Iraq News Highlights and Points To Ponder Sunday AM 7-7-24

Al-Sudani's Advisor Comments On The Fluctuation Of The Dollar Price: It Does Not Suit The Strength Of Iraq's Foreign Reserves

Economy |Today  Baghdad Today – Baghdad  Mazhar Muhammad Salih, the Prime Minister's economic advisor, confirmed today, Sunday (July 7, 2024), that the fluctuations witnessed by the secondary or parallel dollar exchange market during the past days are not commensurate with the strength of Iraq's international or foreign reserves.

Saleh said in an interview with Baghdad Today, "These are the actions undertaken by speculators looking for emergency profitable opportunities here and there," indicating that "the fixed exchange rate system in Iraq is based on international reserves, which is the highest in the history of Iraq, and its monetary policy, as foreign currency covers a percentage of more than 100% of the total currency currently issued."

He added that "the dollar exchange rate compared to the dinar in the parallel market does not constitute any relative importance in influencing the stability of the general price level, as this general price level has become stable in its components and trends due to the influence of the official exchange rate factor currently dominating the financing of foreign trade (imports), amounting to 1320 dinars per dollar," explaining that "this represents a stable trend for the exchange rate and the stable external value of the dinar revolves around it, which is embodied by the state of stability in the relative prices of goods and services to a large extent, as annual inflation in our country does not exceed 3%."

He pointed out that "in light of the strength of the foreign reserves supporting the Iraqi dinar, the value of which as liquid foreign assets exceeds 100 billion dollars, the official exchange market, as a general trend, will remain dominant in containing any colored noise or ambiguous information that affects the parallel exchange market in short periods due to urgent international or regional political events here and there or in adapting some instructions regulating the monetary market."

He explained that "after the decline of the dollarization phenomenon in domestic transactions, especially in contracts, obligations and payments within the country since last year and its legal prohibition, the parallel exchange market has become such that its general effects today only form a narrow economic scope of prohibited transactions practiced by informal markets and at a rate of 10% of the total supply and demand transactions for the currency."

Saleh stressed that "the stability of the exchange rate of the dinar to the dollar that the country is witnessing, even in the secondary markets, is a real and solid stability. Rather, it is derived from the strength of the impact of the price and quantity factors of the monetary and financial policies and their integration in imposing overall price stability in the country and containing inflationary expectations that were caused by the forces of the parallel exchange market during the past years," stressing that "the irregular secondary market, due to the freedom of external transfer, is under the influence of the official exchange market rate, whose operations are constantly expanding in favor of dealing with the fixed official exchange rate."

The price of the dollar against the Iraqi dinar has witnessed a noticeable increase in the past few days, as the exchange rate in the local markets reached 150,000 dinars for every 100 dollars.  LINK

Currency War Rages On, Iraq's Economy The Biggest Loser 

July 6 20:16  Information/Baghdad..   After Iraq opened up to China commercially, Iraq gained a point that is considered the most important, which is dealing in the Chinese yuan, despite its rarity, as Iraq deals in the US dollar when selling its oil abroad. America’s sense of danger forced it to fight international dealings outside the scope of the dollar, in order to maintain its dominance in the economic arena.

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More political than economic, two things linked together that enable countries to rule the world in one way or another, and preserving the interests of the government requires malicious policies like those America is currently implementing, without taking into account the economy of the affected peoples like Iraq and others. All of these explanations and more lie in the issue of stopping dealing in the Chinese yuan.

*Scaling The Economy

Speaking about this file, Ali Al-Zubaidi, a member of the Nabni Alliance, considered that the attempt to stop dealing in the Chinese yuan in Iraq’s foreign transactions by the US Federal Reserve is political pressure and a restriction on the Iraqi economy. 

Al-Zubaidi said in a statement to Al-Maalouma Agency, "America is exerting economic pressure on Iraq to gain political gains," noting that "stopping Iraq's external dealings with the Chinese yuan comes to limit Iraq's economic role and the dominance of the US dollar." 

He added, "The rise in the dollar price in the Iraqi markets is a result of the Federal Reserve imposing sanctions on transactions in the Chinese yuan and stopping dealing with it," noting that "America is exerting pressure to remain in Iraq for as long as possible." 

Since the beginning of 2023, the Central Bank of Iraq has issued several decisions aimed at maintaining the stability of the general monetary and economic situation and confronting the risks of fluctuations in the exchange rate of the Iraqi dinar against the US dollar, the most important of which is strengthening the balances of Iraqi banks that have accounts with Chinese banks - in Chinese yuan.

*Dinar Threat

In this regard, economic expert Ahmed Abdul Rabbo said today, Saturday, that stopping dealing in the Chinese yuan will greatly affect the Iraqi economy, while he confirmed that the coming days will witness a significant increase in the price of the dollar against the Iraqi dinar. 

Abdul Rabbo said in a statement to Al-Maalouma Agency, "Stopping transactions in the Chinese yuan by America through imposing sanctions on the banks dealing with it is a blatant interference in the Iraqi economy and cannot be ignored," noting that "limiting Iraq's transactions in the US dollar strengthens America economically and increases its hegemony over Iraq."  

He added, "Imposing sanctions and stopping transactions in the Chinese yuan is a political matter more than an economic one," calling on the government to "intervene in this matter because the Iraqi market is full of Chinese goods, and such a decision will raise their prices for the common citizen."  

Economic expert Nabil Al-Marsoumi had previously stated that Iraq intends to rely on the Chinese yuan for the purpose of trade exchange with China, in addition to the European euro, the Emirati dirham and the Jordanian dinar, as the Iraqi authorities seek to provide other foreign currencies for local dealings in addition to the US dollar. LINK