Iraq becomes only source of dollars

[Butifldrm]

Another enlightening article describing the reason for saturation of Iraq economy with USD

Iraq becomes only source of dollars for sanctions-hit Iran and Syria

February 02, 2012 01:48 AM

By Aseel Kami

BAGHDAD: In the money changing shops dotted around Baghdad’s Karrada district, Iraqi merchants dabble in many currencies, but these days some joke that banknotes from neighboring Iran and Syria are only worth plastering on windows as decorations.

Discounted Iranian riyals and Syrian pounds are pouring into the shops as Western economic sanctions against the two countries make it harder for them to conduct trade with much of the rest of the world, arrange international bank transactions and obtain hard currency.

Iraq, which shares porous borders and political ties with both countries, is emerging as an important source of dollars for them.

Sales of dollars in currency auctions held by Iraq’s central bank rose as high as $400 million on some days in December from a previous average of $150 million, according to central bank data. Many of those dollars were bought by Iraqi traders for resale in Iran and Syria.

“The reason for this is the sanctions imposed on Iran and Syria, and the fact that bank transactions are having trouble. Iraqi businessmen play the role of middlemen,” deputy central bank Governor Mudher Kasim said in January.

Kadhim Sabri, who works at a Karrada currency exchange shop, said some of the dollars purchased in the central bank auctions went straight to Iran or Syria via a loosely monitored network of wire transfer agencies. “It is more profitable to sell them in Iran or Syria.”

Sharp falls in the currencies of the sanctions-hit countries over the last several weeks indicate how desperate importers and travelers there have become to obtain hard currency. Last week Iran’s central bank announced an 8 percent devaluation of the riyal in an effort to stamp out trade in the black market, where the dollar has soared in value since U.S. and European sanctions in response to Tehran’s controversial nuclear program were tightened late last year.

The Syrian pound, which traded at 47 to the dollar before that country’s crisis, has slipped to an official rate of nearly 58 and has been changing hands at over 70 on the black market.

Iraq is a convenient place for both countries to obtain dollars because business ties have been growing rapidly. Since the fall of Iraq’s Sunni dictator Saddam Hussein, its Shiite-led government has brought the country closer to Shiite power Iran and to the regime of Syria’s Bashar Assad, a member of the Alawite minority, an offshoot of Shiite Islam.

Iran, a major investor in Iraq since the 2003 U.S. invasion, said last July that it aimed to boost bilateral trade to $10 billion in 2011 from $6 billion in 2010.

Baghdad has rejected Arab League calls to impose economic sanctions on Damascus over its bloody crackdown on dissent, citing Iraq’s own painful experience with sanctions during the Saddam era.

Although Iraqi money changers are making profits from supplying dollars to Iran and Syria, the trade carries risks – they could get saddled with large amounts of riyals and pounds just before fresh devaluations. This prospect is now deterring some of the merchants.

“If someone offers me Iranian currency, I won’t buy it anymore,” said Alaa al-Shimary at his exchange shop in the district. “I just do not know the next morning what will happen to its value ... it’s a big risk.”

In the southern Iraqi city of Najaf, some merchants now refuse to accept Iranian currency from travelers, preferring the safety of demanding dollars, which are still widely used in Iraq.

The central bank says Iraq’s large foreign reserves, which have risen to a record $60 billion on the back of high oil prices, will shield it from any damage to its financial system on the national level.

Dollar sales in any case fell off somewhat in January as the central bank tightened enforcement of regulations used to fight money-laundering; sales Tuesday were $201 million compared with $252 million at the start of January.

Any reduction in dollar supplies would be a blow to the thousands of Iranian pilgrims coming daily through the border with Iran in Iraq’s Wassit province, on their way to Shiite shrines in the southern Iraqi holy city of Kerbala. The pilgrims are greeted by money changers in a dusty border park.

“The sharp decline of the currency price has forced us to double the travel costs between Kerbala and the border, and this created problems for us and the pilgrims,” said Iraqi driver Zaid Raheem. “Because of that we decided not to receive Iran’s currency anymore.”

Read more: http://www.dailystar.com.lb/Business/Middle-East/2012/Feb-02/161880-iraq-becomes-only-source-of-dollars-for-sanctions-hit-iran-and-syria.ashx#ixzz1lBIVV2rA'>http://www.dailystar.com.lb/Business/Middle-East/2012/Feb-02/161880-iraq-becomes-only-source-of-dollars-for-sanctions-hit-iran-and-syria.ashx#ixzz1lBIVV2rA

(The Daily Star :: Lebanon News :: http://www.dailystar.com.lb)

http://www.dailystar.com.lb/Business/Middle-East/2012/Feb-02/161880-iraq-becomes-only-source-of-dollars-for-sanctions-hit-iran-and-syria.ashx#axzz1lBH0Zoty

[powerpager]

INFIDELS !!!

[JWJW11]

Wow can believe this article isnt getting more attention from you guys!

This tells us ALOT!

[onerighthand]

Wow! I wonder how Iran (Iranians) is going to take this?

Good and an interesting read.

Thanks for posting

[E. 1999]

would this be a factor in driving the value of there own currency up

[onerighthand]

would this be a factor in driving the value of there own currency up

Supply and demand?

[Stryker365]

Wow can believe this article isnt getting more attention from you guys!

This tells us ALOT!

Your right JWJW, I've read to much today and need some sleep but I think Butifldrm did a great job on his bold highlights of the important parts...see you in the morning...

[Butifldrm]

Wow can believe this article isnt getting more attention from you guys!

This tells us ALOT!

I found it very interesting. Also, it's either the best covery story for what is really happening with the money supply or it's the truth. Today, with the huge decrease in the auction of USD, presents a considerable problem for money supply. It's going to be very interesting to see how this all plays out. According to this news article the IQD has much more value than either of Iran's or Syria's. The Kuwaiti Dinar is one of the strongest currencies in the World. Why would the pilgrims have to trade there currency in for USD, unless there really is no IQD on the streets? This is all so interesting to watch unfold.

[pokerplayer]

I found it very interesting. Also, it's either the best covery story for what is really happening with the money supply or it's the truth. Today, with the huge decrease in the auction of USD, presents a considerable problem for money supply. It's going to be very interesting to see how this all plays out. According to this news article the IQD has much more value than either of Iran's or Syria's. The Kuwaiti Dinar is one of the strongest currencies in the World. Why would the pilgrims have to trade there currency in for USD, unless there really is no IQD on the streets? This is all so interesting to watch unfold.

I find it odd as well. I posted the same article this AM as I found it to be great as well...hardly a whimper. Guess it got lost with all the posts about the small CBI auction.

Awesome read, here's hoping that you get better attention to this then I did.

Thxs B !!!

* MODS please lock mine, at least this one has comments, thxs.

pp

Edited February 2, 2012 by pokerplayer

[onerighthand]

I find it odd as well. I posted the same article this AM as I found it to be great as well...hardly a whimper. Guess it got lost with all the posts about the small CBI auction.

Awesome read, here's hoping that you get better attention to this then I did.

Thxs B !!!

* MODS please lock mine, at least this one has comments, thxs.

pp

Ya when I wake up and look at my email notices fron DV, there is usually 35 + and everybody including me was all over that auction post. It did get lost. Sorry! +1 for U now.

[Butifldrm]

I find it odd as well. I posted the same article this AM as I found it to be great as well...hardly a whimper. Guess it got lost with all the posts about the small CBI auction.

Awesome read, here's hoping that you get better attention to this then I did.

Thxs B !!!

* MODS please lock mine, at least this one has comments, thxs.

pp

Sorry pokerplayer, I sure didn't see your post or i would have commented. I may have been at work when you posted it. either way I concur. it is very interesting considering the course of events lately.

[JWJW11]

Sorry pokerplayer, I sure didn't see your post or i would have commented. I may have been at work when you posted it. either way I concur. it is very interesting considering the course of events lately.

Thanks to you both for posting! Looks like we are really close.....im guna hit the hay...looks like Im guna need my rest for the coming days! I cant wait for this to finally be over!

[pokerplayer]

Sorry pokerplayer, I sure didn't see your post or i would have commented. I may have been at work when you posted it. either way I concur. it is very interesting considering the course of events lately.

np B, just so long as we get this noticed, that's the Important part, not who did what first.

It's all good !!

pp

[Abarvets]

I found it to be a great read, thanks to both of you for finding this article!

[In Iraq]

Thanks for the post.