 Future of Iraqi Dinar IraiIraIIIIIIIIIIIraqi relies heavily on oil, which exposes it to the risk of fluctuations that may occur in the price of a barrel, but it nevertheless has a stable future, according to Moody's credit rating agency. Today, the agency maintained Iraq's rating at CAA1 with a stable outlook, and also kept the country's local and foreign currency ceiling unchanged. Moody's says that the rating reflects Iraq's financial and external dependence on hydrocarbons, which leads to its significant exposure to oil price fluctuations and the risks of transitioning away from carbon.
The agency expects that the escalation of the conflict between Israel and Hamas and the intervention of Iran and America will have fundamental repercussions on Iraq through many transmission channels. Measures to support the dinar In the middle of this month, Iraq approved a package of measures to address the exchange rate difference, which included regulating imports and ensuring the entry of the largest number of merchants and importers to the foreign currency sales window by facilitating account opening procedures, deposit operations, and other procedures. The government also issued a series of measures to develop electronic payment systems and reduce dependence on cash. The Iraqi government held discussions with the Central Bank of Iraq to facilitate procedures related to Iraqi banks importing the (cash) dollar. Iraq relies heavily on imports to meet its needs, which increases the demand for the dollar. During the past months, the country expanded the procedures for relying on the local currency in transactions with the aim of supporting the dinar, including the obligation to pay wages and salaries of foreign workers in dinars. Last May, the Iraqi Ministry of Interior obligated merchants and others to use the dinar instead of the dollar in transactions. The Central Bank of Iraq is the primary source of the dollar and other foreign currencies for various transactions in the country, and the bank provides an electronic platform for importers, traders, citizens and investors to carry out foreign transfers, with the aim of controlling the dinar’s exchange rate against the dollar and eliminating the parallel market.
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 Iranian Rial to USD Conversion Rate Tehran - After the rise in the price of the US dollar toppled the former governor of the Iranian Central Bank, Ali Salehabadi, 25 days ago, the local currency (riyal) fell on Sunday to a new record level, as the price of one dollar exceeded 452 thousand riyals in the unofficial market. The Iranian currency has regained a small part of its value this month, as the dollar fell from 440,000 riyals in the first week to 400,000 riyals in the second week due to promises made by the new Central Bank Governor, Mohammad Reza Farzin, regarding enhancing the value of the national currency. After the relative stability that the riyal witnessed during the past two weeks, its price became unstable again with news of possible European and American sanctions on Iraqi banks with the aim of restricting the besieged Iranian economy. Historic collapse In addition to the rise in the price of the dollar, the prices of the yellow metal witnessed a noticeable increase in Tehran, where a gram of 18-carat gold reached a new record and exceeded 20 million and 110 thousand riyals, at a time when the price of the euro reached 489 thousand riyals, according to banking offices in the center of the Iranian capital. The Iranian currency recorded its highest collapse against foreign currencies since the victory of the Khomeini revolution in 1979, when the dollar was equivalent to 70 riyals at that time, but the riyal fell on the eve of the 44th anniversary of the victory of the revolution about 6,400 times against the green currency in the unofficial market. Observers in Iran attribute the reason for the rial's loss of value to the politicization of the economy and its impact on international developments, especially developments in the nuclear issue and tension with the West, which is directly reflected in the increase in foreign sanctions and restrictions on the Iranian economy. Politicization of the economy In this context, Iranian economist Albert Baghzian reads the fluctuation of the national currency in the context of economic plans affected by politics, explaining that the price of the dollar rose by about 5,000 riyals following the European Parliament’s call to place the Revolutionary Guard on the list of terrorist organizations, while the American currency had It decreased by about 4 thousand riyals following the resignation of the former governor of the Central Bank of Iran, which confirms the close connection between the national economy and the country’s foreign policy. In a press statement published by Entekhab News Agency, Baghzian searches for the reason for the decline in the value of the riyal in the field of political disputes between Tehran and Washington on the one hand and European capitals on the other hand, and believes that the solution lies in removing the specter of sanctions from the national economy. The Iranian economist urges his country's authorities to take serious action to relieve the besieged economy through the nuclear negotiations aimed at saving the nuclear agreement. Relations between European Union member states and Tehran have deteriorated over the past few months with faltering efforts to revive the nuclear agreement, in addition to Tehran's arrest of a number of European citizens on charges of espionage or incitement to the recent protests against the government. Government endeavors Meanwhile, Central Bank Governor Mohammad Reza Farzin, on Sunday, tried to reassure Iranians about their national currency, declaring that the country does not face a problem with its hard currency reserves, which recently rose to about $20 billion. In a televised program, Farzin revealed the release of $200 million in Iranian assets in Iraq, stressing that the Central Bank is following up on the release of all frozen assets abroad, and that its negotiations with regional partners have reached good results that will reflect positively on stabilizing the official exchange rate. For his part, the economic researcher, Moin Sadeqian, described Farzin’s promises as coming in the context of what is known as “speech therapy,” adding that the promises made by the Central Bank governor will have a relative effect in curbing the price of the dollar, but he expects the riyal’s value to continue to decline during the few months. Coming. The collapse continues Speaking to Al Jazeera Net, Sadeghian proposes raising the interest rate and reducing the budget deficit, in addition to reducing tension with external powers to prevent the price of the dollar from rising and reaching new heights in the Iranian market, stressing that the rampant inflation pushes the citizen to acquire hard currency to preserve the value of his money, which raises the demand for... The dollar compared to the limited supply. He expected that the Iranian government would pump hard currency into the free market to limit the continued collapse of the national currency, describing the effect of this policy as temporary, just like the arrest of dollar brokers on charges of disrupting the national economy. The researcher concluded that his country's attempts to trade in national currencies with other countries will not be able to limit the decline in the value of the national currency, explaining that in light of the stability of the value of other currencies against the dollar, their prices in the Iranian market will rise with the decline in the value of the riyal. Following the relative stability that the riyal witnessed following the signing of the nuclear agreement in 2015, turmoil returned to the Iranian currency following the American withdrawal in 2018 from the agreement, and since that time the price of the American currency has witnessed spikes against the riyal as the chances of reviving the nuclear agreement declined.  Central Bank of IRAQ Monetary policy in Iraq faces many challenges, especially in light of the presence of an irregular currency exchange market run by networks that manipulate the prices of the dollar against the dinar, according to local media reports. In the face of the "monetary dualism" that has harmed the country's economy, Iraq is moving toward applying the principle of "monetary sovereignty," according to what the financial advisor to the Prime Minister, Mazhar Muhammad Salih, revealed in statements to the Iraqi News Agency, "INA." By applying the “principle of monetary sovereignty,” according to Saleh, “the Iraqi dinar becomes the only resort for exchange, pricing, and coverage of internal transactions.”
The Iraqi authorities are struggling in an attempt to control the exchange rate of the Iraqi dinar against the US dollar, which is witnessing fluctuations that have led to a decline in the value of the dinar, accompanied by compliance with international rules in financial transfers, which has affected the supply of the dollar in the market. Understanding the Monetary Sovereignty The economic advisor, Saleh, explains in a research paper published by the Iraqi Economists Network last October that monetary sovereignty is called “Westphalianism,” which expresses “the state’s authority to exercise exclusive legal control over its currency through the functions of the central bank, as it is the exclusive authority to determine the quantities of the transaction and its value as a means of payments.” . He added that the name "Westphalianism" comes from the "Westphalian system, which represents a principle in international law that every state has exclusive sovereignty over its territory," which is explicitly stipulated in the United Nations Charter. The research states that this “Westphalian monetary” sovereignty is based on: the independence of monetary management, issuance, and exchange system. Why now does Iraq need to implement such a principle? According to the research paper, Saleh believes that Iraq needs to apply the principle of monetary sovereignty in order to enhance the ability of monetary policy to “control local liquidity levels through the strength of the central bank’s intervention in the monetary market.” Challenges and Solutions He warned of the continuation of what he called “the reality of colored noise that allows the survival of the black market for the monetary dollar” and its ability to influence the price system, not to mention greater availability of the state’s ability to manage inflation by influencing it through interest rates. Saleh stressed that the Iraqi state’s adoption of the principle of monetary sovereignty will lead to “maintaining a fixed exchange rate that allows free capital flows and confronting cheap money.” The Iraqi General Directorate of Intelligence and Security had announced the overthrow of a network that manipulated the dollar exchange rates in Baghdad, according to a report published by the "INA" agency. Last August, Prime Minister Muhammad Shia al-Sudani announced the arrest of a network of currency “speculators” who collect dollars and send them to the Kurdistan region in northern Iraq, and then smuggle them abroad, without specifying the destination, according to an Agence France-Presse report. Factors for applying the principle of monetary sovereignty? The Iraqi economist, Salam Sumaisem, identified the most important factors that allow the application of the principle of “monetary sovereignty,” stressing that it is not linked to the existence of a political decision to implement it, but rather to economic factors and determinants. In an interview with Al-Hurra website, Sumaisem laid out a package of factors that must be present, including: “the strength of the economy, the stability of exchange rates, the strength of the national currency itself, and the existence of a truly productive economy that does not rely solely on imports.” Despite the authorities' attempts to control exchange rates, trading in the informal market still represents about 10 percent of the trading rate, in what Counselor Saleh described as "an uncontrolled market controlled by speculators and adding noise to the Iraqi economy as a whole." Will it affect deposits in foreign currencies? The Iraqi economist, Mahmoud Dagher, explains that the principle of monetary sovereignty “does not mean that the savings of citizens or any legal entity that has funds deposited in foreign currencies will be affected, as they remain able to deposit and withdraw funds in dollars or other foreign currencies that may be deposited in them.” In response to Al-Hurra website's inquiries, he pointed out that the majority of countries seek or aspire to reach "monetary sovereignty" by making "their national currency the primary currency to be used in payments and transactions within the country." Applicability of the principle of monetary sovereignty in Iraq? Iraqi economists unanimously agreed that applying the principle of monetary sovereignty requires the availability of several factors, the most important of which is “bridging the gap between the exchange rate of the national currency against the dollar.” Expert Dagher, a former official in the Central Bank of Iraq, said, “Whenever the exchange rates of the national currency stabilize against foreign currencies, the principle of monetary sovereignty becomes applicable,” which must be accompanied by “the absence of a gap or differences between the exchange rates in the official market and the parallel market, and preventing what happens.” Of speculation in this field.” Expert Sumaisem confirms that every country has the right to resort to the principle of “monetary sovereignty” in order to control the “money market,” adding that “this matter is not only related to desire or ambitions, but rather to the strength of the national currency in real terms, as the currency is not just paper, it is “It must express a value corresponding to the GDP, and its ability to truly store value, while being coupled with various indicators of strength at several levels.” Iraq began applying the standards of the international transfer system "SWIFT" since mid-November of 2022 to access Iraq's dollar reserves in the United States, which are estimated at tens of billions of dollars, according to Agence France-Presse. Iraqi banks must currently register their transfers in dollars on an electronic platform, which checks the requests, and the US Federal Reserve examines them, and if it has doubts, it stops the transfer.  Iraqi Dinar Liquidation Wazin News - Baghdad Economic expert Safwan Qusay confirmed that financial liquidity is available and there are no high risks regarding the existence of the Iraqi dinar. Qusay said, in a televised interview followed by Mawazine News, that “oil revenues rose during the first three months of this year, and this is thanks to the current government’s policy and with Muhammad Shiaa Al-Sudani personally supervising this success.” He added, "Iraq currently embraces more than 600 investment projects, including the Baghdad Metro." He pointed out, "Iraq has completed all its financial needs, and the rest of it needs the price of a barrel of oil to reach only $96 to cover the financial deficit." He pointed out that "there should be rationalization and advice in local financial consumption."
 Decline of USD against IQD Shafaq News/ The official spokesman for the currency market in Sulaymaniyah, Jabbar Gorran, revealed today, Monday, the reasons for the decline in the value of the US dollar against the Iraqi dinar, pointing to the importance of the visit of Iraqi Prime Minister Muhammad Shiaa Al-Sudani to the American capital, Washington. Kuran told Shafaq News Agency, "The main reason for the decline in the value of the dollar against the dinar is the impact of the Sudanese visit to Washington, which led to an increase in American support for the Iraqi economy, and the optimism of the American parties regarding infrastructure and government reforms in the banking system in Iraq."
He added, "The dollar has declined against the dinar in recent days due to a number of factors. Smart Card Utilization The most important of which is the use of smart cards that enable business account holders to withdraw dollars abroad, which is a good reason for the decline in the value of the dollar." According to Kuran, Impact of Turkish President's Visit The other reason for the decline in the value of the dollar against the dinar is the visit of Turkish President Recep Tayyip Erdogan to Baghdad, which resulted in several agreements on a number of issues, including that trade exchange be in the Iraqi dinar and the Turkish lira, indicating that the volume of trade exchange between Iraq and Turkey ranges Between 20 and 24 billion dollars annually, and dealing in the dinar and the Turkish lira will reduce the demand for the dollar. Diversification of Currency Transactions He stated that "all transactions with countries previously were in US dollars, but according to recent agreements, Iraq will be allowed to use other currencies in its transactions. In recent days, a delegation from the Central Bank of Iraq visited Saudi Arabia and it was agreed that future exchange would be in the currency that is dealt with in that country." ". Implications for Iraqi Citizens Kuran pointed out, "Previously, when citizens received their salaries, they would convert part of their salaries into dollars to pay off housing or car loans or any other money owed to them, but now most of these transactions have been converted into the local currency, so people do not need dollars." . Outlook and Market Trends He pointed out, "It is unlikely that the dollar will fall below 1,400 dinars per dollar because it is too early and the central bank has reached its goal, but it may reach 1,420 dinars per dollar." Shafaq News Agency correspondent reported this morning that dollar prices declined with the opening of the main Al-Kifah and Al-Harithiya stock exchanges in Baghdad, recording 144,750 Iraqi dinars for every 100 dollars, while yesterday, Sunday, dollar prices recorded 145,700 Iraqi dinars for every 100 dollars. Our correspondent indicated that the selling prices in the exchange shops in the local markets in Baghdad decreased, as the selling price reached 145,750 dinars, while the purchasing price reached 143,750 dinars for every 100 dollars.  deletion of zeros iraqi dinar revaluation 19 countries have eliminated zeros from their local currencies at least once, while 10 countries have resorted to such a step twice since 1960, according to a study issued by Iran's Payam Nour University. After the regime change in Iraq in 2003 and its transformation from a totalitarian regime to a democracy, successive governments after the American invasion worked intensively to determine the course of the local currency (the dinar) on a paved path against the American dollar, but all plans could not save the dinar from falling into the abyss until The exchange rate reached 1,650 dinars for every 1 dollar. In the latest official press statements by the Governor of the Central Bank of Iraq, Dr. Ali Al-Alaq, he briefly said, “The project to delete zeros from the Iraqi currency is still in place.” But he did not explain many details about this project. Challenges and Considerations The Iraqi Central Bank refused to comment on Al Jazeera Net's inquiries about the implementation of the project at the present time or at a later time. The government’s financial advisor, Dr. Mazhar Muhammad Salih, said, “The phenomenon of many zeros in the monetary unit or the addition of zeros usually comes about because economies are exposed to wild waves of inflation or sharp rises that continue for years in the price level due to wars, sieges, and conflicts, which lead to financing the government budget deficit through issuance.” "Cash." In a previous interview - with Al Jazeera Net - Saleh explained that “price means the value of goods and services expressed in cash, and the continuous rise in prices without stopping leads to the erosion of the value of the monetary unit, which requires the issuance of larger cash denominations due to the lack of value of the smaller cash denominations and the disappearance of their ability to cover transactions.” and high value exchanges in the market. Disturb the monetary system Former member of the Parliamentary Finance Committee, Ahmed Hama Rashid, believes that “Iraq is not prepared for the project to delete zeros,” and he also said, “We always hear statements from the Central Bank to implement a project, only to withdraw after a while from implementation for unannounced reasons.” Rashid said - in a statement to Al Jazeera Net - that "the project costs are very high, as printing one banknote costs the Iraqi state 6 cents," noting that "the volume of the monetary mass printed in Iraq is 92 trillion dinars, of which 45 trillion are in circulation in the market and banks." He points out that "the project to delete the zeros will destabilize the monetary system, which may cause successive collapses," ruling out the possibility that the Central Bank would take such a step because "the dinar suffers from constant vibrations." Interfering factors Focusing on the circumstances of implementing the project to delete zeros from the Iraqi currency, we find banking consultant Abdul Rahman Al-Sheikhli identifying two factors that stood in the way of implementing the project. Al-Sheikhli said in an interview with Al Jazeera Net, “The first factor that was standing in the way of the project was the discrepancy between the official exchange rate (now: 1,332 dinars per dollar) and the parallel market exchange rate (now: 1,530 dinars), which constitutes an obstacle to the implementation of the project.” He pointed out that "the project will be successful if an exchange rate of one thousand dinars is reached for every one dollar. At that time, deleting the three zeros will achieve its economic feasibility, as the exchange rate will turn into one dinar for one dollar, and this is what the late former Central Bank Governor Sinan Al-Shabibi aspired to." ". Al-Sheikhli added, "The second factor was represented by the call made by the government headed by Nouri al-Maliki (2006-2014) to legislate the infrastructure law, which was opposed by many political blocs in Parliament at the time because it would lead to an increase in investments in Iraq through the deferred payment method, and this is what limits the value of the cash project." . There is no strong productive sector To search for the relationship in the stability of the dinar against the dollar, the academic in banking and financial sciences, Dr. Ahmed Al-Husseini, believes that there is no positive effect, explaining this to “the lack of a strong productive sector in Iraq.” Al-Husseini said in a statement to Al Jazeera Net that "the Iraqi economy is a rentier economy that depends on one financial source, which is the export of crude oil," and that the project to delete zeros is linked to strengthening the real productive economic sectors such as industry, agriculture, trade, services, health, and education. "At that time, the project will have a positive impact on the stability of the national currency."  Iraqi Dinar to USD Conversion Advisor to the Iraqi Prime Minister for Financial Affairs, Mazhar Muhammad Salih, revealed the dangers of the exchange rate becoming unstable if demands to float the dinar are met, indicating that the dollar exchange rate in the parallel market is currently gradually approaching the official one.
The Pitfalls of Floating the Dinar Saleh said, “Calls for floating the dinar to end the gap between the official exchange rate and the parallel market may be possible in an economy in which the free market alone influences the movement of the balance of payments and not in an economy in which the rentier government sector is dominant and generates foreign currency reserves.” The Role of Monetary Authority Saleh continued: “The monetary authority alone is the main source of supply of foreign currency that meets the desired demand for foreign exchange in the money market, to provide stability in this market and achieve a desired and homogeneous exchange rate through the interventionist role played by monetary policy,” according to what was reported by the Iraqi News Agency (INA). ) Balancing Stability and Market Forces He added, "Claims for flotation mean in all cases adopting the prevailing exchange rate in the parallel market to achieve the goal of stability and balance in the official exchange rate itself at a new point reached by the market at the end of the supposed flotation policy and returning to stability again. Also, the flotation scenario means in all cases the withdrawal of the authority." Cash from being an essential central supply of foreign currency, to be replaced by new forces supplying foreign currency from free market makers, which only have a weak, limited supply of foreign exchange, and at the same time they carry an uncontrolled package of inflationary expectations and are called in economic literature the forces generating expectations. "inflationary". |
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