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Dollar crisis: Changing exchange rates will create “huge problems” and smuggling is led by a “deep state”

The head of the Diyala Chamber of Commerce, Muhammad Al-Tamimi , confirmed today, Tuesday (September 10, 2024), that changing the exchange rates will create many problems, as the deep state is the one managing the state’s smuggling outside the borders of Iraq.

Al-Tamimi told Baghdad Today, "The money market is suffering from major challenges and is exposed to tremors at any moment, especially since the ability to control it is limited in most areas, with the continued smuggling of the dollar, which has become a lifeline for names and entities representing the deep state in the country in order to maintain its influence."

He added that "the recent rise in the parallel market was due to speculation and the spread of misleading news, in addition to the presence of names that control a large part of the liquidity," noting that "talk about the Central Bank resorting to changing the dollar exchange rates is still speculation, and if it happens, it will lead to many problems."

He pointed out that "without controlling the smuggling rate, the difference between the official and parallel price will remain high," stressing that "the price difference generates billions of dinars in the pockets of many parties and forces."

It is noteworthy that a banking source reported yesterday, Monday (September 9, 2024), that there was confusion in the foreign currency markets, while he expected their prices to rise.

The source told Baghdad Today, "The Central Bank will issue new decisions regarding foreign currency prices and the method of trading them within Iraq."

He added, "It is likely that these decisions will lead to an increase in the dollar exchange rate in the parallel market due to the currency shortage."

The source said, "The aim of these decisions is to limit currency smuggling or its monopoly by the weak-willed."

The dollar exchange rates witnessed a new rise in the two main stock exchanges and local markets for the second day in a row.   link

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Tishwash:  Winners and losers from the fluctuation of the dollar exchange rate against the dinar in Iraq

Despite the long period of time since the start of the electronic platform to monitor the movement of the dollar, the exchange rates of the dinar against the US currency still experience a large disparity between the official price announced by the Central Bank, which is 1320 Iraqi dinars per dollar, and the black market price, or what is known as the parallel price, which ranges between 1490 and 1510 Iraqi dinars per dollar.

And at the beginning of 2023, he announcedIraqAdopting an electronic platform to monitor the movement of dollar sales and money laundering operations, following warnings issued by the Federal Reserve (the US Central Bank), in addition to the US Treasury Department punishing several local banks for their involvement in suspicious activities.

The electronic platform for transfers worksForeign

The Central Bank of Iraq, in its first phase , is reorganizing financial transfers to ensure proactive control over them instead of subsequent control through the Federal Reserve auditing daily transfers.cabinetIraqi on February 7, 2023 on the decision of the Board of DirectorsCentral Bank of IraqBy adjusting the exchange rate of the dollar against the dinar, equivalent to 1300 dinars per dollar after it was 1480 dinars per dollar.

On the fourth of this month, it was announcedCentral Bank of IraqThe "electronic platform" through which US dollar transfers abroad are carried out is about to be completed, indicating - in a press statement - that during the year 2024 and until now, 95% of the transfer process from the electronic platform to "corresponding banks" has been achieved, which means that only about 5% of it remains within the platform, which will be transferred using the same mechanism before the end of this year and according to the plan.

This decision by the Central Bank raised many questions about the extent to which it has been able toIraqPreventing the smuggling of hard currency, stopping money laundering operations, and the extent of the success of economic measures in controlling currency smuggling and controlling the price in the market.

*The winners and losers from the fluctuation of the exchange rate.

Abdul Hassan Al-Ziyadi, a member of the Board of Directors of the Iraqi Businessmen Union, confirmed that the primary beneficiaries of the fluctuation of the dollar exchange rate against the dinar in Iraq are currency smuggling traders and price speculators, adding that the primary victims are...IraqAnd the citizen.

Al-Ziyadi said, "The dollar crisis inIraqAffected all jointslifeCommercial and non-commercial,” he added, “traders were harmed by the rise in the dollar exchange rate, and citizens were also harmed because the instability of the exchange rate destroys the family’s income and monthly resource.”

He continued, “If he wantedIraqTo get rid of this confusing situation, he must first get rid of the import of many goods and rely on manufacturing them locally to reduce the need for hard currency in addition to developing agriculture,” considering that “the Iraqi government and the Central Bank are primarily responsible for the failure of the currency selling platform.”

*Draining money

The researcher in economic affairs and a member of the General Authority of the Iraqi Accountants Syndicate pointed outHusseinNima Al-Karaawi until the entryIraqIn the American SWIFT system in 2023, it was the reason for many traders to refrain from the currency selling platform and turn to the black market for fear of having their money seized, in addition to the lack of mechanisms to help traders avoid having their money seized.

Al-Karawi said that "the price differencebetweenThe dollar and the dinar in the official or parallel price exceed 17 points for one dollar, so what is the case with very large amounts? He considered that “this matter represents a drain on funds.”

He added that “sales have declined significantly inIraqBecause of the change in the exchange rate and the lack of real control over the fluctuations in exchange rates in the market,” explaining that the reason is due to the presence of border crossings outside the control ofthe governmentIt is exploited by some dollar smuggling gangs.

Al-Karawi believed that "the citizen is the one who pays the tax of the exchange rate fluctuations. Although the financing for imported goods is through the platform at the official price, in reality many goods and commodities are sold in the local market at the parallel dollar price."
He said that the platform wasSellDaily up to $280 millionbutThe amount has now dropped to less than $240 million per day, he added, adding that the differencebetweenThe whistleblowers go to smuggling and the parallel market.

Al-Karawi confirmed that "the government and the Central Bank have taken many measures internally and externally to control the smuggling process and control the exchange rate."

He explained that some banks were harmed by the ban imposed on them by the US Federal Reserve and by smuggling operations, which contributed to raising the exchange rate on the black market. He also indicated that reducing the exchange rate of the dinar against the dollar also harmed the government's revenues, because its revenues depend on selling oil and receiving dollars in exchange for it and then selling it on the official platform for banks and traders.

Controlling border crossings

The spokesman for the Baghdad Chamber of Commerce, Rashid Al-Saadi, believed that controlling border crossings and automating the departments concerned with the import and export file are the only way to control currency smuggling.

Al-Saadi said, "There are parties that tried to thwart the currency selling platform to benefit from illegal transfers."

He added that "Iraq lost large sums of money as a result of smuggling of goods and hard currency and tampering with the valuation of goods from border crossings."

As for the citizen Ahmed Jabbar, who owns grocery stores, he called forthe governmentIraq to support the economy and enhance the purchasing power of citizens by strengthening the local currency and supporting local industry and agriculture.

Jabbar said, "Selling in dollars has affected the Iraqi market. We encouragethe governmentTo limit dealings in the local currency, as it contributes to the stability of the market and the economic situation of citizens.  link

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Al-Sudani and Pezeshkian sponsor the signing of 14 bilateral memoranda of understanding between Iraq and Iran

 Prime Minister Mohammed Shia Al-Sudani and Iranian President Masoud Pezeshkian sponsored, today, Wednesday (September 11, 2024), the signing ceremony of 14 memoranda of understanding in various fields and sectors.

The Prime Minister's Office said in a statement received by "Baghdad Today" that "Al-Sudani headed, along with the President of the Islamic Republic of Iran, Masoud Pezeshkian, the delegations of the two countries in the expanded meetings held at the government palace in the capital, Baghdad."

The statement added that "during the meeting, aspects of cooperation between the two neighboring countries were discussed, in a way that achieves mutual interests and benefits, as well as following up on the work of the joint supreme committee between Iraq and Iran, which will hold its next meeting in Baghdad," indicating that "security cooperation and the joint security agreement were also discussed, as well as constructive cooperation in the field of refining and energy industries, and cooperation between the private sectors in the two countries."

According to the statement, the Prime Minister referred to the "religious, social and historical ties that unite the two neighboring countries," explaining that "their geographical location makes the logistical and transportation lines of great importance," referring to "the (Basra-Shalamcheh) railway line for transporting passengers, and the government's keenness to complete the memoranda of understanding and proceed with their implementation."

 For his part, the Iranian President referred to "the depth of the relationship between the two countries, and the impact of the distinguished relationship on the stability of the region," stressing "his country's desire for joint work and development of economic partnerships between the two countries."

The statement indicated that "the meeting witnessed agreement on common visions regarding the continued aggression on Gaza, and the destabilization caused by the Zionist entity to the security and stability of the region."

The two sides renewed "the call to stop the genocide against the Palestinians, and for the international community to assume its responsibilities in this regard."

The Prime Minister and the Iranian President sponsored the signing ceremony of 14 memoranda of understanding in various fields and sectors, including: economy, training cooperation, youth and sports, cultural, artistic, archaeological and educational exchange, media cooperation, communications, in the field of religious tourist groups, cooperation in the field of Iraqi-Iranian free zones, agriculture and natural resources, mail, social protection, vocational and technical training, development of skilled manpower, and cooperation between chambers of commerce.

The memoranda of understanding were signed on the Iraqi side by the Ministers of Foreign Affairs and Trade, and the President of the Federation of Iraqi Chambers of Commerce, while on the Iranian side they were signed by the Ministers of Foreign Affairs and Economy.

The Prime Minister's Office pointed out that "the memoranda of understanding signed between the Republic of Iraq and the Islamic Republic of Iran included the following:

1- Memorandum of Understanding in the field of training cooperation.

2- Memorandum of Joint Understanding in the field of Iraqi-Iranian youth and sports.

3- Memorandum of Understanding in the field of Iraqi-Iranian cultural, artistic and archaeological exchange.

4- Memorandum of Understanding for cooperation in the field of education.

 5- Memorandum of Understanding for Iraqi-Iranian media cooperation.

6- Memorandum of Understanding for cooperation in the field of communications.

7- Memorandum of Understanding for cooperation in the field of religious tourist groups.

8- Memorandum of Understanding for cooperation in the field of Iraqi-Iranian free zones.

9- Memorandum of Understanding for cooperation in the field of agriculture and Iraqi-Iranian natural resources.

10- Memorandum of Understanding for cooperation in the field of postal services.

11- Memorandum of Understanding for cooperation in the field of social protection.

12- Memorandum of Understanding for cooperation in the field of vocational and technical training.

13- Memorandum of Understanding for cooperation in the field of developing the Iraqi-Iranian skilled workforce.

14- Memorandum of Understanding for cooperation in the field of Iraqi-Iranian Chambers of Commerce. link

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