The dollar is flying high and confusing monetary policy measures
Economical 2023/07/27
Baghdad: Haider Fleeh Al-Rubaie
The process of increasing the exchange rate in the parallel market constituted a new shock to the financial and monetary policies, after they made great efforts during the past periods with the aim of aborting the rise of the dollar, whose exchange exceeded yesterday, Wednesday, the limits of 155 thousand dinars per 100 dollars, which was considered by specialists in economic affairs.
They stressed the need to
take strict measures to limit the flight of the green currency against the dinar, to
find quick financial settlements that meet the needs of importers and traders, and to
create a tangible balance between dollar supply and demand,
with the aim of controlling the prices of goods and materials from the exploitation of the "greedy".
Despite the continuous rises in the exchange rate, however, specialists in the economic affairs minimized the risks of these rises on the local market, assuring to "Al-Sabah" that
75% of the materials and commodities in the markets enter Iraq at the official rate set by the Central Bank, and that merchants make their foreign transfers. According to that price,
however 25% of Iraqi trade is affected by the parallel exchange rate.
The efforts of the fiscal and monetary policies to undermine the dollar were matched by the efforts of the legislative and executive authorities with the aim of limiting the rise in the parallel exchange rate.
While the Prime Minister, Muhammad Shia’a al-Sudani, discussed with the Governor of the Central Bank, Ali Al-Alaq, the measures taken to stabilize the currency in the local market, and discussed the facilities provided by the Central Bank, Which includes allowing small merchants and importing individuals to finance their imports without the need to establish a company.
The Parliamentary Finance Committee reviewed with Al-Alaq ways to achieve monetary stability and control prices.
In contrast to the "cautious optimism" shown by a number of specialists regarding the effects of the exchange rate rise,
others see the possibility of economic indicators, which they described as "painful", represented by entering the local market in the short term in a state of stagnation and high inflation rates.
In turn, the researcher in Iraqi and international economic affairs, Dr. Ali Daadush, in an interview he gave to "Al-Sabah", attributed the reasons for the price jumps of the green currency to the shortage in the supply of cash dollars compared to the volume of demand, which led to a rise in the exchange rate in the parallel market that finances trade. Foreign with the penalized countries.
Dadoush pointed out that the reasons that led to the exchange rate rising again are many, but
the most prominent of them is the speculation on which most transfer and exchange companies live, as
these transfers take two directions, the
first is to cover the volume of commodity imports from the punished and banned countries with dollars, which leads to
This leads to an increase in the demand for the dollar in the parallel market, while the
second lies in the expansion of the phenomenon of speculation and hoarding of the dollar and putting it up later to obtain a larger price difference.
The economic researcher believes that solutions in the short term may not be within reach, as most of the reasons that led to the dollar’s rise are external, especially after 14 Iraqi banks were punished by the US Federal Reserve,
pointing out that the most effective solutions to confront the “dollar dominance” lie in Activating and operating factories and laboratories to produce goods that are imported from countries banned from the dollar,
and directing the government towards activating institutions and companies in the public and private sectors, operating and managing industries and working to increase their production, stressing that
these steps will lead to eliminating the gap between the official and parallel prices, as
they will produce imported goods that are Cover their dollar amounts cash.
https://alsabaah.iq/81301-.html
Iraq currency depreciation linked to traders not using central-bank platform, central bank says
He also said some sides were spreading rumors over the currency's decline in order to engage in currency speculation.
The Iraqi dinar was changing hands at around 1,580 per dollar on Wednesday compared to around 1,470 about a week ago.
The official exchange rate is set at 1,300 dinars per U.S. dollar.
In line with tougher U.S. regulations governing Iraq's access to dollars that went into effect last year, all requests for transfers must now go through an electronic system that contains detailed information on the end-recipient of dollars.
The U.S. measures aim to curb the illegal siphoning of dollars to Iran and apply pressure on Tehran along with U.S sanctions imposed over its nuclear programme and other disputes.
But the system has slowed access to dollars, central bank officials say, with wait times sometimes exceeding a month, leading many traders to go to the black market to source their dollars, which in turn drives up the exchange rate.
Allaq said that the central bank received transfer requests averaging $155 million per day and could cover the demand, with FX reserves standing at more than $113 billion.