Iraqi News Highlights Thursday Afternoon 3-9-23
Iraqi News Highlights Thursday Afternoon 3-9-23
Tlm724 Administrator Bondlady’s Corner
How Iraq Caused A Currency Crisis By Paying Iran In Dinars
Desperate to avoid power shortages, Kadhimi's government gave Iran billions of dinars.
US sanctions however mean it can no longer access the dinars it needs
The Iraqi Central Bank has found it increasingly difficult to obtain its own currency (AFP/file photo)
By Suadad al-Salhy in Baghdad Published date: 4 March 2023 09:27 UTC | Last update: 2 days 7 hours ago Iraq has worsened its financial crisis and contributed to its currency depreciating by paying its debts to Iran in Iraqi dinars, Iraqi officials told Middle East Eye.
Iraq’s currency has been struggling for months against the dollar since new restrictions were imposed by the US Federal Reserve on how the country's central bank trades the dollars it receives from oil sales.
The subsequent liquidity crisis has meant the government is failing to pay the salaries of millions of public servants, as well as pensions and payments to other beneficiaries of social welfare programmes.
Iraq has been one of the largest importers of Iranian goods over the last two decades, in particular gas, electricity, food, and construction materials.
Yet Iran was nonetheless able to turn these dinars into dollars - which are far more useful - using a currency auction the Central Bank of Iraq holds daily to convert the dollars it received from oil sales.
But since November, the US Federal Reserve, which holds the money Iraq makes from oil sales and delivers it to Baghdad by request, has imposed restrictions aimed at stopping Iran from accessing these dollars and combatting money laundering.
The impact of handing Iran large amounts of dinars - that it is now unable to trade for dollars - is still being felt.
"Paying Iranian debt in Iraqi dinars was not a calculated step. The financial crisis we are currently suffering from is caused by this stupid step,
Intractable problems and patchwork solutions
Despite having one of the largest oil reserves in the world, Iraq has suffered from severe energy shortages since the 1990s, due to conflicts, sanctions, mismanagement, and a failure to develop infrastructure.
Iraq spends around $900m a month on Iranian goods, according to Iranian officials. Fifty percent of that is electricity and gas.
The United States only agreed to waive sanctions if Iraq placed the funds in the Trade Bank of Iraq with the understanding that it would be used later by Iran to pay for food and medicine.
The next prime minister, ex-intelligence chief Mustafa al-Kadhimi, and his backer, Sadr, sought to find quick solutions to the intractable problems that Iraq suffers from, including the Iranian debt
The debt to Iran that had been accumulated since 2019 was one of the most pressing issues for Kadhimi’s government at the time.
“Sadr had to find a way out for his ally,"
Sadr wanted to present "a gesture of goodwill to the Iranians to prove that his project does not target them or threaten their interests,"
In February 2019, the Central Bank of Iraq concluded an agreement with the Central Bank of Iran, allowing customers of both banks to open accounts in the two countries and conduct their banking transactions in dinars and euros.
“The Iranians are very smart and they are investing in all the details that serve their goals. They were clear from the beginning. They said if you could not pay in dollars, pay in dinars and leave it to us,”
the complete article is at https://www.middleeasteye.net/news/iraq-dinar-iran-undermined-own-currency-crisis
The Central Bank Announces The Start Of Expanding Coverage By Entering The Electronic Platform
Economy 6-03-2023, 17:42 Baghdad – INA – Wissam Al-Mulla The Central Bank announced, today, Monday, the
start of expanding inclusion in entering the electronic platform, and while indicating its
continuation in issuing positive steps to facilitate foreign trade financing, it
confirmed its communication with Chinese banks regarding dealing in the yuan currency.
The Deputy Governor of the Central Bank, Ammar Hamad Khalaf, said in a statement to the Iraqi News Agency (INA), that
"the central bank continues to follow the instructions previously issued to ensure the stability of the parallel exchange rate." He pointed out that
"a meeting was held with the banking sector, merchants and factory owners to confront and overcome challenges," noting that
"the Central Bank began expanding the channels and entities covered by entering the electronic platform." He explained,
"This is the first step, while continuing to issue positive steps to facilitate the financing of foreign trade or any sound official transfers abroad." He added,
"The measures taken can control the market," calling," He pointed out,
"The recent decisions of the Council of Ministers referred to dealing in dinars, so there is no justification for citizens to use foreign currency in local transactions."
Regarding dealing in the Ioan, Khalaf stated,
"There is continuous communication by the central bank with Chinese banks, in order to activate and allow merchants to transfer directly,
meaning that the central bank delivers the dinar through banks, and
the transfer is directly through the use of the Chinese currency, the yuan."
The Central Bank Decides To Use Only The Local Currency At Atms
Economy News _ Baghdad Today, Thursday, the Central Bank decided to use the local currency only in ATMs. The bank said in a statement received by "Al-Iqtisad News", that "based on the decision of the Council of Ministers and in light of the policy of the Central Bank of Iraq to encourage reliance on the national currency in financial transactions inside Iraq provided by the banking system and non-bank financial institutions, it was decided that the electronic financial services provided within Iraq through (automated teller machines, point-of-sale devices, electronic payment gateway) in the Iraqi dinar.
It is noteworthy that the automatic teller machines use the denominations of Iraqi dinars and dollars in withdrawal operations for citizens. https://economy-news.net/content.php?id=32844
Central Bank Sales Fell To 144 Million Dollars In Today's Auction
Posted On2023-03-09 By Sotaliraq The central bank’s sales of dollars at auction today, Thursday, decreased by 35%, to reach 144 million dollars.
And the Central Bank sold today, during its auction for the sale and purchase of US dollars, 144 million and 951 thousand and 21 dollars, a decrease of 35.43% compared to yesterday, Wednesday, in which sales amounted to 223 million, 406 thousand and 794 dollars, covered by the bank at a basic exchange rate of 1305 dinars per dollar for documentary credits.
And international settlements for electronic cards, at a price of 1310 dinars per dollar for foreign transfers, and at a price of 1310 dinars per dollar in cash.
Most of the dollar sales went to enhance balances abroad in the form of (remittances, credits) at 83 million 151 thousand 21 dollars, while the rest of 61 million 800 thousand dollars went in the form of cash sales.
The number of banks that bought cash dollars reached 12 banks, while the number of banks that responded to requests for strengthening balances abroad reached 22 banks, while the total number of exchange and mediation companies participating in the auction was 130 companies. LINK
A Slight Decrease In The Exchange Rates Of The Dollar In Baghdad With The Closing Of The Stock Market
Thursday, March 9, 2023 Baghdad / The National News Center The exchange rates of the US dollar decreased against the Iraqi dinar, today, Thursday, with the closure of the main stock exchange in Baghdad.
The correspondent of the National News Center said, “The central Kifah Stock Exchange in Baghdad closed at an exchange rate of 157,000 Iraqi dinars against 100 dollars, while the prices this morning were 157,900 dinars.”
He added, "The buying and selling prices in exchange shops in the local markets in Baghdad decreased, as the selling price reached 157,500 Iraqi dinars, while the purchase price reached 156,000 dinars per 100 dollars." https://nnciraq.com/191972/
Calculating The Exchange Rate Of 1320 Dinars For Currency Conversion Operations
The Iraqi Trade Bank confirmed that the exchange rate was calculated at 1,320 dinars for currency conversion operations.
The media expert at the bank, Aqil Al-Shuwaili, said in a statement: "It was decided to calculate the exchange rate at (1320) dinars per dollar for currency conversion operations in the event that electronic cards are used while traveling or via the Internet (online) and according to the instructions of the Central Bank of Iraq." https://www.radionawa.com/all-detail.aspx?jimare=33686
Sudanese Advisor: The "Parallel" Exchange Rate Will Approach The "Official" In This Case
Money and business Economy News _ Baghdad Today, Thursday, the financial advisor to the Prime Minister, Mazhar Muhammad Salih, clarified about the fluctuation of the exchange rates of the dollar in the parallel market, while setting a condition for its approach to the official market.
Saleh said, "If the daily sales of the Central Bank of Iraq window reach approximately $200 million per working day and continuously, then certainly the parallel market will shrink and exchange rates in it will approach the fixed central official market."
Saleh added, in an interview with the official news agency, that "this requires that the level of sales be at the mentioned rate, and that it takes a range of days and stability and continuously in order to appear."
He pointed out, "The financing of foreign trade for the private sector has really adapted to the climate of the compliance platform and its controls in the matter of transparency of commercial information, especially knowing the final beneficiary of the external transfer."
https://economy-news.net/content.php?id=32847
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