Dollar Conflicts Are Exhausting The Market. The Government’s Solutions Are Almost Powerless, And The Citizen Is A Victim Of Prices
Posted On01-11-2024 By Sotaliraq Baghdad/ Haider Hisham The Iraqi people have been suffering for quite some time from the rise in the dollar exchange rates in local markets, despite the government and the central bank taking many measures to control the “parallel market,” but attempts to control it and bring it to the official price seem “difficult,” according to what is expected. Citizens, at a time when Parliament Finance confirmed that the strength of the dollar will remain.
On February 7, 2023, one hundred days after assuming the presidency of the government, Prime Minister Muhammad Shiaa Al-Sudani confirmed that “the currency window was a black spot in the banking system,” pointing to “the vote on the Central Bank’s request to adjust the exchange rate to 1,300 dinars for every one dollar.” .
Al-Sudani said at the time: “In order for the citizen to be convinced that the dinar is stronger than the dollar, I advise citizens not to acquire the dollar.”
Many citizens were upset by the continuing dollar crisis, as they always remembered the speech of the Prime Minister and his advisors, who promised that “the dinar would be stronger than the dollar,” but the continuous rise in the American currency did not fulfill the government’s “famous” statement.
Citizen Omar Al-Zaidi said, in an interview with (Al-Mada), that “the crisis of the dollar’s rise in the markets has increased our suffering, given the lack of control over its prices, especially in the parallel market,” considering that “the measures of the government and the Central Bank are not sufficient to control this rise.”
Al-Zaidi adds, “The Prime Minister promised us several months ago to control the dollar crisis, and bring prices and their fluctuations in the Iraqi street to the official price, which he set after assuming office, but these are only ‘daydreams’, and the dollar will not fall.”
Dollar prices recorded an increase with the opening of the Al-Kifah and Al-Harithiya stock exchanges yesterday, Wednesday, to record 153,900 Iraqi dinars against 100 dollars, while prices also rose in banking shops in the local markets in Baghdad, where the selling price reached 154,750 Iraqi dinars. Member of the Parliamentary Finance Committee, Mudar Al-Karawi, expected a rise in the dollar and an increase in demand on the parallel market, with the launch of the allocations of the financial budget law, while he stressed that the strength of the dollar will remain for several reasons.
Al-Karawi said, in an interview with Al Mada, “Reducing the dollar exchange rates in the parallel market is a strategy adopted by the current government through four dimensions: The most prominent of which is strengthening the dinar, ending the issue of smuggling and speculation, in addition to resolving the issue of dollarization in the markets, as well as the trend towards electronic payment.”
He points out that “a decrease in the dollar is possible and an increase is also possible, but according to specific percentages according to the principle of supply and demand.” Because the Central Bank’s measures will have an impact in the coming months.”
The member of Parliamentary Finance explains that “the pressure will be great on the parallel market and may rise by certain percentages, with the release of budget allocations,” stressing that “the ability of speculators has decreased by clear percentages.”
Al-Karawi points out, “Iraq exists in a worried regional environment and its crises are multiple, and it still depends on the pastoralist economy, so it is the most affected by several files,” pointing out that “the strength of the dollar remains present, but according to levels.”
He explains, “The parallel market’s influence cannot be eliminated without reviving industry and national production in order to reduce the demand for buying the dollar,” noting that “exchange rates are currently almost stable and their rise may tend to decline, but slowly.” According to economists, the widening gap between the official and parallel rates of the dollar against the dinar weakens confidence in the local currency, reduces incentives to deposit money in Iraqi banks and prompts savers to exchange the dinar for the dollar, which leads to higher prices and a decrease in the real or purchasing value of the Iraqi currency.
In turn, economic affairs researcher, Diaa Al-Mohsen, enslaved the government’s ability to confirm its saying, “The dinar is stronger than the dollar,” while proposing several solutions to control the dollar exchange rates. Al-Mohsen confirms, in an interview with (Al-Mada), that “the exchange rate of the dollar against the Iraqi dinar has fallen from its previous levels to the threshold of 1,500 dinars per dollar, but this did not prevent the dollar from rising again,” wondering “why did the exchange rate of the dollar decrease against the Iraqi dinar?” Why did it rise again?
He added: “There were no real changes that occurred in the Iraqi economy, even aiming for a decrease in the exchange rate,” noting that “small merchants still cannot pay the dues they owe to suppliers, especially those Syrian, Lebanese, and Iranian suppliers, due to the embargo imposed on these countries by US Federal Bank.
He notes, “These people are forced to go to the black market to buy the dollar, which leads to an increase in demand for the dollar and thus its price rises.” “The solution is in more than one direction. The first is to agree with these countries to pay the dues they owe in the same country’s currency, that is, to deal in the local currency of Iraq, Syria, Lebanon and Iran, and then secondly to activate and qualify the real economic sectors to contribute to meeting the largest part of the market’s needs.” According to the researcher’s vision of economic affairs.
He continues, “These solutions are the ones that will end the suffering of the Iraqis with the rise in prices and end the dollar battle with them.”
The government is not able to implement the saying that the dinar is stronger than the dollar,” Al-Mohsen adds to (Al-Mada), and says: “As long as imports consume the largest part of oil revenues, in addition to the agricultural and industrial sectors not contributing, except for the local market’s need for goods that the citizen needs, then it is “It is difficult to strengthen the local currency, at the expense of the dollar.”
The fluctuation in the exchange rate is troubling Iraqis and has become their primary concern due to its catastrophic repercussions on their living conditions and purchasing capabilities, which are declining daily due to the rise in prices of basic goods, materials and services, with the decline in the value of the dinar against the dollar.
Exchange rate fluctuations are taking place around the clock, despite the attempts of the Central Bank of Iraq to control them and return to the official approved exchange rate of 132 thousand dinars per 100 dollars, which prompts observers and economic experts to sound the alarm that what is happening will further destabilize the political and social stability of the country, and will raise Of the already high rates of poverty, unemployment and high prices.
It is noteworthy that, on Tuesday, February 7, 2023, the Council of Ministers approved a decision to adjust the dollar exchange rate to 1,300 dinars. LINK