In the context of strengthening banking supervision, in compliance with international rules imposed by Washington, the Iraqi authorities imposed, in recent days, a number of new restrictions, which citizens described as “complicating the use of hard currencies, and increasing the complexity of the daily life of the population.”
A number of citizens said, “The new measures are a paradox in an oil-rich country that has huge reserves in US dollars, exceeding one hundred billion.” The official exchange rate now stands at 1,320 dinars to one dollar. But at money changers, the price of one dollar is equal to 1,500 dinars and may reach 1,600.
Currency exchange offices are now dealing with customers with extreme caution after the arrest of dozens of money changers accused of manipulating prices. This is what made the 37-year-old Iraqi citizen, Hassan, say: “For three months or more, there has been great difficulty in obtaining dollars from banks.”
This employee supervising logistics operations in an oil field in southern Iraq, whose monthly salary is approximately $2,500, explains: “In the past months, we would go to the bank to withdraw the salary. They would give us very small amounts in the form of payments due to the illiquidity of the dollar.” .
Hassan adds, “Recently, the general trend among banks has been to give salaries in dinars, and according to the official exchange rate. But he considers this “a problem, because the official exchange rate differs from the parallel market price by 20 percent,” meaning that “the salary will be reduced” from Its real value.
The Central Bank of Iraq had previously decided, through a statement, “that, as of next January, all commercial and other transactions will be limited to the Iraqi dinar, instead of the dollar, within the country.”
In addition, starting from the year 2024, it will become necessary to withdraw every money transfer from abroad exclusively in dinars and according to the official exchange rate. While the dollar can be withdrawn in cash from previously existing deposits in hard currency naturally.
In the same context, the Prime Minister’s Advisor for Financial Affairs, Mazhar Saleh, stressed that “this is the rule that is part of monetary sovereignty, but there are exceptions, which especially include embassies.”
Saleh adds, saying: “We are strengthening what is called monetary sovereignty… It is not possible to deal with two currencies within the national economy.” However, these restrictions opened the way for great controversy and hindered the daily life of Iraqis.
In the context of his defense of banking restrictions aimed at “verifying transfers,” Saleh adds: “With the aim of reassuring the international financial community and also for reasons related to Iraqi society: Do these transfers actually go to finance Iraq’s trade?”
He adds, “What is happening has nothing to do with the strength of the Iraqi economy. Iraq today is at the highest levels of foreign reserves in its financial history. Rather, there have been structural changes in issues of dealing with foreign currency.”
It should be noted that the banking sector in Iraq has adopted an electronic platform, the aim of which is to monitor the uses of the dollar and tighten control over a thriving informal economy, while tax evasion attracts some importers and traders.
In turn, Prime Minister Muhammad Shiaa Al-Sudani acknowledged that “with the new measures, the cash supply in hard currency available in the market has declined from 200 to 300 million dollars a day to 30, 40, and 50 million dollars.”
Al-Sudani explained, during September, that “merchants who deal with Iran are forced to turn to the parallel market to obtain currency, given that the Islamic Republic is a country subject to sanctions and is not allowed to conduct financial transfers.”
At the same time, he stressed that “the central banks of Iraq and Iran are discussing a ‘mechanism’ to regulate trade, which would divide the parallel market.”
2023-12-17 18:24:45
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