KTFA:
Clare: The dinar will recover.. Iraq is approaching an “imminent end” to the dollar crisis before the end of 2023
Baghdad
Today, Monday (November 27, 2023), the Parliamentary Finance Committee commented on the possibility of the Iraqi government succeeding in controlling the dollar by the end of the current year.
Committee member Moeen Al-Kazemi told Baghdad Al-Youm, “The government and the central bank are working to end the dollar crisis once and for all, and there is great progress in this file and there is control over the market, as well as a gradual decline in exchange rates in the parallel market.”
Al-Kadhimi added, “We expect that the new year will witness a significant decline in dollar prices with the rise in the value of the Iraqi dinar, especially with the presence of government decisions and directives to address all the causes of the dollar crisis, and we expect that economic and financial stability will be strongly present at the beginning of next year.”
Earlier, a senior official in the Central Bank of Iraq told Reuters that the country will ban cash withdrawals and transactions in dollars as of January 1, 2024, in the latest effort to limit the misuse of the country’s hard currency reserves in financial crimes and evade US sanctions on Iran. .
Mazen Ahmed, Director General of the Investment and Transfer Department at the Central Bank of Iraq, told Reuters that the aim of the step is to stop the illegal use of about 50 percent of the $10 billion cash amount that Iraq imports annually from the Federal Reserve Bank in New York.
This step comes as part of a broader campaign to stop the economy’s dependence on the dollar after residents began to prefer the US currency over the dinar.
Ahmed said that people who deposit dollars in banks before the end of 2023 will be able to withdraw money in dollars in 2024. But dollars deposited in 2024 can only be withdrawn in the local currency at the official rate of 1,320 dinars to the dollar.
Official price
Ahmed said, “You want to transfer money? To do so. You want a card in dollars? Here you go. You can use the card inside Iraq at the official rate, or if you want to withdraw cash, you can at the official rate in dinars… but don’t talk to me about dollars in cash anymore.”
Iraq has already created a platform to organize bank transfers that make up the bulk of demand for dollars, and which has served as a hotbed for counterfeit receipts and fraudulent transactions that have leaked dollars to Iran and Syria, which are under US sanctions.
Ahmed stated that this system, which was put in place in coordination with the authorities in the United States where Iraq’s reserves of $120 billion from oil sales are kept, is now almost airtight and provides dollars at the official rate to those who engage in legitimate trade activities such as importing food and consumer goods.
But he said that the misuse of cash withdrawals continues in ways that include travelers who are officially entitled to $3,000 but are looking for ways to circumvent the system.
Iraq relies heavily on its good relations with Washington to ensure that the country’s oil revenues and funds are not subject to American oversight.
Dollar shortage
Many local banks have already limited cash withdrawals in dollars over the past few months, exacerbating shortages that have caused the exchange rate to continue to rise in the parallel market.
Ahmed said that some banks are suffering from a shortage of dollars because many people are trying to withdraw at the same time in light of a feeling of unease about the financial system, while some banks are also suffering from a shortage because they provided loans denominated in dollars that were then repaid in dinars.
He added that the Central Bank of Iraq also limited the amount of dollars it provides as part of an agreement with the US Central Bank to limit cash liquidity and shift to electronic payments.
Ahmed pointed out that the Iraqi Central Bank expects the dinar to lose more of its value as the new measures enter into force, but he added that this is an acceptable side effect of formalizing the financial system, noting that the Iraqi Central Bank provides dollars at the official exchange rate for all legitimate purposes.
He said that the cost that Iraq is bearing today is not compared to the value of achieving this goal.
Ahmed stated that the financing operations that are carried out transparently and legally through the bank and at the official rate are the most important and therefore nothing else matters, even if the exchange rate reaches 1700.
He continued, saying, “The cost we bear now is nothing compared to achieving this goal, in all honesty, as long as the legitimate channels are established. What matters is even if the exchange rate reaches 1,700… because the legitimate purpose is the official price.” LINK
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Clare: A senior Iraqi banking delegation heads to Türkiye tomorrow
11//27/2023 Baghdad
An Iraqi government delegation will head tomorrow, Monday, to Turkey to hold discussions with Turkish financial and banking institutions.
A government source said, “Based on the Prime Minister’s directives regarding regulating trade exchange between Iraq and Turkey and stabilizing it through approved legal and banking methods and means, and in completion of the first round of discussions that took place in Baghdad on 11/15/2023, a delegation that includes the financial advisor to the Prime Minister will leave tomorrow at dawn, Monday.”
Three officials from the Central Bank of Iraq and directors of twelve Iraqi banks will hold discussions with a number of Turkish financial and banking institutions, including the Central Bank of Turkey and the Association of Banks, in addition to the Turkish Banking Regulation and Supervision Agency.
The discussions will focus, according to the source, “on a number of topics, including discussions with Turkish banks for the purpose of opening correspondent accounts for Iraqi banks in various foreign currencies to be used in account settlements between the two countries and resolving all obstacles facing the two parties in implementing this process.”
The source added, “Facilitating the use of credit cards for Iraqi residents and tourists in the Turkish banking market will be discussed,” noting that “the organization of trade exchange between the two countries will be discussed through the Turkish and Iraqi customs authorities matching the goods supplied to Iraq with the financial transfer documents through the currency buying and selling window.” Foreign affairs in a way that protects the interests and stability of trade between the two countries.”
The government source continued, “It is hoped that the discussions will result in the signing of a number of agreements regarding banking arrangements between the two countries, which will contribute to containing the demand for the cash dollar through the irregular market for foreign currencies.” LINK
