THE SECRETS OF “BLACK TRADE”… FACTION TACTICS BRING THE DOLLAR BACK TO 140,000 DINARS
The current decline in the US dollar exchange rate against the Iraqi dinar is raising concerns among economists, as it “did not result from radical reforms to the economic structure and mechanisms for dealing with foreign currency,” exposing it to a sudden resurgence when black market networks resume activity or any political or security tensions arise .
According to the Al-Kifah and Al-Harithiya stock exchanges in the capital, Baghdad, they closed on Thursday evening at 142,700 Iraqi dinars for every US dollar. Meanwhile, selling prices at exchange shops in local markets were 144,000 Iraqi dinars for every US dollar, while buying prices reached 142,000 dinars for every US dollar .
In Erbil, the capital of the Kurdistan Region, the selling price was 142,900 dinars per $100, and the buying price was 142,800 dinars per $100 .
” Great danger “
Regarding the repercussions of this decline, Kazem Al-Shammari, a member of the Parliamentary Economic Committee, stated, “This decline in the dollar exchange rate has negative repercussions and raises concerns among economists, because the more the dollar declines, the more the country’s economy is exposed to greater danger .”
Al-Shammari explained to Shafaq News Agency, “The current situation of the Iraqi dinar is unstable due to its absence in daily transactions and the fact that a large portion of it is stored in homes, which significantly impacts the country’s economic situation .”
He explained that “an individual’s purchasing power depends on the strength of the economy. If a country’s economy is healthy and strong, purchasing power will be good. However, if the economy is collapsing, there will be no purchasing power. Therefore, anyone who believes that the decline of the dollar benefits the Iraqi economy is mistaken .”
Regarding the role of parliament in addressing this potential crisis, Al-Shammari said, “Parliament has entered a legislative recess, and during this recess, the House of Representatives is not permitted to host officials or hold meetings, except for extraordinary sessions based on the signatures of a specific number of representatives or an invitation from the House Presidency .”
Due to this holiday, he confirmed that “we will be meeting with the governor of the Central Bank starting next week to discuss the nature of this decline, whether it is planned or an emergency, the consequences of this decline on the economy and individuals, and the Central Bank’s measures in this regard .”
Faction tactics
The current decline in the dollar on the parallel market is “a development that reflects the magnitude of the financial changes that have recently occurred in the local market,” according to economic researcher Ahmed Eid . However, it is a temporary decline due to low demand, a contraction in official imports, tightened controls at border crossings, and some monetary movements.
Eid told the agency that “recent government measures have contributed to expanding dollar sales outlets through official banks and increasing coverage for travel, study abroad, and medical treatment, alleviating pressure on the black market, creating a temporary balance between supply and demand in the market .”
But deeper down, there’s a “dark side” to this decline, as Eid describes it, attributing it to “the presence of numerous economic offices affiliated with militias and parties that have long controlled a significant portion of financial transfers and the smuggling of dollars abroad. These have recently reduced their activities as a result of American and international pressure and potential sanctions .”
He pointed out that “reducing these activities has reduced the demand for dollars from these informal networks, especially since some of these offices have temporarily reduced their activity as a precautionary tactic pending a change in the political climate or a relaxation of controls .”
Therefore, the economic expert considered that “this decline may be viewed as stability, but it is a fragile stability because it is not based on radical reforms to the economic structure and mechanisms for dealing with foreign currency, but rather on circumstantial shifts that could be reversed at any moment .”
Eid predicted that “if black market networks resume activity or any political or security tensions arise, the dollar could suddenly rise again, requiring a comprehensive national strategy to control the market and curb the influence of illegal economic offices that continue to operate in Iraq and pose a real threat to its national economy .”
Government procedures
However, in an interview with Shafaq News Agency, the Prime Minister’s financial and economic advisor, Mazhar Mohammed Salih, praised the decline in the dollar’s price, attributing this to the Central Bank of Iraq’s success in financing foreign trade for the private sector, encouraging small business financing without costly intermediaries, and the success of travelers in obtaining their foreign currency dues .
Economic expert Nawar Al-Saadi agreed with Saleh, stating that “the decline in the dollar exchange rate is not surprising, but rather reflects a set of policies and measures that are gradually beginning to bear fruit, along with other developments in market behavior and local demand for hard currency .”
Al-Saadi explained, during his interview with the agency, that “the first decisive factor is the gradual expansion in the use of electronic payment tools, which has contributed to reducing reliance on cash dollars, especially among travelers, thus reducing the actual demand for hard currency in the open market .”
He continued: “In recent months, we have witnessed serious efforts by the Central Bank to reduce the amount of money in circulation in Iraqi dinars, which has directly reflected in the appreciation of the dinar, in addition to some savers and investors shifting from dollars to gold, amidst the state of anticipation and anxiety regarding developments in the regional situation .”
He noted that “non-oil-related financial flows contributed to an increase in the supply of dollars, thus facilitating the balancing of supply and demand without the need for excessive reliance on the currency selling window .”
Al-Saadi also attributed the dollar’s decline to “a decline in import volume due to the declining purchasing power of Iraqi consumers, which reduced the need for dollars to finance these transactions, which in turn affected demand in the market .”
Al-Saadi concluded his remarks by pointing out that what also contributed to this decline was “the relative control of some smuggling and illegal financing channels in neighboring countries, which has made the dollar in the Iraqi market less vulnerable to leakage and more stable within the local monetary system .”