An economic expert warns of a rise in the dollar exchange rate in Iraq in the coming days
Economic expert Nasser Al-Tamimi warned, today, Tuesday (December 17, 2024), of a rise in the dollar exchange rate in Iraq in the coming days.
Al-Tamimi said in a press statement, “There are real fears in the Iraqi market of the continued rise in the dollar exchange rate after the suspension of the platform by the Central Bank of Iraq,” indicating that “this matter will constitute a shock, especially at the beginning of implementing the decision and will lead to a rise in the dollar, to increase demand for it in the parallel market.”
He added that “after the platform is stopped, most traders, especially small ones, will depend on the parallel market to finance their foreign trade, while continuing to finance trade with Turkey in dollars, through illegal means,” noting that “this is what will lead to the rise, and therefore practical steps must be taken to prevent this by the country’s monetary authority, and urgently.”
The Central Bank of Iraq revealed on Wednesday (September 4, 2024) the mechanism for ending the electronic platform for foreign transfers, while indicating that the placement of foreign transfer operations and meeting requests for the dollar are on sound paths and consistent with international practices and standards.
The bank said in a statement that “the electronic platform for foreign transfers managed by the Central Bank of Iraq began at the beginning of 2023 as a first phase to reorganize financial transfers in a way that ensures proactive oversight of them instead of subsequent oversight by the Federal Reserve auditing daily transfers. This was an exceptional measure as the Federal Reserve does not usually do this, and a gradual shift was planned towards building direct relationships between banks in Iraq and foreign correspondent and approved banks, mediated by an international auditing company to conduct pre-audit of transfers before they are executed by correspondent banks.”
He added that “during the year 2024 and until now, 95% of the transfer process from the electronic platform to the mechanism of correspondent banks directly between it and Iraqi 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,” explaining that “some expectations about potential impacts on the exchange rate and transfer operations are baseless, because the process will not be sudden or in one batch at the end of this year, but rather it was originally achieved during the past period with effort and careful follow-up, except for the remaining small percentage that will be completed in the coming short period.”
He stressed that “trade with the United Arab Emirates, Turkey, India and China represents about 70% of Iraq’s foreign trade as (imports), which prompted the Central Bank of Iraq to find channels for transfer in euros, Chinese yuan, Indian rupees, and Emirati dirhams, through accredited correspondent banks in those countries, and (13) Iraqi banks have actually begun conducting transfer operations with a pre-audit mechanism that has been agreed upon and approved in addition to transfers in dollars.”
He continued: “With the provision of channels for personal transfers for legitimate purposes and external purchases through electronic payment channels and international money transfer companies and cash sales to travelers, and the payment of cash dollars for incoming transfers to the parties and purposes specified in the Central Bank’s published instructions.”
The Central Bank of Iraq stressed that it “put foreign transfer operations and meeting dollar demands on sound tracks consistent with international practices and standards and the Anti-Money Laundering and Terrorist Financing Law.”
Explaining that “providing the aforementioned channels for all purposes at the official dollar price makes this price the true indicator of economic practices, which is proven by the reality of price stability and control of inflation, and any other price traded outside of these channels is an abnormal price that those with unorthodox or illegal practices resort to, who avoid official channels in their dealings, and bear the additional costs alone by purchasing at a higher price than the official price to delude others with the difference between the official price and the other.”
Burathanews.com