Sudanese Financial Advisor: The informal exchange market represents only 10% of trading volume
Sudanese Financial Advisor - The informal exchange market represents only 10 percent of trading volumeThe financial advisor to the Prime Minister, Mazhar Muhammad Salih, confirmed today, Tuesday, that the economic policy in Iraq seeks to implement the principle of monetary sovereignty, while stressing that the Iraqi dinar constitutes the only resort for exchange and pricing within the country, noting that the informal exchange market represents only 10%. from trading.
Saleh said, in an interview with the official agency, that “economic policy in general and monetary policy in particular is moving towards a new principle called (monetary sovereignty), which considers the Iraqi dinar the only refuge for exchange, pricing, and coverage of internal transactions.”
He added, “It is not permissible for the currency of another country whose monetary policy is subject to pricing and trade exchange operations within the Iraqi economy, and the principle of monetary sovereignty starts from this level.”
Saleh continued, “The problem in Iraq is the existence of two exchange markets: the first is the regular one in which exchange takes place through the central bank’s platforms, which prices the exchange rate at 1,320 dinars to the dollar as a stable and official price and defends monetary policy.”
He explained, “The second market is irregular, representing 10% of the trading rate. It is an uncontrolled market controlled by speculators and adds noise to the Iraqi economy as a whole.”
Saleh pointed out, “There are two things: the first is commodity diversification, which the government has begun through baskets that support livelihoods, including the food basket that has achieved stability in the prices of materials, as well as the medicine basket, a construction basket, and another for reserve materials that the Ministry of Commerce will launch soon, and these are funded at the official exchange rate and help to stabilize prices and counteract the noise introduced by the informal market.”
He stressed that “dealing in the dollar (dollarization) and its pricing of the internal economic movement is what is most harmful to the economy, but there is no harm in covering external transactions exclusively and through official platforms.”
Saleh pointed out, “On this basis, government policy and the policy of the Central Bank moved towards not relying on one country’s currency in foreign transactions and diversifying those currencies such as the Emirati dirham, the Turkish lira, the Chinese yuan, the British pound, and the euro, in addition to the dollar. This diversification reduces the dollarization of the economy and gives it great independence.” .
Saleh stressed, “This diversification can be generalized at the level of selling foreign currencies for travel purposes and according to the currency of the country you are traveling to. This will greatly reduce the demand for the dollar as a single currency in transactions, and the monetary and commodity diversification adds independence to the Iraqi economy.”
Regarding Iraq’s steps to provide these currencies, Saleh said, “The monetary authority in Iraq is independent and there is a wide consultation circle between it and the government. This is happening for the first time to open banking arrangements with central banks in countries that have a commercial partnership with Iraq, such as the Emirates, Saudi Arabia, Turkey, and China, and it is possible to cooperate with these countries.” Directly in their national currencies to achieve ease of conversion and exchange to finance trade and the movement of goods, supported by a stable exchange rate of 1,320 dinars, which allows for achieving stability and monetary sovereignty.”
He noted, “The demand for foreign currency is linked to the demand for goods and foreign transactions. It is dangerous to use the dollar to cover internal transactions, and monetary double-dealing has harmed Iraq. This must end, and it does not mean not providing foreign currency to citizens for the purposes of financing foreign trade or for the purposes of travel and tourism. Therefore, there are steps.” This is a major regulatory change aimed at achieving diversification through agreement with several countries with which transactions are conducted.”
He stressed, “The state has large commercial arms, and whenever it finds that there are needs affected by secondary market noise, the commercial apparatus intervenes to expand its dealings supported by a stable exchange rate, as well as in cooperation with Iraqi merchants.”
Regarding the government’s steps to strengthen the banking system, the Prime Minister’s advisor said, “There is a large team headed by the Prime Minister that directly supervises the reform of the banking system, and the largest system is the government system, whose assets dominate 85% of the assets of the banking system in Iraq, so the reform begins with government banks.” We are working on this seriously, and during the next 6 months the results of this reform will appear, and there will also be work in parallel to reform the private banking system, and there is a strong movement and cooperation in this direction with the associations of private and Islamic banks.”