An expected rise in the dollar...a “temporary shock” awaiting the Iraqi market, 24 dec

 An expected rise in the dollar...a “temporary shock” awaiting the Iraqi market

 
Economy | Yesterday, 19:49 |
Baghdad today - Baghdad
 
Today, Monday (December 23, 2024), the "Future Iraq" Foundation for Economic Studies and Consultations expected a rise in the dollar exchange rate during the next few days, following the Central Bank of Iraq's announcement of stopping the currency conversion window platform.
 
The head of the institution, Manar Al-Obaidi, said in a statement to “Baghdad Today” that
 
“stopping the Central Bank’s currency transfer platform, which was officially announced on 12/23/2024, will lead to a temporary rise in the dollar exchange rate in the market as a result of the prevailing state of fear.”

However, things will return to normal at the beginning of the new year.” Al-Obaidi added,
 
"This decision had been previously announced by the Central Bank,
 
but such measures, when implemented, cause a shock in the market, leading to a temporary rise in the exchange rate, before the shock is gradually absorbed." He explained that
 
"the difference between the official and parallel market will remain, but it will shrink as the situation stabilizes."
 
On Tuesday (December 17, 2024), economic affairs specialist Nasser Al-Tamimi warned of a rise in the dollar exchange rates in Iraq in the coming days. Al-Tamimi told “Baghdad Today” that
 
 “there are real fears in the Iraqi market about the continued rise in dollar exchange rates after the platform was suspended by the Central Bank of Iraq,” noting that
 
“this matter will constitute a shock, especially at the beginning of the implementation of the decision and will push for a rise.” The dollar, to increase demand for it in the parallel market.” He added,
 
"After stopping the platform, most merchants, especially small ones, will depend on the parallel market to finance their foreign trade, while continuing to finance trade with Iran and Turkey with dollars, in illegal ways," pointing out that
 
"this is what will push the rise and  that is why practical steps must be taken to prevent This is done by the monetary authority in the country, and urgently.”
 
On Wednesday (September 4, 2024), the Central Bank of Iraq revealed the mechanism for ending the electronic platform for external transfers, while
 
indicating that placing external transfer operations and meeting requests for the dollar is on sound paths and consistent with international practices and standards. 
 
https://baghdadtoday.news/264515-ارتفاع-مرتقب-للدولار.-صدمة-مؤقتة-بانتظار-السوق-العراقي.html   

ARIEL: Iraqi Dinar Update, Strategic Window, 24 DEC

 ARIEL

Iraqi Dinar Update

I can understand why this would be the case for the Central Bank of Iraq and determine a cohesive strategy for their new exchange rate.

 As we know speculation can run wild once they reinstate their currency. Releasing a new exchange rate during a period when markets are closed or less active, such as during Christmas, could indeed provide a strategic window.

This timing allows for adjustments in the currency valuation without the immediate pressure or volatility that might come from active trading.

 This could minimize the risk of speculative attacks or undue market reactions. Introducing the new rate just before the weekend gives the Forex markets time to adjust over a couple of days before the new week starts.

This buffer can be useful for banks, traders, and the financial systems to recalibrate without the intensity of a full trading week’s pressure right away. Will everything go according to this plan? Not sure but it does make perfect sense. As we know others are saying they could delay it to July 2025 because of the digital transformation. Which I highly disagree with.

Because for one Starting a new fiscal year with an adjusted rate would simplify financial reporting and economic planning for businesses and government entities. It allows for a clean slate where all financial transactions from January 1, 2025, would be based on the new rate, reducing confusion and making economic analysis more straightforward.

While full digitalization by July 2025 might be an ambitious goal, Iraq has already taken significant steps towards digital banking. The introduction of digital payment methods, mobile banking apps, and efforts to reduce cash reliance indicate a progressive move towards digital finance. 

This groundwork suggests that even if full digitalization isn’t complete, substantial progress has been made, potentially sufficient to handle a currency revaluation without needing to wait until July 2025.

NADER FROM MID EAST: I FEEL IT'S VERY VERY CLOSE!! @DINARREVALUATION #iraqidinarinvestor #iraqidinar

 

Stopping The Dollar Transfer Platform...A Calculated Step Or A Risky Adventure?, 24 dec

 Stopping The Dollar Transfer Platform...A Calculated Step Or A Risky Adventure?

 
December 23, 2024  Baghdad/Iraq Observer  The Central Bank of Iraq is scheduled to abandon the electronic platform for dollar transfers abroad at the end of this year,  which has raised questions about whether this decision indicates the abandonment of the Iraqi Central Bank and the US Federal Bank’s mechanisms for monitoring the movement of the dollar,
 
or is it a step towards adopting a new system that may It contributes to reducing sharp fluctuations in the exchange rate and returning it to its natural levels that are consistent with the requirements of the local market and the national economy.

The electronic platform was launched in early 2023 as a new mechanism aimed at auditing dollar transfers before they are implemented, replacing the previous system that relied on auditing by the US Federal Bank after the transfers were completed, which was considered a step to enhance transparency, improve control of the movement of funds, and ensure compliance with financial laws.
 
At that time, banks, companies and merchants in Iraq faced major challenges in adapting to the new mechanism, as it required time to understand the working mechanisms and ensure compliance with the requirements.
 
However, these entities were able to adapt gradually, especially after bank employees underwent extensive training courses on using the electronic platform, which contributed to achieving full compliance with the new work procedures and ensuring the smooth flow of financial operations.
 
According to the new transfer mechanism, banking operations in dollars will be limited to banks that have international banking relationships, or what are known as “correspondent banks.”
 
Concern and reassurance
 
Both the Central Bank of Iraq and the US Federal Reserve believe that this step will contribute to strengthening oversight of remittances in a more precise and specialized manner, by restricting transactions to a limited number of banks that have high banking standards and the ability to cooperate with international banks, which aims to reduce financial risks and ensure Compliance with international control s.
 
In turn, Mustafa Akram, a researcher in financial and banking affairs, said that
 
stopping work on the electronic platform (FITR) and restricting dollar transfers to a limited number of foreign banks may pose challenges to the local banking system, indicating that
 
“this step may raise concerns about the concentration of transactions in dollars.” “In a limited range, which may lead to effects on exchange rate stability.”

Akram added to “Iraq Observer” that  “there is a need for a deeper study of the impact of these measures on competitiveness in the Iraqi banking sector, while emphasizing the importance of preserving banking sovereignty and enhancing balance in the local market.”
 
Possible bounces
 
In light of these movements, news was raised about a trend towards making a new adjustment to the exchange rate, which raised concern among economists about the potential impact of this trend on the economic process in general.
 
Experts stressed that sudden changes in monetary policy may create additional confusion in the markets and weaken confidence in the financial system.
 
For his part, economic expert Uday Al-Alawi stressed that
 
“the biggest mistake the government can make is manipulating the dollar exchange rate through sudden decisions, because this has a direct impact on the national economy and undermines investors’ confidence in the financial system.” Al-Alawi added, in a press comment, that
 
“the government’s continued making of ill-considered decisions regarding the exchange rate will lead to the erosion of international and local confidence in the Iraqi economy, which will weaken the ability to attract the investments necessary to improve the economic reality.”
 
Economists fear the possibility of some banks not included in the transfers going to meet the requirements of their customers towards the parallel market, which could lead to a return to the rise of the dollar in Iraq.   https://observeriraq.net/إيقاف-منصة-تحويلات-الدولار-خطوة-محسوب/   

DINAR REVALUATION UPDATE: THE PROGRESS OF IRAQ'S BANKING REFORMS, 24 DEC

 DINAR REVALUATION UPDATE: THE PROGRESS OF IRAQ'S BANKING REFORMS

Summary

The CBI reports significant progress in Iraq’s banking reforms, including the transition to digital finance, the elimination of the parallel market, and steps toward international currency exchange.

Highlights

• 🚨 CBI reports a transition to digital banking and the elimination of the electronic platform.
• 🌍 Iraq is moving toward direct relationships with international correspondent banks.
• 📈 The Iraqi dinar may soon see a significant exchange rate increase.
• 💼 International auditing firms are involved in the restructuring process.
• 🔄 The parallel market will be phased out to stabilize the dinar’s value.
• 📅 The CBI plans to integrate new banking practices by early 2024.
• 💡 Iraq aims for financial independence and compliance with international standards.

Key Insights

• 📊 Digital Transformation: Iraq’s shift to digital banking will enhance transparency and efficiency, potentially stabilizing the dinar. This modernization is crucial for attracting foreign investment and trust.
• 🏦 International Engagement: By establishing direct banking relationships, Iraq can facilitate smoother international transactions, marking a significant step toward economic integration. This is essential for the dinar’s international acceptance.
• ⚖️ Elimination of Parallel Market: Removing the parallel market is vital for restoring the dinar’s value, as it addresses corruption and manipulation that have historically devalued the currency.
• 🔍 Role of Auditing Firms: The involvement of international auditing firms ensures that Iraq meets global financial standards, which is key for building credibility in the international banking community.
• ⏳ Implementation Timeline: The CBI’s plan to complete these transitions by early 2024 indicates a clear timeline for stakeholders, enhancing confidence in Iraq’s reforms.
• 💰 Potential Wealth Creation: As Iraq moves toward a revalued dinar, individuals holding the currency may see significant financial benefits, reinforcing the importance of establishing banking relationships now.
• 📈 Rising Demand for Dinar: Anticipated increases in the dinar’s value could lead to heightened interest from investors, making now a pivotal time for engagement in Iraq’s financial landscape.

JENTEL NOTES : A RATE WAS POSTED TO PAY CONTRACTORS AT $3.92 @DINARREVALUATION #iraqidinarinvestor