Economy |Yesterday, 21:53 |
Baghdad today - Baghdad
The financial advisor to the Prime Minister, Mazhar Muhammad Saleh, confirmed today, Thursday (November 23, 2023), that the decision to circularize the Central Bank today regarding trading the dollar outside the platform according to supply and demand, will provide high flexibility in supply that contributes to market stability.
Saleh told the official news agency, followed by "Baghdad Today", that
"liberalizing the operations of buying and selling foreign exchange is not an alternative to the policy of defending price stability and the government's plan to interfere in the stability of the general level of prices."
The Central Bank of Iraq had issued circulars to licensed banks regarding their share and the sale of the dollar to citizens at the official price yesterday, Wednesday, as it confirmed that its circulars, No. 463/3/9, on 8/17/2023, paragraph (first), thereof, stated that the official price for selling the cash dollar To the final citizen beneficiary, the amount of (1,320) dinars/dollars will be spent on the cash share received by banks and exchange companies, and mediation in buying and selling foreign currency directly from this bank/foreign currency buying and selling window.
It must be adhered to and sold in accordance with the instructions communicated to you. Otherwise, the price is subject to forces. Market supply and demand.
The Prime Minister's advisor added, "Families, natural and legal persons in Iraq are hoarding amounts of cash in foreign currency and outside the banking system amounting to billions of dollars and are subject to two phenomena. The
first is the difficulty of disposing of their circulation outside the laws of supply and demand that create the currently free exchange rate due to deterrent legal controls, and the
second is a significant contraction of the money supply." of liquid foreign currency while it has stopped moving in the form of a cash hoarding that is immobile and outside the circle of supply.” He continued,
"This exacerbates exchange rate fluctuations under the influence of (a liquidity trap in foreign currency resulting from an expected positive wealth due to the rise in the value of foreign exchange against the local currency)." He added,
“Therefore, liberalizing the climate of dealing in foreign currency and giving it a white character will provide high flexibility in supply that contributes to reducing noise in the secondary exchange market, which provides a flexible supply of foreign exchange that leads to market stability, supported by a government policy that provides commodity supply through the official exchange rate.” Highly stable and financed at an exchange rate of 1,320 dinars per dollar.
The Central Bank of Iraq’s statement yesterday, Wednesday, that the dollar exchange rates are subject to “the forces of supply and demand in the market,” raised several questions from economists about the reasons that prompted the governor to issue a decision that only recently considered it an “economic crime” that would put the accused in prison under penalty of the Penal Code. Effective against speculators in exchange rates.
What economists have pointed out is that all the measures taken in cooperation with the American side for nearly two years have been put in vain by the return of the currency auction in a “parallel” manner, which is considered an implicit acknowledgment of the existence of a “parallel market” that imposes itself on the Iraqi economy and controls it, and there is no point in preventing it.
Economist Nabil Al-Marsoumi commented on this step, sarcastically, “The militarization of the dollar has ended, after the Central Bank recognized the existence of the parallel market!!!”
On the other hand, economic experts described the Central Bank’s action by saying that the bank was finally convinced of the futility of preventing parallel markets, and allows the exchange of the dollar currency according to supply and demand,” considering that “this step is good and will enhance the stability of the markets.”
The matter led to the raising of several questions by observers about how the Central Bank will ensure that the dollar does not go to prohibited channels, and
whether this means that the Central Bank will retreat from the step of preventing the delivery of dollar remittances to citizens, and
whether dollar circulation will become available and not be pursued and anyone can Banking can sell the dollar to anyone willing to buy the dollar, as well as
whether it will enhance the stability of the markets,
especially since cash from the dollar will become available, which may lead to a balance of supply and demand and thus a decline in prices.