Noting that OPEC will reduce oil exports from Basra because the region sells and exports oil unofficially, the Parliamentary Oil and Natural Resources Committee urged the federal government to intervene to stop oil smuggling by Kurdistan on Tuesday.
“The oil smuggling operations taking place by the Kurdistan Region require the federal government to intervene in this file, as it is an internal matter, especially since the government has great support from the political blocs that run the country,” committee member Bassem Al-Gharibawi stated.
He went on to say, “At a time when the government has worked to arm Kurdistan and provide it with advanced artillery that may be used at another time against the security forces, the regional government does not recognize the Iraqi state.”
He elaborated, “Iraq is still committed to OPEC, as it has become clear to the organization that Iraq produces and sells oil through the region at a rate of 300,000 barrels, and therefore the organization is cutting this amount from the share that is scheduled to be exported by Iraq, and this matter harms Basra’s exports without affecting the region, as it does not have official dealings to sell oil.” He stated that “Iraq is still committed to OPEC.”
Article: "Al-Sudani postpones his visit to the United Kingdom due to regional and international developments"
Article: "What would happen to the Iraqi dinar if the zeros were removed? Comment by Dr. Mahmoud Dagher"
Quote: "Economist Mahmoud Dagher pointed out that deleting zeros will not change...the purchasing power of the dinar...Instead of carrying a bundle of 50,000 dinar notes, it will be possible to compress them into a smaller number of notes after removing the zeros, and this will not change their purchasing power.
The amount of money on offer...is equal to 105 trillion dinars, and after removing the zeros, the amount will be 105 billion dinars, which is exactly the same amount, and the exchange rate will change from 1320 dinars per dollar to 132 dinars per dollar."
Mohammed Ali Tamim, the country’s planning minister, emphasized the significance of developing human resources as a fundamental pillar for achieving sustainable development.
Tamim noted that the government is working to implement a comprehensive reform program aimed at addressing unemployment, supporting vulnerable groups, and combating corruption during the first national conference to improve Iraq’s human capital. He emphasized the need to redirect investments towards the health, education, and social protection sectors.
He explained that human capital enhancement policies and programs are included in the National Development Plan 2024-2028. He also emphasized the significance of the population census, which will be conducted in November to provide a comprehensive database that supports development efforts.
In order to meet the challenges posed by limited resources, Tamim emphasized the need to prioritize funding for human capital investment projects and diversify funding sources.
Article quote "Central Bank seeks to withdraw excess liquidity"
When the central bank of Iraq is removing excess liquidity, that's taking in dinar, what does that do?
Enhances the value of the currency - Supply and Demand. Reduce the note count, the value goes up...That's the way it's always worked and it always will IMO.
In the last week or so...there's probably five or six articles specifically talking about removing zeros from the Iraqi dinar...
Quote: "...this is done by removing a specific number of zeros from the nominal value of the currency."
From the value of the currency not the currency notes but the value of the currency...
Increased Demand for US Dollars in Iraq: 2024 Overview
In 2024, Iraq has experienced a significant surge in the demand for US dollars, influenced by regional geopolitical events and illicit trade activities. This heightened demand has implications for the country's economy and currency stability, as well as its role in the global financial system.
The escalating conflict in Lebanon has driven individuals and groups with connections to Iraq to prepare for potential departure. Fearing Israeli military action that could target sites, figures, or factions within Iraq, these parties are increasing their demand for dollars to facilitate their exit from the country. This trend is exacerbated by Iraq's status as a rentier economy, heavily dependent on oil exports and dollar revenues.
Any disruption to the broader economic framework could directly influence the value of the Iraqi dinar against the dollar, potentially driving up the cost of goods and services.
Parallel Market Dynamics: Illegal Imports and Currency Smuggling
Another factor contributing to the increased demand for dollars in Iraq is the rise in illegal imports, primarily from sanctioned countries such as Iran and Syria. These imports, facilitated through direct transfers or currency smuggling, bypass the scrutiny of the US Federal Reserve and the US Treasury, creating a parallel market for dollars. As a result, the Iraqi dinar has faced fluctuations in its exchange rate against the dollar, with rates exceeding 150,000 IQD in the markets of Baghdad and Erbil.
Central Bank of Iraq's Response
To combat the illicit trade and stabilize the currency, the Central Bank of Iraq (CBI) has taken measures to limit the flow of hard currency, particularly US dollars. Starting January 1, 2024, cash withdrawals and transactions in US dollars were prohibited, and internal trade and transactions were restricted to the Iraqi Dinar. Foreign trade, however, could be settled in other currencies like the Euro, Emirati Dirham, Turkish Lira, and Indian Rupee.
Impact on Iraq's Economy
These measures have had mixed outcomes. On one hand, the CBI's move to regulate wire transfers through an electronic platform for internal and external transactions has helped in reducing the misuse of hard currency reserves and curbing financial crimes. On the other hand, the restrictions have led to a drop in the value of the Iraqi dinar, impacting the economy and causing public discontent.
Conclusion
The increased demand for US dollars in Iraq during 2024, driven by Lebanon's escalating conflict and illicit trade activities, has posed challenges for the country's economy. The Central Bank of Iraq's measures to regulate the flow of hard currency have led to both positive developments in financial oversight and negative consequences for currency stability and public sentiment. Understanding the dynamics of these factors and their impact on the Iraqi dinar is crucial for stakeholders involved in the region's economic activities.