Friday Morning Iraq Economy News Highlights 1-20-23

Wall Street: The Decline Of The Iraqi Dinar Is Caused By An American Policy To Curb The Illegal Seizure Of The Dollar By Iraqi Banks

January 20, 2023  Baghdad / Obelisk: The Wall Street Journal reported, quoting US officials, that the depreciation of the Iraqi dinar is a result of the policy adopted by the US Treasury and the Federal Reserve in New York to curb money laundering and the illegal appropriation of dollars by Iraqi commercial banks for the benefit of countries subject to sanctions. In the Middle East, including Iran, according to the expression of the report.

US and Iraqi officials said it was time to bring the Iraqi banking system into compliance with international money transfer practices.

The value of the Iraqi currency fell to 10 percent against the dollar, which led to a sharp rise in the prices of imported goods.

US officials confirm that the strict rules for electronic dollar transfers by Iraqi private banks were not a surprise to officials in Baghdad, but are implemented jointly after two years of discussions and planning between the Central Bank of Iraq, the US Treasury and the Federal Reserve Board. They added that the rise in the dollar exchange rate was not due to the new measures.

https://almasalah.com/archives/38287

The Iraqi Dinar Pays The Price.. Washington Cuts Off The Dollar Smuggling Route To Iran

2023-01-20 01:30   Shafaq News/ The Iraqi dinar continues to pay the price, by faltering against the dollar, and perhaps the most prominent reason lies in the noticeable change by the US Treasury and the Federal Reserve Bank of New York towards monetary policy in Iraq, due to currency smuggling operations to Iran, which is suffering from severe economic sanctions for years.

The American newspaper "The Wall Street Journal", shed light on the currency file in Iraq, in a report translated by Shafak News agency, indicating that the Iraqi economy is suffering from faltering with the decline in the value of the dinar by 10% against the dollar, which led to an increase in food prices.

American Procedure

And the American newspaper stated, in its report, that "American and Iraqi officials say that the stricter controls imposed by the Federal Reserve Bank in New York regarding dollar transactions by Iraqi banks last November are a step aimed at reducing money laundering and illegal smuggling of dollars to Iraq.” Iran and other countries in the Middle East are subject to severe sanctions.

She added, "Successive US administrations have postponed the entry of the Iraqi banking system into global money transfer mechanisms so far, due to the years of weak governments in Iraq and the crises represented by the rebellion during the US occupation, leading to the control of ISIS over large parts of the country.”

According to US and Iraqi officials and official data, since the introduction of the new measures, 80% or more of daily dollar transfers to Iraq, which previously totaled more than $250 million on some days, have been blocked for reasons including insufficient information. The destination of this money or because of other errors.

The American newspaper pointed out that "in light of the scarcity in the availability of the dollar, the Iraqi dinar fell by up to 10% against the dollar, which caused a strong rise in the prices of imported goods, including basic commodities such as eggs." , flour and cooking oil.”

Shock Policy

The “Wall Street Journal” report quoted the Chairman of the Board of Directors of the Southern Islamic Bank, Mahmoud Dagher (a former official in the Central Bank of Iraq), as saying, “For 20 years, we have been following the same system , but the shock policy pursued by the Federal Reserve created a crisis within the economy. Iraqi.”

The report pointed out that this turmoil reflects the cautious and overlapping relations between Washington and Baghdad, recalling that since the United States contributed to the establishment of the Central Bank of Iraq in 2004, the US dollar has turned to being the main currency of the country to a large extent because a large part of the Iraqi economy operates on cash.

And the report continued that in order to provide Iraq with dollars, planes transport shipments of US currency to Baghdad every few months, indicating that additional dollars flow electronically through transactions carried out by Iraqi banks, which are withdrawn from official Iraqi accounts in the Federal Reserve Bank in New York, where proceeds from oil sales are deposited.

And US officials acknowledged that "the strict rules for electronic dollar transfers by Iraqi banks were not a surprise to officials in Baghdad, explaining that they were implemented jointly last November, after two years of discussion and planning by the Central Bank of Iraq, the US Treasury and the Reserve Bank." The Federal Reserve, stressing that "the increase in the exchange rate of the dollar was not due to the new measures."

And the American newspaper noted, that "auditing dollar transactions caused a demand for dollars in Iraq and a wave of criticism by Iraqi officials, bankers and importers who criticize the new system because it caused an unnecessary financial shock and contributed to the exacerbation of their severe economic problems."

The new "platform" system

She explained, "According to the new procedures applied, banks must submit requests for dollar transfers through a new electronic platform with the central bank, and then the Federal Reserve Bank of New York reviews them."

The report quoted US officials as saying that this system "aims to limit the use of the Iraqi banking system to smuggle dollars to Tehran, Damascus and safe havens for money laundering throughout the Middle East."

The report quoted Dagher as saying that "under the old rules, it was not obligatory for Iraqi bank account holders to disclose the party to which they send money until after the dollars have already been transferred."

The report quoted a spokeswoman for the Federal Reserve Bank of New York as saying, referring to bank accounts belonging to foreign governments that fall under its control, similar to Iraqi accounts, as saying, “We have a strong compliance system for these accounts that evolve over time in response to new information.”

The report also quoted a US official as saying that these measures would reduce "the ability of malicious actors to use the Iraqi banking system."

The report pointed out that both the US Treasury and the Central Bank of Iraq declined to comment, but the Central Bank of Iraq described the new electronic platform in a statement issued on December 15, noting that it requires providing “full details about customers who want.” to transfer money.” Including who are the ultimate beneficiaries, adding that "a number of errors are discovered and what is required of the banks is to repeat the process," noting that these procedures will require additional time before approval is obtained and passed by the international mechanism. .

According to Iraqi officials and judicial documents, the central bank prevented four banks, including the Islamic Bank of Asia and the Iraqi Middle East Bank, from carrying out any transactions in dollars.

The report pointed out that US officials have been exerting pressure on Iraq for years in order to strengthen its banking controls, noting, quoting US officials at the time, that the Federal Reserve Bank and the Treasury Department temporarily stopped in 2015 the flow of billions of dollars dollars to the Central Bank of Iraq because of their fears of The dollars were on their way to Iranian banks and may be transferred to ISIS militants.

The report indicated that some Iraqi officials support strengthening the oversight of Iraqi banks, and in this context, MP Hadi al-Salami, a member of the Anti-Corruption Commission, was quoted as saying that political parties and militias control most banks and use them to smuggle dollars to neighboring countries, adding, "We need this to stop immediately."

And the American newspaper considered, in its report, that the impact of the new controls can be seen in the sharp decline in bank transactions in dollars, which the Central Bank tracks on its website, adding that on October 17 of last year, that is , before the entry into force of the new controls, Daily transfers from Iraq's official accounts at the Federal Reserve Bank of New York and other external institutions amounted to $224.4 million, while on January 17, it amounted to $22.9 million, which is equivalent to a decline of 90%.

And while US officials say, according to the "Wall Street Journal", that this financial confusion will ease with the compliance of Iraqi account holders with the new controls, the newspaper pointed out that "Iraqi bankers and merchants consider that the new rules aim to stop the schemes used to steal dollars." LINK

Presidency Of Parliament Ignores A Request To Discuss The Dollar Crisis

Posted On2023-01-19 By Sotaliraq  Independent MP Adnan Al-Jabri revealed the parliament's refusal to include the dollar crisis on the agenda of yesterday's session. Al-Jabri said, "The crisis of the high exchange rate of the dollar against the Iraqi dinar was not included in yesterday's parliament session."

And Al-Jabri continued, “This is despite submitting the signatures of many deputies to discuss the issue or hosting the responsible authorities in the Central Bank and the Ministry of Finance,” noting that “the presidency of Parliament did not explain the reasons for the refusal.  LINK

FROM BASRA..THE IRAQI MASSES ARE CALLING ON THE SUDANESE TO LOWER THE EXCHANGE RATE OF THE DOLLAR AGAINST THE DINAR (VIDEO)

Thursday, January 19, 2023 6:23 PM  Baghdad / National News Center  https://nnciraq.com/180839/

"The dollar has gone down... the dollar has gone down"... cheers from the audience as Al-Sudani entered the Basra stadium

Baghdad today – Baghdad Today, Thursday, a number of the masses present at the Trunk of the Palm Stadium in Basra Governorate chanted slogans calling for a reduction in the exchange rate of the dollar, coinciding with the entry of Prime Minister Muhammad Shia al-Sudani.

And a circulating videotape, which I followed (Baghdad Today), documented the moment the audience chanted: "Download the dollar...Download the dollar" in the dialect.

The exchange rates of the dollar have been witnessing a jump, against the Iraqi dinar, for weeks, and reached its maximum today, as it reached 166 thousand dinars for every 100 dollars.  LINK

The Iraqi Dinar May Also Fall Victim After The Collapse Of The Toman And The Lira In Syria, Turkey, Iran And Lebanon

Economy   2023/01/19 09:20  , Number of readings: 273   Baghdad - Iraq today:   Despite the stability of the Iraqi dinar in the official markets, the news reveals a violent decline of the Iraqi dinar against the dollar in the parallel markets.

According to the "Investing.com" financial platform, the Iraqi dinar is falling against the dollar, despite the fall of the US dollar index below the 102 levels, following the release of US inflation data and its significant slowdown.

The price of the dollar in Iraq against the local currency reached 1610 dinars per 100 US dollars, while it settled in the official market at 1450 dinars per 100 dollars. Thus, the dollar gap between the official and parallel rate has now returned to more than 11%.

The decline of the local currency in the parallel market led the Iraqis to rush towards gold as a safe haven to preserve the value of their money, and gold continues to rise inside Iraq, and its prices have risen 10% compared to the last quarter of last year, and an ounce of 21-carat gold, the most valuable in Iraq, is 78,530 dinars.   LINK

Parliamentary Finance Sets The Date For Approving The Budget Law By The Government

Posted On2023-01-19 By Sotaliraq   2023-01-19  The Parliamentary Finance Committee revealed, on Thursday, the reason for the delay in sending the draft general budget law for the year 2023 to the Council of Ministers, stressing that the Council of Ministers will discuss the budget in next week’s session.

Committee member Mueen Al-Kadhimi said, "Financial inflation in some projects in the General Budget Law for the year 2023 caused a delay in sending them to the Council of Ministers."

He pointed out that "the Ministries of Finance and Planning are now making the last amendments to the draft budget law before sending it to the Council of Ministers."

He added, "The ministries of finance and planning are working on completing the final draft of the budget law and sending it to the cabinet before the next session."

And Al-Kazemi stated, “The cabinet will discuss and approve the budget law in next week’s session, after its completion by the Ministry of Finance.”  LINK