Economic: Parties within the Central Bank are complicit in the dollar issue
Economic - Parties within the Central Bank are complicit in the dollar issueInformation / Baghdad..
On Wednesday, economic expert Diaa Al-Mohsen criticized the continued fluctuation of the dollar exchange rate and the lack of control over the rise in its value in the parallel market, pointing out the existence of collusion by some parties within the Central Bank regarding the dollar issue.
Al-Mohsen told Al-Maalouma, “The management of the Central Bank is aware of what banking companies are doing in terms of selling the dollar and exploiting passports, but some figures within the Central Bank are complicit in such matters.”
He added, “Collusion within the Central Bank regarding the dollar file is on behalf of some political blocs and banks, and therefore it falls within the category of conspiracy with the aim of putting pressure on the Prime Minister because he is better than his predecessors.”
He stated that “there are attempts by the Prime Minister regarding the dollar file to achieve benefits for some parties,” stressing that “the Sudanese visit to New York and his meetings with US Treasury officials will give him a major boost in the fight against corruption, which will become clear during the coming period.”
“The reason for the dollar’s rise.” Parliament Finance criticizes foreign banks’ control of the currency market
2023-10-04 | 09:54
The reason for the dollars rise - Parliament Finance criticizes foreign banks control of the currency marketToday, Wednesday, a member of the Finance Committee in the House of Representatives, Muhammad Nouri, considered the control of foreign banks over the currency selling market in Iraq as a “dangerous precedent.”
In an interview with Al-Sumaria News, Nouri said, “The control of a large group of non-Iraqi banks over the currency selling market is a dangerous precedent in the Iraqi economic market, given that Iraq has solid private banks that have the potential To operate according to international conditions and standards.”
He criticized the Central Bank for setting “conditions that apply only to foreign banks for selling currency in…IraqIncluding the Jordanian National Bank, which now accounts for a large percentage of dollar sales in the currency auction,” indicating that “what the Bank of Jordan sells in one day amounts to more than 200 million dollars in one day.” Nouri pointed out that “at a time
when We suffer from a lack of cash flow, where the dollar goes abroad,” stressing that “there is unorganized work insideCentral Bank of IraqAnd an unregulated work mechanism, an unreal submission mechanism, and an unreal set of controls and conditions controlled by non-Iraqi banks,” indicating that “the Iraqi Central Bank’s procedures serve foreign banks and those behind them from entities trying to control the currency market inIraq
He stressed, “The facilities granted to foreign banks are the main reason for the dollar’s rise, given that no one can obtain what is offered in the market except this narrow group of banks and through agreements made in secret with the Central Bank,” noting that “the existence of … The difference of 25 numbers between the standard and real price of the dollar is a problem caused by the Central Bank and its routine procedures.”
Observers wonder about the parties behind the issue of a Jordanian bank acquiring 70% of the currency auction atCentral Bank of IraqAt a time when Iraqi banks are being punished or threatened with punishment if they demand their rights.
Iraq’s Central Bank Limits Dollar Provision to Local Banks: Economic Implications and Repercussions, 5 OCT
Banking Shift: Iraq Limits Dollar Access
The Central Bank of Iraq (CBI) has made a notable shift in its policy, officially confirming a decision to limit the provision of cash dollars to local banks. This change is set to become effective from January 1, 2024, as part of an effort to curb financial crimes and the evasion of U.S. sanctions on Iran, according to Mazen Ahmed, director-general of investment and remittances at the CBI.
Each year, Iraq imports $10 billion in cash from the New York Federal Reserve. However, it’s estimated that around 50% of this hard currency reserve has been misused, leading the CBI to take decisive action. This move also aligns with a broader push to de-dollarize an economy that has increasingly favored the U.S. dollar over local notes, due to recurrent wars and crises that have plagued the country since the 2003 U.S. invasion.
Implications for Banks and Individuals
While this policy change is expected to help curtail illicit activities, it also has significant implications for local banks, businesses, and individuals who rely heavily on these banks. Individuals who deposit dollars into banks before the end of 2023 will still be able to withdraw funds in dollars in 2024. However, dollars deposited in 2024 can only be withdrawn in local currency at the official rate of 1,320. This change could potentially impact the liquidity of the banks, their ability to conduct transactions, and the overall financial stability in the country.
Moreover, the parallel market rate of the Iraqi dinar sat at 1,560 on Thursday, roughly 15% percent below the official rate. This discrepancy could cause significant financial strain for individuals and businesses, particularly those that rely heavily on U.S. dollars for their transactions.
International Impact and Responses
This policy change is also likely to attract the attention of international entities dealing with these banks. The United States Treasury and Federal Reserve Bank of New York, for instance, have already banned 14 Iraqi banks from conducting US dollar transactions due to concerns that US currency could be redirected to sanctioned individuals and possibly benefit Iran. This restriction is part of an attempt to stem the flow of United States currency to Iran and other sanctioned jurisdictions, demonstrating increased scrutiny of Iraq’s financial practices.
Looking Ahead: The Future of Iraq’s Economy
The exact future implications of this policy change are uncertain. However, it’s clear that it could significantly alter the economic landscape in Iraq, potentially affecting everything from the day-to-day transactions of individuals to the international financial relations of the country. As the country navigates this change, the focus will likely remain on maintaining financial stability, curbing illicit activities, and managing the delicate balance of international relations.
Where are they going to get all the money to do all this road construction? Where are you going to get all the money for the water, sewer and all of those things? Where is that money going to come from when you have an exchange rate at 1310?
Everybody should be pretty happy to see Iraq is getting ready to be underway...
Did they say they were Sovereign?
According to the Prime Minister at the U.N., yes they did say they were sovereign ...What you can deduce from the bigger picture...Iraq is going international. You can't deny it.
They're getting ready to do something and we can see that...We're in a really good spot...
There are a lot of projects that are very expensive and they need to have an investment budget to go along with that.
Why has it been delayed?
Probably because there's something they're not quite yet ready to expose or they're just about ready to expose. They're going to have to have an International currency...exchange rate and the country needs to have that final step to sovereignty.
Revival of Kirkuk-Kurdistan Oil Pipeline: A Boost to Iraqi Oil Exports, 5 OCT
The oil pipeline connecting the Kurdistan Region and Kirkuk is now fully operational, announced Turkish Energy Minister, Alparslan Bayraktar. This development signals Turkey’s readiness to recommence oil shipments, marking a significant milestone in the global oil industry.
Origins of the Dispute
The dispute over independent Kurdish oil exports has been a contentious issue between Ankara and Baghdad for nearly a decade. A 2014 agreement between Ankara and Erbil allowed oil pumped in landlocked Iraqi Kurdistan to be independently sold via Turkey’s Mediterranean port of Ceyhan. This move was met with resistance from Iraq, which argued that Turkey had violated a 1973 pipeline agreement by enabling oil exports from Iraqi Kurdistan without its consent. The disagreement led Iraq to file an arbitration case with the International Chamber of Commerce (ICC).
Further tensions arose when Kurdish supporters clashed with protesters following the evacuation of the Iraqi military’s Joint Operations Command headquarters in Kirkuk. The fallout resulted in heightened security interventions, a citywide curfew, and four tragic deaths. The decision to evacuate the headquarters was part of a broader political bargain to secure the backing of the Kurdish Regional Government (KRG) for a government under Mohammed Shia al Sudani in Baghdad.
Kirkuk: A Key Player in Energy Security
The Kirkuk-Ceyhan oil pipeline, which stretches between Iraq and Turkey, symbolizes the significant partnership between the two nations. However, control and revenue distribution from this pipeline have been contentious, especially during periods when the KRG has attempted to bypass Baghdad and export oil directly to Turkey. These actions have been perceived by the Iraqi central government as breaches of its sovereignty, leading to political disputes.
Ankara-Erbil Bond: Overlapping Interests in Kirkuk
Since 2014, the central government in Baghdad has consistently maintained that Iraqi Kurds have been exporting Iraqi oil through Turkey, a transaction carried out without the requisite approvals from the central authorities. This issue was escalated to an international forum, where the Paris-based International Chamber of Commerce ultimately ruled in favor of Baghdad, imposing a significant penalty of $1.5 billion on Turkey. In retaliation, Turkey halted the transport of approximately 400,000 barrels per day of Kurdish crude oil, along with an additional 75,000 barrels per day originating from the Kirkuk fields.
Resumption of Oil Pipeline Operations
Turkish Energy Minister Alparslan Bayraktar recently announced the reoperation of the oil pipeline, signaling Turkey’s readiness to recommence oil shipments. Amid ongoing financial pressures on both Baghdad and the Kurdistan Region, the resumption of the pipeline operation represents a significant breakthrough in the global oil industry and a vital step towards enhancing the flow of Iraqi oil to international markets.