Iraq Economic News And Points To Ponder Tuesday AM 12-24-24
Stopping The Dollar Transfer Platform...A Calculated Step Or A Risky Adventure?
December 23, 2024 Baghdad/Iraq Observer The Central Bank of Iraq is scheduled to abandon the electronic platform for dollar transfers abroad at the end of this year, which has raised questions about whether this decision indicates the abandonment of the Iraqi Central Bank and the US Federal Bank’s mechanisms for monitoring the movement of the dollar,
or is it a step towards adopting a new system that may It contributes to reducing sharp fluctuations in the exchange rate and returning it to its natural levels that are consistent with the requirements of the local market and the national economy.
The electronic platform was launched in early 2023 as a new mechanism aimed at auditing dollar transfers before they are implemented, replacing the previous system that relied on auditing by the US Federal Bank after the transfers were completed, which was considered a step to enhance transparency, improve control of the movement of funds, and ensure compliance with financial laws.
At that time, banks, companies and merchants in Iraq faced major challenges in adapting to the new mechanism, as it required time to understand the working mechanisms and ensure compliance with the requirements.
However, these entities were able to adapt gradually, especially after bank employees underwent extensive training courses on using the electronic platform, which contributed to achieving full compliance with the new work procedures and ensuring the smooth flow of financial operations.
According to the new transfer mechanism, banking operations in dollars will be limited to banks that have international banking relationships, or what are known as “correspondent banks.”
Concern and reassurance
Both the Central Bank of Iraq and the US Federal Reserve believe that this step will contribute to strengthening oversight of remittances in a more precise and specialized manner, by restricting transactions to a limited number of banks that have high banking standards and the ability to cooperate with international banks, which aims to reduce financial risks and ensure Compliance with international controls.
In turn, Mustafa Akram, a researcher in financial and banking affairs, said that
stopping work on the electronic platform (FITR) and restricting dollar transfers to a limited number of foreign banks may pose challenges to the local banking system, indicating that
“this step may raise concerns about the concentration of transactions in dollars.” “In a limited range, which may lead to effects on exchange rate stability.”
Akram added to “Iraq Observer” that “there is a need for a deeper study of the impact of these measures on competitiveness in the Iraqi banking sector, while emphasizing the importance of preserving banking sovereignty and enhancing balance in the local market.”
Possible bounces
In light of these movements, news was raised about a trend towards making a new adjustment to the exchange rate, which raised concern among economists about the potential impact of this trend on the economic process in general.
Experts stressed that sudden changes in monetary policy may create additional confusion in the markets and weaken confidence in the financial system.
For his part, economic expert Uday Al-Alawi stressed that
“the biggest mistake the government can make is manipulating the dollar exchange rate through sudden decisions, because this has a direct impact on the national economy and undermines investors’ confidence in the financial system.” Al-Alawi added, in a press comment, that
“the government’s continued making of ill-considered decisions regarding the exchange rate will lead to the erosion of international and local confidence in the Iraqi economy, which will weaken the ability to attract the investments necessary to improve the economic reality.”
Economists fear the possibility of some banks not included in the transfers going to meet the requirements of their customers towards the parallel market, which could lead to a return to the rise of the dollar in Iraq. https://observeriraq.net/إيقاف-منصة-تحويلات-الدولار-خطوة-محسوب/
An expected rise in the dollar...a “temporary shock” awaiting the Iraqi market
Economy | Yesterday, 19:49 |
Baghdad today - Baghdad
Today, Monday (December 23, 2024), the "Future Iraq" Foundation for Economic Studies and Consultations expected a rise in the dollar exchange rate during the next few days, following the Central Bank of Iraq's announcement of stopping the currency conversion window platform.
The head of the institution, Manar Al-Obaidi, said in a statement to “Baghdad Today” that
“stopping the Central Bank’s currency transfer platform, which was officially announced on 12/23/2024, will lead to a temporary rise in the dollar exchange rate in the market as a result of the prevailing state of fear.”
However, things will return to normal at the beginning of the new year.” Al-Obaidi added,
"This decision had been previously announced by the Central Bank,
but such measures, when implemented, cause a shock in the market, leading to a temporary rise in the exchange rate, before the shock is gradually absorbed." He explained that
"the difference between the official and parallel market will remain, but it will shrink as the situation stabilizes."
On Tuesday (December 17, 2024), economic affairs specialist Nasser Al-Tamimi warned of a rise in the dollar exchange rates in Iraq in the coming days. Al-Tamimi told “Baghdad Today” that
“there are real fears in the Iraqi market about the continued rise in dollar exchange rates after the platform was suspended by the Central Bank of Iraq,” noting that
“this matter will constitute a shock, especially at the beginning of the implementation of the decision and will push for a rise.” The dollar, to increase demand for it in the parallel market.” He added,
"After stopping the platform, most merchants, especially small ones, will depend on the parallel market to finance their foreign trade, while continuing to finance trade with Iran and Turkey with dollars, in illegal ways," pointing out that
"this is what will push the rise and that is why practical steps must be taken to prevent This is done by the monetary authority in the country, and urgently.”
On Wednesday (September 4, 2024), the Central Bank of Iraq revealed the mechanism for ending the electronic platform for external transfers, while
indicating that placing external transfer operations and meeting requests for the dollar is on sound paths and consistent with international practices and standards.
https://baghdadtoday.news/264515-ارتفاع-مرتقب-للدولار.-صدمة-مؤقتة-بانتظار-السوق-العراقي.html
New Conditions From The Iraqi Central Bank For Buying And Selling Foreign Currencies
December 23, 2024 Baghdad/Iraq Observer Today, Monday, the Central Bank of Iraq set new conditions for buying and selling foreign currencies. Below is the document:
https://observeriraq.net/wp-content/uploads/2024/12/IMG_9748.jpeg
https://observeriraq.net/شروط-جديدة-من-المركزي-العراقي-لبيع-وشر/
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[approximate and incomplete translation of https://observeriraq.net/wp-content/uploads/2024/12/IMG_9748.jpeg ]
DATE: 2024/12/22 Electronic payment companies / two accessories
Exchange and mediation companies selling and selling foreign currencies
5 / Digital payment providers
Due to the availability of all the requirements for appointing the agent mentioned in (Chapter Two /
First / The Requirements of the Agent) from controls
The work of the providers of digital payment services for a year 2020 and the fact that exchange companies are my category (A,B) and the mediation companies by selling and selling
Foreign currencies Venice (C) licensed from this bank and is subject to its supervision and monitoring; The following decides:
1- Allowing exchange companies Vinte (A,B) and mediation companies to buy and sell foreign currencies (C) Digital payment services / accessories to provide cash withdrawal service (POC) according to the following conditions:
1- The agency/ executor in the name of the company should be limited and not owned by natural people.
A- The agency's services are provided inside the company’s headquarters and its branches exclusively.
B- The company informs this bank when contracting with the digital payment service and providing it with a copy of the signed contract The two parties.
C- Closing the agency / port in the event that this bank withdraws the company's leave.
D- The agency's domestic payment service for the agency took a written pledge from the company wishing to contract with him not to own any
A shareholder / executive and operating outside the exchange of the exchange or mediation company.
2- In the event that one of the shareholders or director of the exchange and mediation companies has an agency / port in his name and works outside the headquarters
The company can integrate the agency / port with the company and allow it to transfer its ownership in the name of the company in exclusivity and inform this bank that
An exception to the blindness of this bank number (114/10/9) on 2/22/2022, which includes not transferring the ownership of agents/withdrawals outlets POC; In the event that the agent / the perpetrator wants to leave the work, the digital payment companies must end the contract and take
The appropriate procedures for them not to sell the agency's ownership and its transmission.
With appreciation. https://observeriraq.net/شروط-جديدة-من-المركزي-العراقي-لبيع-وشر/
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