The dinar cannot go up in value until Iraq diversifies and creates significant economic growth. The current conditions in Iraq will continue to keep the dinar weak...Until they pass laws...there will be no change. We have a window now over the next three years...
Pimpy
It's definitely going to revalue. They're under sanctions, as soon as the sanctions are lifted and Iraq can get their crap together then definitely it'll be done...If they remove the sanctions I'm curious to see if they're going to go up in increment or are they going to just reinstate the $3.22 rate. That's always a possibility..
Released from their sanctions that's what we're really waiting for.
So even if we woke up in themorning and you found out the Iraqi dinar had been reinstated to$3.22, Hallelujah, We're rich right?!? Jumping around celebrating.
But where are you going to redeem your dinar at if they are still under sanctions?
Your options are going to be very limited here inthe United States. Chase Bank still deals with the Iraqi dinars butnot a lot of other companies or banks do just because of thesanctions...Will they be released from their sanctions before the revaluation or if they do an RI will they be released from their sanctions?
Surge in Dollar Prices Strikes Baghdad and Erbil Amid Stock Exchange Closure
The cities of Baghdad and Erbil in Iraq were hit by a significant surge in dollar prices on Monday, coinciding with the closure of key stock exchanges. In Baghdad, the exchange rate escalated to 166,800 dinars for 100 dollars, a notable increase from the morning’s rate of 164,250 dinars. Local exchange shops followed suit, raising their selling prices to 167,750 Iraqi dinars for 100 dollars. Similarly, in Erbil, the selling price spiked to 166,250 dinars for 100 dollars.
Underlying Factors and Implications
The accelerated dollar prices are primarily linked to rampant speculation on the stock exchanges and an ongoing scarcity of supply in the market. The closure of the Al-Kifah and Al-Harithiya stock exchanges disrupted the usual flow of currency exchange, leading to a dollar shortage. This gap has fueled speculation and increased demand, pushing the prices up. The situation is further worsened by the existence of “black transfers”—illegal or unregulated money transfers utilized by small merchants for their imports. Despite government measures to curb them, these black transfers continue to operate, contributing to the crisis.
Seeking Solutions
The Iraqi government, along with the central bank, bears the responsibility of resolving this crisis. One suggested approach involves engaging in dialogue and negotiation with the American side to tackle the issue of black transfers. The government aims to legitimize and regulate these transfers to bridge the gap between the official and parallel exchange rates. However, this solution necessitates cooperation and coordination between various stakeholders, both within Iraq and with external partners.
Economic and Geopolitical Implications
The surge in dollar prices carries broader implications for the Iraqi economy. The high exchange rate has led to an increase in the prices of goods and commodities, affecting the purchasing power of Iraqi citizens. The rising cost of living strains households, especially those with limited income. It also impacts businesses negatively, as higher import costs and inflationary pressures challenge profitability. Besides, the surge in dollar prices coincides with U.S. Secretary of State Antony Blinken’s visit to Iraq. His presence in the region amid warnings from Iran-backed groups adds another layer of complexity to the situation, highlighting the need for diplomatic efforts to maintain stability in the region.
Iraq’s Central Bank Witnesses Surge in Foreign Exchanges Amid Economic Challenges
The Central Bank of Iraq’s (CBI) foreign exchanges have witnessed a substantial 86% rise, hitting a marked $199 million in cash sales. These transactions, covered at an exchange rate of 1,305 dinars per dollar for various exchanges and at the rate of 1,310 dinars per dollar for foreign transfers, primarily bolstered balances abroad in the form of transfers and credits, amounting to $199,757,755. Cash dollar purchases were made by four banks, while 22 others sought to enhance their foreign balances. A total of 48 exchange and intermediary companies engaged in the auction.
Implications of Rising Dollar Prices
Despite this significant increase, concerns over escalating dollar prices in Baghdad and Erbil have induced market closures. Adding to the economic instability are reported Turkish artillery attacks in the Kurdistan Region of Iraq (KRI). Further exacerbating the economic challenges is the surge in gold prices in both cities.
US Federal Reserve Restrictions: A Restricting Factor
Moeen al-Kadhimi, an Iraqi lawmaker, attributes the Iraqi government’s inability to control the exchange rate between the US dollar and the Iraqi dinar to the US Federal Reserve’s restrictions on external transfers from Iraqi banks. These impediments have affected daily transactions necessary for merchants, leading them to source US dollars from the parallel market, thereby inflating the exchange rate despite the Central Bank’s efforts.
Long-term Policies: The Need of the Hour
Al-Kadhimi proposes long-term policies to liberate Iraq’s financial system from growing US imposed restrictions. Suggestions include depositing oil deal revenues in the central bank instead of the US Federal Reserve and using other hard currencies in oil transactions. Al-Kadhimi perceives these restrictions as politically motivated. Despite market fluctuations, he opines that the Iraqi markets remain relatively stable. However, the consequences of rising dollar prices and market closures are significant for the economy and the Iraqi citizens.
Conflicting Reports and Speculations
Despite the challenges posed by these rising dollar prices, speculations on the Iranian Rial and the Dollar in Iraq have led to heavy losses. As the dollar recovers, dollar exchange rates in Iraq have seen a decline, and gold prices have dropped. The CBI has dismissed news about dealing with the ‘Libyan dollar’ as fake, hinting at potential misinformation.
The complexity of Iraq’s financial system is evident. While the CBI reports a significant increase in foreign exchanges, rising dollar prices, market closures, and US Federal Reserve restrictions continue to challenge the Iraqi economy. It is imperative for the government and relevant authorities to address these issues and implement long-term policies for financial stability and to mitigate impacts on Iraq’s citizens.
[via PDK] Seems that things appear to be heating up…so many rumors.
Chatter continues to be great and we will see if anything happens over this weekend. We have a lot of group leaders that seem to think this is it.
Here is another one that is putting pressure on this “re-valuation” "Amid war on Gaza – Egypt see highest exchange rate on US dollar in black market” So in the middle east the dollar is gaining and will cause regional issues and inflation. They are painting themselves in a corner without a reset. They need rate changes.
Nader From The Mid East
Purchasing power...when you buy for $100 over here [U.S.], over there [In Iraq] cost you $200. If it [dinar rate] goes to 1 to 1 if you buy it in America for $100, we'll buy over here for $100 too.
Iran and Allies Strive to Prevent Broader Conflict with Israel
Iran and its allies, including militant groups such as Hezbollah and Hamas, are striving to prevent a broader conflict with Israel. Despite their belligerent rhetoric and backing of several militant groups in the region, a comprehensive strategy for managing the situation seems to be absent. The powerful military force, Hezbollah, doubles as a political movement with substantial influence in Lebanon’s parliament. Its decision to wage war would likely necessitate Tehran’s approval. However, Iran and Hezbollah seem inclined to keep Israel and US forces in the region under constant pressure through harassment attacks, not instigating a broader war.
Surprises and Strategies
Recent events indicate that Iran and its proxies may not have predicted the scale and severity of Hamas’ attacks on Israel. Intelligence sources reveal that high-ranking Iranian officials seemed shocked by Hamas’ actions. Hezbollah’s leader, Hassan Nasrallah, denied any involvement by Hezbollah or Iran in his initial public comments on the Gaza war. He emphasized that the attacks were purely a Palestinian operation, stating that all options are on the table for a potential military response by Hezbollah against Israel.
Hezbollah’s Dual Role
Hezbollah, besides being a potent military force, is also a political entity. Following last year’s elections in Lebanon, the pro-Hezbollah bloc holds 58 out of 128 seats in the Lebanese parliament. Consequently, Hezbollah must respond to Lebanese public opinion to a certain extent. Considering the struggling Lebanese economy, it’s unlikely that the Lebanese people desire a repeat of the 2006 war, which resulted in billions of dollars in damages. Furthermore, any decision by Hezbollah to escalate the war would likely need Tehran’s approval.
Pressure over War
Iran and its proxy groups in Iraq, Lebanon, Syria, and Yemen appear to favor maintaining pressure on Israel and US forces in the region through harassment attacks, rather than instigating a broader war. While the ayatollahs in Iran may rhetorically seek Israel’s destruction, they are unlikely to instigate a large-scale regional war that could also involve the United States. The Iranian regime is grappling with significant domestic challenges, including protests against repressive policies and a struggling economy due to US sanctions. Therefore, Iran is more likely to act through its proxies in the region, maintaining pressure on Israel and the US without escalating to a full-scale war.
US Response and Iran’s Call to UN
In response to the ongoing conflict, the United States has deployed a strategic missile-armed submarine to the Middle East as a deterrent to regional adversaries. The Ohio-class submarine is equipped with 154 Tomahawk cruise missiles and can deliver a significant firepower quickly. The deployment of this submarine, along with two carrier strike groups and an amphibious group, sends a clear deterrent message to Iran and its allies. The US has stated that while it does not seek a conflict with Iran, it will take necessary measures to protect its personnel and interests in the region. On the other hand, Iran has called on the United Nations to take immediate action to end Israeli aggression in Gaza and lift the blockade on the Palestinian enclave. Iran accuses Israel of intentionally destroying urban and administrative infrastructure, hospitals, and educational centers, and violating over 30 UN Security Council resolutions.
In conclusion, Iran’s desire to avoid a broader war with Israel and the United States is evident. While Iran and its proxies continue to support militant groups in the region, they seem to prefer maintaining pressure through harassment attacks rather than instigating a full-scale war. The deployment of US forces, including a strategic submarine, serves as a deterrent to Iran and its allies. The ongoing conflict in the region remains a complex and volatile situation with significant implications for regional stability.
Iraq can play a pivotal role in solving the crisis in Gaza, Khamenei says
Shafaq News / Iran's Supreme Leader, Ayatollah Ali Khamenei, emphasized the need for heightened political pressure within the Islamic world against the United States and Israel. He stated this during his meeting with Iraqi Prime Minister Mohammed Shia Al-Sudani in the capital, Tehran.
Khamenei expressed his appreciation for Iraq's strong support for the people of Gaza, affirming the necessity of increasing political pressure in the Islamic world to halt the killing of Gaza's residents by the U.S. and Zionist forces. He highlighted Iraq's pivotal role, stating, "Iraq, as a significant nation in the region, can play a distinctive role in this regard, creating a new path in the Arab and Islamic worlds."
Addressing the dire situation in Gaza, Khamenei condemned the atrocities committed, pointing out direct American involvement in managing the war. He stated, "Regardless of the ongoing killings in Gaza, the Zionist entity has truly failed in this matter as it has been unable to restore its tarnished reputation and will not be able to do so in the future without American military and political assistance. The Americans are partners with the Zionists in the crimes against Gaza."
Khamenei stressed the comprehensive efforts needed to increase political pressure on the U.S. and the Zionist entity to cease the bombings in Gaza. He emphasized, "The Islamic Republic of Iran and Iraq can play a role and have an impact in this area through coordination between them."
Additionally, Khamenei discussed bilateral cooperation between Iran and Iraq in economic and security domains, stating, "Progress is being made, thanks to God, but it is crucial to ensure the continued implementation of agreements with the same initial zeal and without delay."
In conclusion, he expressed his sincere gratitude to Iraq, its people, government, and Prime Minister for their warm hospitality, services, and security arrangements during the forty-day period.
