Dollar Fluctuates Amid Tight Monetary Authority Measures
Economic 2024/07/16 Dollar fluctuates amid tight monetary authority measures 678 , days before the implementation of the Central Bank’s decision to sell dollars exclusively to travelers at airports, the dollar exchange rates witnessed clear fluctuations in the parallel markets, as they exceeded the barrier of 150 thousand dinars for every 100 dollars, a number that specialists see as possible (stability or decline) in the coming periods as a result of the Central Bank continuing to meet the requirements of foreign trade, which could lead to a decline in the effects of the parallel market, stressing the need to double efforts to make the new experiment of granting travelers dollars a success for fear of the continued rise of the green currency.
The Central Bank’s decision to grant the green currency exclusively to airport travelers has come into effect, amid anticipation of the continued fluctuation of the exchange rate in the parallel market, which observers fear will affect the purchasing value of prices, while the Prime Minister’s Advisor for Financial Affairs, Dr. Mazhar Mohammed Saleh, sees the opposite, as he explains that through “the strength of the official central exchange market, the exchange rate of the dollar to the dinar in the parallel market does not constitute any relative importance in affecting the stability of the general price level, which has become stable in its components and trends due to the influence of the prevailing official exchange rate factor.”
Amidst this, economic experts believe that among the tools for controlling exchange rates are the recent measures represented by introducing the Customs Data Automation Program (ASYCUDA) system, stressing that this important government measure is an essential part of limiting the rise in the dollar price in the parallel market.
Financial Affairs Advisor, Dr. Mazhar Muhammad Salih, said yesterday, Sunday, in a statement to the Iraqi News Agency (INA): “There is an international factor that imposes controls on the so-called banking compliance in financing the demand for the dollar from our country’s international bank accounts in foreign currency, and there is also an internal factor that benefits from the actions and pressure of the external factor in order to obtain temporary or emergency profit gains, especially in cash dollar transactions.”
He explained that “the dominance of the fixed exchange rate system in Iraq, based on an international reserve base, is the highest in the history of Iraq and its monetary policy, as foreign currency covers more than 100 percent of the total currency currently issued.”
He continued: “Through the strength of the official central exchange market, the exchange rate of the dollar to the dinar in the parallel market in our country does not constitute any relative importance in influencing the stability of the general price level, which has become stable in its components and trends as a result of the influence of the prevailing and dominant official exchange rate factor currently in financing foreign trade (imports), amounting to 1320 dinars per dollar, which is responsible for financing 90 percent of Iraq’s foreign trade.”
He stressed that “after the decline of the dollarization phenomenon in domestic transactions, especially in contracts, obligations and payments within the country since last year and its legal prohibition, the parallel exchange market has become such that its general effects only form a narrow economic scope of prohibited transactions, practiced by informal markets and at a rate of 10 percent of the total supply and demand transactions for the currency.”
He pointed out that “the stability of the dinar to dollar exchange rate that the country is witnessing even in secondary markets is a real and solid stability, and is derived from the strength of the impact of the price and quantitative factors of the monetary and financial policies and their integration in imposing overall price stability in the country, and containing the inflationary expectations that were caused by the parallel exchange market forces during the past years.”
It is noteworthy that the Central Bank’s sales of hard currency last week amounted to more than one billion dollars through the currency auction that was held over four days, at a daily rate of 272 million and 80 million and 368 dollars, while sales of foreign remittances recorded 991 million and 141 thousand and 473 dollars, which indicates, according to specialists, the possibility of achieving clear relative stability in the various prices of goods and materials, and their not being affected by the parallel exchange rate.
The new mechanism for granting the “dollar”, according to the Central Bank, aims to provide foreign currency to the real traveler and pass sound transactions, in addition to facilitating travelers’ access to the dollar faster.
According to the “Monetary Authority”, the mechanism includes the traveler going to authorized exchange companies spread across all cities to deliver the amount in dinars equivalent to the citizen’s share of the dollar according to the official exchange rate of the Central Bank of Iraq.
The company will enter the data of the traveling citizen and upload his name on the electronic platform of the Central Bank of Iraq and deliver him a receipt confirming his deposit of the dinar, to receive the cash dollar inside the airport exclusively.
In turn, the economic expert Dr. Nabil Al-Marsoumi, during his interview with “Al-Sabah”, sees the existence of several closely related factors that contribute to the rise in the exchange rate, some of which are real and others are psychological, as the real factors are represented by stopping bank transfers in the Chinese yuan due to suspicions of corruption on the subject, in addition to stopping the injection of cash dollars into the parallel market and the new procedures of the Central Bank that limit sales to air ports and airports.
The expert Al-Marsoumi attributed the reasons for the fluctuations to the launch of the general budget for the year 2024 and the approval of the budget schedules, as this leads to an increase in public spending in its operational and investment aspects, which naturally leads to an increase in consumer demand and an increase in investment demand, and thus an increase in imports and an increase in pressure on the dollar.
Regarding psychological factors, the spokesman indicated that “the fears among citizens went towards the possibility of the dollar rising in the near future, and therefore there is a great rush to buy it from the parallel market, which caused its exchange rate to rise by 3 to 4 percent, expecting that “the market will calm down soon as a result of several factors, most notably the negotiations that the governor of the Central Bank may conduct in Washington regarding bank transfers.”
This Is The Volume Of Our Trade With Iran.. An Economist Reveals The Reasons For The Dollar Problem Inside Iraq
Economy |Baghdad Today – Baghdad Economic expert, Munir Al-Abidi, revealed today, Tuesday (July 16, 2024), the volume of trade between Iraq and Iran, while indicating that the dollar problem in Iraq is not due to official trade.
Al-Obaidi said in a clarification he published on Facebook, which was followed by “Baghdad Today”, “The Iranians say that our trade with Iraq during three months amounts to 3 billion dollars, distributed as 1.2 billion to meet the need for gas, 700 million dollars for electricity, while 200 dollars are for food, and another 200 million for iron trade.”
He added, “This means that the value of food and iron during the year amounts to only 1.5 billion dollars annually,” indicating that “some say that our trade with Iran amounts to 12 or 14 billion dollars, which is the reason for the dollar crisis.”
Al-Obaidi said, “Our official trade for the private sector does not exceed 3 billion dollars with Iran and does not exceed 300 million dollars with Syria,” stressing that “the problem with the dollar is not the official trade with Iran and Syria.”
He pointed out that “the problem of the demand for dollars in the local market is to cover the needs of other types of informal and illegal trade, most notably drugs,” stressing that “all this fuss, crying and wailing in the channels is to reopen the money channels for this trade.” LINK
Parliamentary Finance Committee Comments On US Decision To Stop Iraq’s Transactions In Chinese Yuan
Posted On2024-07-16 By Sotaliraq Member of the Parliamentary Finance Committee, MP Moeen Al-Kadhimi, described today, Tuesday, the decision of the US Federal Reserve to stop transfers in Chinese yuan as “arbitrary” against the Iraqi economy.
[size=45]Al-Kadhimi said in a statement, “The decision to stop transfers in the Chinese yuan was issued by the US Federal Reserve, claiming that there were suspicions about some transfers in the Chinese yuan.”
[size=45]He pointed out that “the Central Bank of Iraq has contracted with an international company to evaluate and monitor transfers, and this company is a source of acceptance and trust for the US Federal Reserve.”
He pointed out that “after a short period, the Central Bank of Iraq will resume transferring remittances in Chinese yuan to Iraqi traders in general,” indicating that “these measures of the US Federal Reserve are considered arbitrary against Iraq and its national economy.”
The Central Bank of Iraq stopped dealing in the Chinese yuan after the US Federal Reserve accused Iraq of “inflating remittances.”
During the current period, America has worked to destroy the Iraqi currency by imposing sanctions on private banks and preventing the dollar under many pretexts, which in one way or another led to a severe financial crisis in local markets. LINK
Economist: America Has Begun To Abandon Iraq
Money and business Economic expert, Jalil Al-Lami, confirmed that America has begun to gradually abandon Iraq by restricting the use of the dollar and abandoning the purchase of Iraqi oil.
Al-Lami said that America decided to buy oil from Canada instead of Iraq, and also to restrict the use of the dollar, which are messages to the Iraqi government.
