The Central Bank of Iraq announced the expansion of external transfer channels for local banks, to include new currencies: the Jordanian dinar and the Saudi riyal, and allowing Iraqi banks to finance trade with Turkey in euros after it was limited to its use with the European Union countries.
The Central Bank’s Media Office said in a statement received by “Economy News” that “this step comes within its efforts to expand the options of financing foreign trade in various currencies and channels, and the bank has initiated taking the necessary measures to meet the requests of banks in these currencies.”
The Central Bank pointed out that “this expansion in external transfer channels provides transfers at the official rate, and aims to streamline the transfer and engage more banks in external transfers, and expand the horizons of economic cooperation between Iraq and other countries, especially in light of the bank’s quest to find other channels to meet the size of demand for various foreign currencies according to Iraq’s dealings with those countries.
It should be noted that a smooth transition took place during 2024 from the electronic platform to the approved correspondent banks directly, thus achieving a fundamental transformation in line with international banking practices, and this transition is widely praised.
The Central Bank of Iraq is implementing reforms and expanding foreign currency transfer channels to enhance the economy and strengthen the Iraqi dinar.
Highlights
📈 New International Currency: Iraq is diversifying foreign currency exchange channels.
🏦 Banking Reforms: Restructuring of government and private banks is underway.
💰 Enhanced Foreign Transfers: New mechanisms are being adopted for smoother transactions.
🌍 Global Cooperation: Iraq is establishing trade agreements with multiple countries.
🛢️ Unending Oil Revenue: Development Road Project aims to boost oil-related income.
📉 Dollar Demand Reduction: Expanding currency use will decrease reliance on the dollar.
🎉 Positive Outlook: Strong progress in banking and currency reforms is expected to benefit citizens.
Key Insights
🔄 Currency Restructuring: The restructuring of banks aligns with international standards, boosting confidence and facilitating economic growth. This is critical for attracting foreign investment.
🌐 Foreign Currency Basket: By diversifying currency options for trade, Iraq can reduce the pressure on the dollar, potentially leading to a stronger dinar and more stable economy.
📊 Investment Projects: Ongoing investment projects will remain unaffected by potential budget delays, ensuring continuity in economic development.
🏗️ Development Road Project: This strategic initiative is pivotal for enhancing Iraq’s commercial position, leveraging its vast oil reserves for long-term economic stability.
🚀 Banking Transformation: The Central Bank’s transition to modern banking practices will likely streamline operations and enhance the overall banking landscape in Iraq.
💼 International Banking Practices: Adopting international banking standards is essential for Iraq to regain credibility and strengthen its financial system amidst prior sanctions.
🎯 Positive Economic Projections: The current reforms are seen as a proactive approach to improving Iraq’s economic standing, with expectations of increased currency value and enhanced trade relationships.
BP has reached an agreement with the government of Iraq on the technical conditions for the redevelopment of oil and gas fields in Kirkuk, the company announced on Thursday.
“Today’s signing is an important step towards a fixed-term contract,” BP’s vice president of executive William Lane said in a statement.
“We are grateful to the Government of Iraq for its continued support of BP activities in the country, particularly around Rumaila, and for its dedicated engagement in advancing negotiations on the possible future development of these critical fields in and around Kirkuk,” Lane added.
BP said it expected the negotiations to be completed in early 2025.
Iraq signed 13 contracts with the winning companies to develop oil and gas fields and exploratory patches, as part of the country’s efforts to increase oil production, according to the website of the Iraqi Ministry of Oil
The major British oil company has a long history with the second largest producer in the Organization of the Petroleum Exporting Countries, which has the fifth largest proven reserves of crude oil in the world. The company was part of the alliance that discovered oil in Kirkuk in the 1920s, and now appears that Kirkuk is the key to BP’s exploration and production strategy under CEO Murray Ochenklos.
Iraq and BP’s move on Thursday follows a memorandum of understanding signed by the two sides in August for investment and exploration in the region.
(Middle Eastern time)
It will happen on Tuesday
Because Tuesday is the last day
And the Middle East is eight hours ahead of Washington DC time
It’s only a matter of 24 hours if it didn’t happen on my Monday morning.
Dr.Muamar Al Kubaisi @DrMuamar74
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اذا قلت مبيعات مزاد العملة وتوقفت شحنات الدولار النقدي من امريكا تلك المقررة كل يوم 23 من كل شهر، سيعلن البنك المركزي افلاس الخزينة الإفلاس_آخر_حلقة
Translated from Arabic by Google
If the currency auction sales decrease and the scheduled shipments of cash dollars from America on the 23rd of each month stop, the central bank will declare the treasury
#الإفلاس_آخر حلقة bankrupt
Amidst the challenges... What is Iran's plan to save its currency?
The imminent return of US President-elect Donald Trump to the White House and rising tensions with Israel have put pressure on the Iranian currency, the rial, to lose another chunk of its value and hit a new record low.
The European Union has added further pressure on the Iranian rial, after announcing its intention to activate the “trigger” mechanism, following Tehran’s condemnation by the International Atomic Energy Agency’s Board of Governors last month for “not cooperating sufficiently” in its nuclear program.
After the Iranian press used to publish daily reports about the decline in the value of the currency against the dollar, the Iranian government's economic team announced its plan to limit the decline of the rial and curb the prices of hard currency in the markets.
Supply and demand
In a move aimed at bridging the gap between the government exchange rates and the parallel market, the Central Bank of Iran has cancelled the government pricing of hard currency allocated for importing some basic commodities, starting last Saturday, so that the price of the green currency will be determined according to the mechanism of supply and demand between exporters and suppliers in the consensus market designated for trading hard currencies.
Following this move, the consensus price of the dollar stabilized the next day at around 600,000 Iranian rials, but it continued to rise on Monday and Tuesday in the “NIMA” market for foreign exchange trade at 613,000 and 617,000 rials, respectively.
In the parallel free market, the price of one dollar jumped to 768 thousand riyals last Monday, then touched the threshold of 778 thousand riyals yesterday, Tuesday, after trading at about 733 thousand riyals, on the eve of the launch of the new mechanism.
Objectives and justifications
The Central Bank of Iran's move came after a number of factories refused to continue their activities due to the accumulation of losses resulting from the mandatory pricing, as they were forced to display their export revenues in the government market, and sell their hard currency at prices lower than their real price, and in return buy raw materials according to the parallel market prices.
Iranian Economy Minister Abdolnaser Hemmati said that implementing this mechanism is a preliminary step towards getting rid of the mandatory pricing, especially in the hard currency market, adding that the mandatory pricing will lead to financial corruption, rent distributions and exacerbate difficulties in the hard currency market.
In a tweet on the X platform, Hemmati wrote that unrealistic prices cannot be defended without containing inflation, and despite the feasibility in the short term, it will not last long, warning that continuing to work with mandatory pricing would eliminate the national reserves of hard currency and undermine the country's economic security.
A strong shield to protect the economy
A segment of Iranian experts believe that the Central Bank aims, through its measures, to encourage factories to produce and export.
Economic writer Hamid Sayed Qurbani welcomed the new mechanism, considering it to be in the interest of economic development through supporting exports, and also in line with the restrictions that should be imposed on imports in order to achieve comprehensive self-sufficiency and presence in foreign markets.
In an article titled “The harmonious currency; a first step towards national development” published on the (Economy Online) website, Sayed Qurbani believed that the new mechanism will reduce the volume of unnecessary demand for imports, and contribute to eliminating the false demand for hard currency, leading to a reduction in its prices in the markets, transferring profits from the suppliers’ basket to exporters, and supporting national production.
Given the national fear of shrinking oil exports with Trump’s return to the White House by imposing more sanctions, which could lead to an increase in the currency’s price in the markets, the author likens the new mechanism to a strong shield that will protect the national economy from external shocks to the exchange rate.
Political developments
In contrast, Iranian economic expert Albert Baghzian recalls the obsession of successive Iranian governments with unifying the exchange rate and bridging the gap between official prices and the free market, stressing that the harmonious price mechanism will succeed if it satisfies suppliers and exporters and spares them the need to consult the black market for supply and demand, adding that he does not expect the new mechanism to succeed.
In an interview with Setareh Sobh newspaper, Baghazian considered lifting foreign sanctions a condition for the Iranian economy to get rid of the crises of high hard currency prices and the decline in the value of the national currency, explaining that the exchange rate in Iran is affected by political developments more than economic indicators and supply and demand in the markets.
He said: “Given the reality of sanctions, tension in Syria, and Trump’s return to power in the United States, concern will remain in the Iranian hard currency market, because providing hard currency in sufficient quantities is a condition for talking about unifying the exchange rate, which encourages the strengthening of the national currency and the decline in the value of foreign currencies.
The Iranian academic said that his country suffers from a problem in providing hard currency due to the sanctions, even the revenues from oil sales return to the country in the form of goods, stressing that imposing sanctions on the economy is equivalent to cutting off a person’s limbs and paralyzing his life, as the major powers have been imposing embargoes instead of wars and military attacks.
The fall of the lion
On the other hand, a third segment in Tehran senses a direct relationship between the fall of Bashar al-Assad’s regime in Syria and the acceleration of the decline of the Iranian currency and its recording of a new record low against the dollar, due to the major repercussions of the regional political development on the Iranian economy.
Although the value of trade exchange between Iran and Syria did not exceed $170 million during the past year, the fall of Assad paints a foggy horizon for Tehran’s dues to Damascus, which are estimated at tens of billions of dollars.
In this context, the analytical website (Bazaar News) published an article entitled “The Syrian Crisis and Its Impact on the Iranian Economy,” in which its author believes that the new scene in the Levant will expose part of Iranian investments in the Syrian infrastructure and its military and security sectors to destruction.
The article believes that the lack of security in Syria may affect Tehran's investments in neighboring countries, as well as undermine the Iranian corridor linking the East and the West and reduce its position in front of the corridor planned to link India and Europe via the Middle East (IMEC). link
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