Why Does The Dollar Maintain Its Parallel Price Despite The “Million Shipments” Arriving In Iraq?
Economy | Baghdad today – Baghdad Today, Saturday (December 9, 2023), the Parliamentary Finance Committee commented on the reason why the dollar exchange rate remained high in the parallel market, despite the arrival of shipments of the dollar to Iraq.
Committee member Jamal Kujar told Baghdad Today, “The reason the dollar continues to rise in the parallel market is the continuation of black transfers through which money is paid for a lot of imports, especially trade with Iran and Syria.”
Cougar stated, “The shipments of dollars that have arrived in Iraq and will arrive are for the purpose of providing this currency to pay for commercial work that is within the platform and not outside it, and for this parallel market, the dollar will remain high in it due to black transfers, for which the government has not developed any real solutions so far.” .
The Central Bank of Iraq had allowed licensed banks to import dollars from outside the country to cover legitimate requests for dollars.
On the other hand, Iraq's annual imports from Iran amount to approximately 10 billion dollars, according to statistical data, while all of these imports are financed from the parallel market dollar due to the inability to transfer the dollar to Iran by the Central Bank of Iraq. LINK
Fluctuations in USD-IQD Exchange Rate: Insights from Baghdad and Erbil Markets
The dynamics of the U.S. dollar (USD) against the Iraqi dinar (IQD) witnessed subtle shifts in the forex markets of Baghdad and Erbil. local sources reported a marginal dip in the exchange rate, offering a glimpse into the economic nuances shaping the financial landscape.
Baghdad’s Forex Markets:
In the heart of the Iraqi capital, Baghdad, the al-Kifah and al-Harithiya Central Exchanges saw the USD traded at 157,450 IQD to 100, a decrease of 250 IQD from the previous day. Parallel markets in Baghdad showcased selling and buying rates settling at 158,500 and 156,500 IQD to 100, respectively. The intricate dance between supply and demand factors contributing to these fluctuations paints a dynamic picture of the economic scenario in the region.
Erbil’s Financial Landscape:
Turning our attention to the capital city of the Kurdistan region, Erbil, the USD displayed a different narrative. Selling and buying rates in Erbil stood at 157,250 and 157,100 IQD to 100, presenting a slightly contrasting scenario compared to Baghdad. Exploring the regional variations in exchange rates provides a comprehensive understanding of how economic dynamics can differ within the borders of a single country.
Market Sentiments and Influencing Factors:
Unraveling the forces at play behind these exchange rate movements, market sentiments and influencing factors come into focus. Political and economic developments, both domestic and international, weave a complex tapestry that impacts the USD-IQD exchange rate. Analyzing these factors becomes crucial for investors, policymakers, and financial analysts aiming to navigate the volatile terrain of currency markets.
Implications and Future Trends:
As the USD-IQD exchange rate experiences fluctuations, it prompts a closer look at the potential implications and future trends. Understanding the economic pulse of Baghdad and Erbil provides valuable insights into the resilience of local markets and their susceptibility to global economic shifts. Observing these nuances becomes imperative for stakeholders seeking to make informed decisions in the ever-evolving financial landscape.
...the reinstatement is a multi-step process. First a new in-country rate of about 1:1, then the swap-out and then a move to FOREX. It is this move to FOREX we want and I cannot also emphasize this enough. There will NEVER be two rates...Once the reinstatement occurs the program rate stuff goes away....Then the CBI will also link to and reference the FOREX rate.
Article Quote: “ Encouraging and dealing with the local currency under the current economic conditions in the country is an important issue, especially with the government’s tendency to “strengthen” the Iraqi dinar against other hard currencies, especially the dollar, as well as seeking to present it first in order to be a “issue of a homeland” in a real way."
They are telling us once again they must complete the currency reform first as in integral part of rebuilding...the economy and the country...Their goal is to have the dinar come out higher than the dollar. This is not a fairy tale or rumor. This is FACT...
What is the story of the disappearance of 35 trillion dinars? The Finance Committee requests an investigation into Representative Nouri
“We carefully monitor currency printing.”
On Saturday, the Parliamentary Finance Committee issued an angry statement criticizing the statements of one of its members about the disappearance of an amount of 35 trillion printed Iraqi dinars that do not exist inside Iraq, calling on the Presidency of Parliament to open an investigation and calling on the representative to prove his claim.
A statement by the Parliamentary Finance Committee:
We followed with great astonishment and disapproval the irresponsible statements made by Representative Muhammad Nouri during his hosting on a satellite channel to talk about monetary policy in the country and the procedures of the Central Bank of Iraq.
While we categorically deny the allegations made by Mr. Representative, as they lack credibility, accuracy, and objectivity, and indicate his lack of familiarity with the procedures and duties of the committee, we express our strong rejection of these allegations because they constitute a great abuse of the tasks and duties of the Parliamentary Finance Committee in particular and the legislative authority in general.
We also call on the Presidency of the House of Representatives to form an investigative committee to determine the validity and source of these dangerous statements, and to take deterrent legal measures against anyone who intentionally harms the reputation of the Iraqi state and its constitutional institutions.
We emphasize once again that everything that the Representative spoke about is untrue. Rather, he had to verify the information by communicating with his fellow Representatives who regularly attend meetings, before talking about sensitive files, despite the fact that he did not have any information about them due to his constant absence from committee meetings.
We reiterate that the monetary policy of the Central Bank, especially with regard to printing currency, is subject to monetary standards and foundations, and in line with the stability of the economic situation and the level of inflation, and that our Finance Committee has a clear work program for oversight of the executive authority, which will be completed at the beginning of the new legislative term, we hope. Representative Al-Nouri’s commitment to performing his legislative and oversight duties and tasks.
The aforementioned representative said in a televised interview:
More than 35 trillion printed Iraqi dinars do not exist inside Iraq, noting that there are only two neighboring countries that deal with Iraq in dinars, and more than 3 months ago, 4 trillion Iraqi dinars were entered from the (50) category,” pointing out that “Finance and Banking The Central Bank raised the issue of bonds to control the issue of the Iraqi dinar, but they only raised one trillion.”
He added, “The control of the parties and the existing quotas within the financial system is what established the failure of the Iraqi economy, and there is no country so far that relies on paper accounts and has no final accounts in banks, no electronic automation, and more than 73 private banks except Iraq,” noting that “the system The financial system must be independent in order to achieve economic balance within the country.”
He also added that “government banks are shackled by the Ministry of Finance and the Prime Minister,” indicating that “the Central Bank is a failure and does not aim for real management, and the control of some parties over its decisions affected the price of the dollar, and its biggest mistake was pricing the dollar in the budget at 132 thousand compared to 100 dollars because Iraq lost more than 9 trillion, and the difference between it and the market became high.”
While he pointed out that the one responsible for monetary policy in Iraq is “the American Federal Reserve, and it does not give money except with American approval, and whoever imagines that Iraq is in economic control is dreaming.”
He pointed out that “the loss of the Iraqi dinar caused a lot of damage and as a result many small projects and construction advances stopped,” stressing that “the Iraqi economy is completely linked to the United States and we were receiving 3 payments of the dollar now only one, and the US Federal Reserve’s sanctions caused an explosion in the exchange rate.” He deals with us according to the missiles that fall on the Ain al-Assad base and the embassy.” link
Iraq Initiates Joint Task Force Following Mortar Attack on U.S. Embassy
On December 9, 2023, the U.S. Embassy in Baghdad witnessed a significant mortar attack, the most substantial assault on U.S. interests since the escalation of conflict between Israel and Hamas in Gaza on October 7th. The attack involved approximately seven mortar shells, underscoring the volatile nature of the current geopolitical landscape.
Formation of Joint Task Force
In response to the attack, Iraqi Prime Minister, Mohammed Shia’ Al-Sudani, has ordered the creation of a joint task force. The task force’s mandate is to investigate the security officials responsible for the area surrounding the U.S. Embassy. This move signifies the government’s commitment to maintaining the security of diplomatic missions in the country.
Accountability and Justice
The Iraqi armed forces have referred the officers and personnel responsible for the area’s security to specialized investigative committees. This step aims to hold accountable those who were negligent in their duties. The task force, under the direct supervision of the Commander-in-Chief of the Armed Forces, is committed to pursuing the perpetrators, arresting them, and ensuring they face justice.
Enhanced Security Measures
In response to these incidents, security measures are to be considerably stringent. Security forces have been granted broad powers to counter immediate threats to the safety of diplomatic missions and locations of international advisors. This incident follows a series of attacks on military bases housing U.S. forces in Iraq and Syria since mid-October, claimed by Iranian-backed armed groups in retaliation to the U.S. support for Israel.
In a call with U.S. Defense Secretary Lloyd Austin, Prime Minister Al-Sudani reaffirmed his government’s commitment to protecting diplomatic missions and personnel of the international coalition. The world watches in anticipation as the Iraqi government takes decisive steps to ensure the safety of international diplomatic missions and combat the rising tide of violence.
