔄 Parallel Market Challenges: Addressing the parallel market’s impact on the Dinar’s value is essential; raising the official exchange rate may stabilize the situation.
📅 Timely Expectations: The anticipated RV window between September 11th and 15th has generated excitement among investors, reflecting the community’s hope for positive changes.
🏦 Foreign Reserves Impact: Iraq’s substantial foreign reserves suggest economic resilience, indicating the country can sustain itself financially, which could influence the Dinar’s value.
📣 Ongoing Updates: Continuous monitoring of Iraq’s economic developments is vital for investors, as new information can affect expectations and strategies in currency investments.
President Barzani's Diplomatic Influence in Erbil-Tehran Relations in 2024
President Nechirvan Barzani of the Kurdistan Region has emerged as a pivotal figure in fostering diplomatic ties between Erbil and Tehran, navigating the complex political landscape with skill and persistence. His efforts have been instrumental in strengthening the historically significant relationship between the two entities, particularly in light of recent tensions and challenges.
Barzani's Role as a Bridge Builder
Barzani's commitment to diplomacy has been evident in his numerous visits to Iran over the past decade. His most recent trip, in July 2024, coincided with the inauguration of Iranian President Masoud Pezeshkian. These interactions have not only been symbolic but have also paved the way for concrete diplomatic outcomes and enhanced communication between Erbil and Tehran.
A Historic Visit by President Pezeshkian
The visit of Iranian President Masoud Pezeshkian to Erbil in September 2024 was hailed as a historic moment in the relations between the two regions. Pezeshkian's arrival was warmly welcomed by President Barzani and key Kurdish officials, marking the first visit by an Iranian president to the autonomous region.
During the visit, the two leaders discussed ways to enhance bilateral relations, particularly in the security sector, and expressed their commitment to preventing the use of Kurdish land to threaten Iran's security. Pezeshkian also held talks with Kurdistan's Prime Minister Masrour Barzani and the region's political and religious leaders.
t emphasizing the desire to resolve existing issues and strengthen ties.
Addressing Challenges and Enhancing Ties
Despite the shared cultural and historical ties, the relationship between Erbil and Tehran has not been without its challenges. Iranian concerns over Kurdish groups operating within the region have sometimes led to tensions. However, under Barzani's leadership, both sides have sought to address these issues and improve their relationship.
Conclusion
President Barzani's diplomatic influence has been critical in shaping the evolving relationship between Erbil and Tehran. His efforts have not only helped to bridge the gaps between the two entities but also contributed to the broader regional stability. As both sides continue to work on enhancing their ties, Barzani's role as a bridge builder remains central to the future of Erbil-Tehran relations.