Dollar trees staggering with knockout and fears of dinar collapse
The impact of the fluctuation of dollar prices and the rise in gold prices on the contraction of the commercial market in terms of import and purchase of goods significantly amid the flush of opinions between the return of the rise and decline of green to the official price set by the state 1320 dinars per dollar.
The dollar price currently in the parallel market is 1,460 dinars, up or down for this rate.
The cancellation of the currency {auction} window at the end of 2024 and Washington’s sanctions on Iraqi banks opened a door of doubts that end in putting the dollar in front of speculation, which will make it subject to demand after the Iraqi dinar recovers with government orders that limited dealing with the dinar to restrict the movement of the dollar.
While officials find that the establishment of the electronic platform and the level of regularity of the flow of external transfers responsible for financing private sector trade and the escalation of financing rates have reached very high rates through the compliance platform of banks active in this regard, and the high gold prices are not the direct alternative that directly affects the improvement of the exchange rate.
This is what the Prime Minister’s advisor for financial and economic affairs, Mazhar Mohammed Saleh {Euphrates News}, confired that: “Positive effective factors have affected the recovery of the Iraqi dinar in the secondary exchange market, foremost of which is the high level of regularity of the flow of foreign remittances responsible for financing private sector trade and the escalation of financing rates to very high rates through the compliance platform of active banks in this regard.”
He explained, “What means that the demand for foreign currency through official external transfers is responsible for 90% of the total desired demand for foreign exchange, as it is met with the official exchange rate of 1320 dinars per one dollar, which gave dominance to the official market over the parallel market for exchange.”
Saleh, he said that “as for the developments in the gold commodity market or gold shaws, especially the sudden price developments in it up and down, is not the direct alternative that affects the improvement of the exchange rate because it is limited in impact and the movements of the exchange parallel market, and that the main gold trade is financed as foreign trade through the transfers of the banking system and the official exchange market.”
Contrary to the government opinion, the Parliamentary Finance Committee supported the theory of doubts and confirmed that the dollar reached {200} thousand dinars with the cancellation of the currency auction.
The Deputy Chairman of the Parliamentary Finance Committee, Ahmed Mazhar Al-Janabi {Al-Furat News}, said that “the decision of the Central Bank to cancel the currency auction at the end of the year will open a space for exploitation and a problem occurs. If the auction is canceled and the exchange rate is ended, the exchange rate in the markets may double and if the Central Bank goes towards this option, the dollar exchange will reach 200,000 dinars, according to his opinion.
“It will open up space for speculators to exploit the matter, not the current price is higher than the official price despite the sale of approximately $250 million a day, so how if the auction stops?” he said.
In light of this, economists expected that the demand for the dollar will continue more than supply and thus lead to a re-drop in the dinar rate due to the central bank’s limited capacity to cover.
Economist Manar Al-Obeidi said in a statement that “the demand for the dollar depends primarily on commercial transactions and coverage of imports. The higher the demand for imports, the higher the demand for the dollar, and with the limited ability of the Central Bank in covering this demand as a result of the the specified, it is expected that the demand will continue more than the supply and thus lead to a re-decline of the price of the dinar against the dollar.”
He added, “The follower of the exports of the main countries exporting to Iraq notes an increase in the value of the exports of these countries, as the value of Turkish exports to Iraq increased in the first quarter by 30%, while Chinese exports to Iraq increased in the first quarter by 20%, as well as the exports of other countries such as the UAE, India, Iran and Brazil.”
Al-Obeidi attributed the reasons for this increase are due to five main factors:
1- High global inflation, which led to the high values of various commodities in various exporting countries.
2- Inflating invoices, as some merchants agree with the equipped entity to inflate the invoices to obtain transfers in higher amounts in order to resell the converted dollar in those markets.
3- The change in the consumption pattern of the Iraqi citizen and the high population growth rates that increase the demand for various goods, which increases the demand
4- Increasing the government agreement as a result of high operating and investment expenses
5- Lack of a local industry capable of competing with the imported product as a result of high costs.
Al-Obeidi added, “These four reasons are mostly due to the loss of tools to control the state’s fiscal policy (taxes + customs + control of expenditures) in order to control this large increase in the value of imports, which leads to increased demand for the dollar. The customs and tax policy must be changed for many sectors and the need to exput tools capable of applying these policies more effectively and productively.”
Al-Obeidi added, “The continuation of the import bill will lead to an increase in demand for the dollar and therefore a rise in its price in the parallel market, which has become sought by many beneficiaries of the low official price, and the inability to control imports and the loss of control of financial policy tools will put the state in front of a single solution that is not second, which is the use of monetary policy, which is not favored by many specialists in the economic aspect and always prefer to focus on controlling financial policy.”
As the Hajj season approached, the Central Bank stopped selling the dollar to travelers and to find out its reasons, the former director of the Financial Supervision Bureau, financial expert Salah Nouri, said that “the recent report of the Financial Supervision Bureau, which was dealt with by satellite channels on violations in the sale of dollars to travelers, is the main reason for reviewing procedures and addressing the defect in the remittance system, and stopping until the situation is fixed.”
In the same context, the economist, Safwan Qusay, revealed the leakage of the dollar of travelers to the parallel market.
“The current policy of the Central Bank of Iraq goes towards auditing the monetary dollar, which was similar to many failures in the first periods, especially its leakage through travelers to the irregular market, and this issue needs a new and clear mechanism,” Qusay said tolat News.
“Travelers are supposed to be dealt with through tourism and aviation companies and not allowed to cancel the ticket unless the traveler returns the amount he purchased from banking outlets or banks,” he added.
“This measure will restore confidence in the cash dollar and the possibility of facilitating the real tourist’s mission and filling the gaps that accompanied the establishment of the electronic platform for the sale of cash for foreign currencies,” Qusay said.
He pointed out that “the Central Bank will not hesitate to provide dollars to the eligible, whether at the level of Hajj or other windows,” pointing out that “the Central Bank’s emphasis on the procedures for granting citizens dollars of cash to ensure that it reaches those who need it.”
While travelers expressed surprise at the central bank’s decisions to prevent government banks from selling dollars to travelers.
“We are surprised by the Central Bank’s decisions to prevent government banks from selling dollars to travelers and monopolizing it only with money transfer and exchange companies,” Travelers said, via {Euphrates News}.
Travelers called on parliament and members of the parliamentary finance committee to “intervene and solve the problem and allow government banks to practice the process of selling the dollar, especially in conjunction with the rewing of pilgrims to the Sacred House of God, and they need to buy the dollar at the official price.”
https://alforatnews.iq/news/الدولار-يترنح-بضربة-قاضية-ومخاوف-من-انهيار-للدينار
