Iraqi PM’s financial advisor: the dollar crisis will end soon
“[CBI]’s sales have stabilized and meet the demands of traders and the domestic market for dollars”
Mudhhar Mohammad Saleh, the Financial Advisor to the Prime Minister of Iraq, on Wednesday attributed the recent surge in the US dollar’s exchange rate to Iraq’s adherence to international regulations, hinting at an imminent solution.
Saleh explicated that “reorganizing foreign exchange sales by the Central Bank of Iraq (CBI) in accordance with the international compliance platform initiated since October 2022 is a challenging task.” He further stated that “foreign exchange transfers account for 80% of the bank’s total daily sales.”
He remarked that “during the recovery phase, financing foreign trade with the dollar following the compliance procedures has been essential.” He explained that “the CBI’s sales through the auction window, following the three packages launched by the central bank earlier, have returned to their natural level of $200 million per day.”
“The bank’s sales have stabilized and meet the demands of traders and the domestic market for dollars, relying on its large reserves of hard currency. This enables the bank to intervene at any time to control exchange rates for extended periods and support the economy through financing foreign trade,” he added.
Saleh acknowledged that “the price difference between the official exchange rate of the Iraqi dinar against the dollar and the parallel market rate has gradually decreased, albeit at a slow pace.” However, he emphasized that “the period from October 2022 to the end of February 2023 has accumulated rejected transaction requests due to non-compliance with the regulations of the compliance platform.”
Saleh pointed out that “the foreign currency window at the CBI needs time to absorb the surplus demand for foreign currency, subject to the conditions of the compliance platform.” He reassured that “market signals indicate that a positive solution to the crisis is imminent.”
Iraq has faced a shortage of dollars due to pressure from the United States aimed at reducing the flow of money to neighboring countries, which have been subjected to financial sanctions by the United States. In November 2022, the Federal Reserve Bank of New York imposed stricter regulations on dollar transactions for Iraqi commercial banks, leading to delayed approval of transfers and pushing traders to buy dollars from exchange offices. The rise in the dollar against the Iraqi dinar has resulted in the inflation of essential goods and foodstuffs prices in local markets.
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