Iraq's Bold Plan to Strengthen the Dinar: Ending the Black Market

DINAR REVALUATION REPORT: Strategy to Eliminate the Black Market and Strengthen the Iraqi Dinar, 12 SEPT

Strategy to Eliminate the Black Market and Strengthen the Iraqi Dinar

In a bold move aimed at strengthening the Iraqi Dinar, the government is devising a strategy to eliminate the black market, a key factor in currency value depreciation [1]. As of September 11, 2024, the Iraqi government has identified the black market as a significant obstacle to economic stability and the Dinar's value [1].

The Bilateral Effect of Currency Exchange

One of the challenges Iraq faces is the smuggling of dollars to Iran, a problem exacerbated by pro-Iranian proxies [1]. Prime Minister Shia Al-Sudani's commitment to tackling this issue could be pivotal in restoring economic stability [1].

Navigating Currency Volatility

The Iraqi Dinar has experienced persistent exchange rate volatility, with noticeable discrepancies between the official Central Bank of Iraq (CBI) rate and the black market rate [6]. These fluctuations have caused uncertainty for businesses and consumers alike [6].

The Bold Strategy: Currency Flotation

Economists propose a daring strategy to address volatility and the black market premium: currency flotation [6]. This involves removing the Dinar's peg to the US dollar, allowing its exchange rate to be determined by market forces [6]. While this may lead to short-term depreciation, advocates argue it could establish greater long-term stability [6].

Control Measures

In response to these challenges, Iraqi authorities have implemented control measures including restrictions on foreign exchange transactions, mandating domestic transactions in Dinars, and increased scrutiny of international remittances [6]. However, the effectiveness of these measures is still under evaluation [6].

A Managed Float Approach

Some analysts suggest a more measured approach, advocating for a "managed float" system [6]. This would allow for market flexibility while maintaining a level of CBI control, potentially avoiding excessive volatility [6].

Conclusion

The Iraqi government's strategy to eliminate the black market and strengthen the Dinar is a critical step towards economic stability. By addressing currency volatility and implementing effective control measures, Iraq aims to reinforce its national currency and enhance its economic standing [6].

DINARLAND HIGHLIGHTS!!, 12 SEPT

 DINARLAND HIGHLIGHTS

Summary

Iraqi Dinar updates reveal upcoming central bank decisions affecting the parallel market, potential increases in exchange rates, and comprehensive banking reforms.

Highlights

• 🛢️ Five oil and gas laws are being discussed in Parliament.
• 📉 Militia Man warns the parallel market may face upheaval.
• 💵 Central bank decisions could confuse markets and raise exchange rates.
• 📊 Mark Z predicts a significant shift in dollar-to-dinar exchange rates.
• 🏦 Central Bank announces a comprehensive banking reform roadmap.
• 🏴‍☠️ Fulu suggests eliminating the black market by raising currency value.
• 🔒 Frank 26 reports on mechanisms to secure funds from potential theft.

Key Insights

• 🛢️ Legislative Changes: The discussion of five oil and gas laws indicates a potential shift in Iraq’s economic landscape, impacting the Dinar’s value. 📈
• 🔄 Market Disruption: Militia Man’s concerns about the parallel market highlight the risks of illegal currency trading, signaling possible government intervention. ⚠️
• 📊 Exchange Rate Predictions: Mark Z’s forecast of a drastic change in exchange rates suggests volatility ahead, impacting investors holding Dinars. 💔
• 🏦 Banking Reforms: The Central Bank’s roadmap for comprehensive reforms aims to enhance foreign transfers, potentially stabilizing the economy. 🌐
• 💰  Black Market Elimination: Fulu’s strategy to raise currency value to eliminate black market profits presents a bold approach to strengthening the Dinar. 🏆
• 🛡️ Security Measures: Frank 26’s report on securing funds indicates a focus on financial stability and fraud prevention, crucial for investor confidence. 🔐
• ⏳ Revaluation Timing: With discussions of a revaluation this year, the current strategies may set the stage for a favorable environment for Dinar holders. ⌛

Iraq's New Oil Law: What It Means for Kurdistan

DINAR REVALUATION REPORT: Understanding Between the Iraq Federal Government and the Kurdistan Regional Government in 2024, 12 SEPT

 Understanding Between the Iraq Federal Government and the Kurdistan Regional Government in 2024

The relationship between the Iraq Federal Government and the Kurdistan Regional Government (KRG) in 2024 is complex and multifaceted, marked by ongoing negotiations and disputes over key issues such as budget shares, elections, and oil autonomy. 1  4  6

Political Dynamics and Governance

In 2024, Iraq continues to face challenges in governance, with a weak state structure influenced by non-democratic forces and a power system dominated by ethnic-confessional elites. 1 Mohammed Shia’ al-Sudani, the prime minister since October 2022, had difficulties in finalizing his cabinet, reflecting internal political tensions. 1The KRG, under the leadership of Masrour Barzani, has been seeking to strengthen its economy and renew its relationship with the federal government. 2

Disputes Over Budget and Elections

A significant point of contention is the KRG's share of the federal budget. President of the Kurdistan Region Nechirvan Barzani has met with Iraqi leaders to address this issue, aiming for a consensus on budget allocations. 3 Additionally, the electoral process in the Kurdistan Region has been impacted by legal challenges. In 2024, the Iraqi Supreme Court ruled that the 11 seats reserved for religious and ethnic minorities in the Kurdistan Parliament are unconstitutional, leading to the postponement of regional elections scheduled for June 2024. 5

Oil Autonomy and Legal Rulings

Oil remains a critical component of the Iraqi economy and a source of tension between Baghdad and Erbil. The Federal Supreme Court of Iraq has ordered the KRG to hand over all oil and non-oil revenues to the federal government, a move seen as another blow to the region's oil autonomy. 6 This ruling has implications for international oil companies operating in the region, as it changes how they operate and negotiate contracts.

Security Cooperation and Interstate Relations

Security cooperation between the KRG and the federal government has improved due to the presence of fighters from the Kurdistan Workers Party (PKK) in Sinjar. However, this has also escalated conflict with Peshmerga forces affiliated with the Kurdistan Democratic Party (KDP). 1 External threats, such as attacks by Türkiye and Iran on the PKK inside Iraqi territory, pose additional challenges to regional stability. 1

Conclusion

The understanding between the Iraq Federal Government and the KRG in 2024 is characterized by a series of negotiations, disputes, and legal rulings. Key areas of contention include budget shares, electoral processes, and oil autonomy. Security cooperation and external threats also play significant roles in shaping the relationship between the two governments.

"ABOUT THE NATIONAL RECONCILIATION BETWEEN KURDISTAN & BAGHDAD" BY MILITIAMAN, 12 SEPT

 Militia Man 

  "...Understanding between the Iraq Federal Government and the Kurdistan Regional Government..."  

You have two entities coming together...They had a lot of turmoil in the past...  Now they've come to an agreement...A huge delegation from Iraq has gone to the Kurdistan region - The highest executive authorities in Iraq, the Ministerial Council of Economics...Planning, Trade, Interior, Central Bank of Iraq, legal...finance, oil department.  The whole list was immense...with their counterparts from the Kurdistan region...working it out, which reeks of national reconciliation.

..If they get National Reconciliation I can see Iraq is going to go so far.  It's phenomenal...Reconciliation is historic.

Article:  "The Parallel Market will be upended" 

 Quote:  "Expected decision from the central bank will confuse markets and raise exchange rates...These decisions will lead to an increase in the dollar exchange rate"  When you're talking about the parallel market you're talking about a black market...an illegal market, that's subverting the platforms to get the dollar.  That's coming to an end...They're saying, parallel market...you're going to have a problem.  If you don't fix it you're going to get hurt [If you're holding dollars and not dinar]. 

 They're giving them [Iraqi citizens using the black markets] numerous warnings [to get out of the dollar].

US-Iraq Deal: End of a 23-Year Occupation