The Iraqi market is abandoning the dinar.. and the government is reassuring: there is no collapse

[yota691]

The Iraqi market is abandoning the dinar.. and the government is reassuring: there is no collapse

•  Time: 12/21/2021 21:25:01
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•  Reading: 2,301 times

  

{Reports: Al Furat News} Report: Ammar Al Masoudi

Large traders, even retail owners, turn towards the dollar and refrain from the dinar to overcome any sharp fluctuations or similar collapse that occurred in neighboring countries and the region such as Iran, Turkey and Lebanon, which may cause heavy losses to them.

These fears have prompted citizens to expedite the disposal of the local currency in their possession and replace it with dollars, as well as limiting sales and purchases of hard currency by some owners of companies, car showrooms, and some interests whose dealings are linked to the dollar, for fear of a sudden collapse of the dinar against the dollar.

The companies that deal in loans, debts and deferred transactions have also tended to make the dollar a fixed form of dealing for them instead of the dinar.

An economic expert explained the reason why the local market sometimes resorted to dealing exclusively with the dollar, not the Iraqi dinar.

Bassem Jamil Antoine told {Euphrates News}: "This transaction does not mean a collapse and the exit of the dinar from daily transactions, as the majority of people still deal in the Iraqi dinar and consider it the basis of the currency, but the rise in commodity prices and monetary inflation has become easier in buying and selling in the dollar, which is not new and it has passed." It's more than 20 years old."

And he indicated that "the Iraqi economy is non-productive and consumerist, and all imports depend on the dollar, so dealing with it is easier than trading in dinars, which may be exposed to a loss or disparity."

Jamil stressed, "The Iraqi dinar is still strong, and the strength of the Iraqi economy does not lie in paper and remains a facade," noting that "these exaggerations are largely unjustified, and some people have turned, and unfortunately rumors play a role, and the Iraqi dinar is still a similar site."

Traders say, "The increasing demand of people to buy dollars is due to two reasons, the first reason is with the aim of the daily transactions of some stakeholders for the purpose of trade and buying and selling operations that began to impose dealing in dollars, and the second reason aims to acquire dollars by citizens in anticipation of any collapse or economic emergency in Iraq in the future. ".

On December 19, 2020, the Council of Ministers announced raising the price of selling the dollar to banks and exchange companies to 1460 dinars instead of 1200 dinars to one dollar, with the aim of compensating for the decline in oil revenues caused by the deterioration of oil prices, to witness the impact of that, the Iraqi market, a significant increase in the local market This sparked a wave of intense resentment among the popular circles and some political blocs, as well as the objections of some interested in economic affairs.

The Central Bank of Iraq attributed the reasons for the devaluation of the dinar at the time to what it described as structural distortions in the Iraqi economy that impoverished public finances and restricted the reform capacity sought by the government and the Ministry of Finance.

The devaluation of the dinar caused a great shock to the Iraqi street, which was not expecting such a step, especially since it came at the height of the spread of the Corona pandemic, which caused the suspension of business, the disruption of studies, the closure of markets and the health curfew, in addition to the collapse in oil prices that Iraq relies on. Its sales to supplement the general budget by 95%.

Regarding these concerns, the government reassured the citizens and expressed its confidence in the dinar.

The financial advisor to the Prime Minister, Mazhar Muhammad Salih, ruled out a collapse of the local currency (the Iraqi dinar) and told Al Furat News: "There is no collapse of the local currency, and the Iraqi dinar is strong and covered by good foreign reserves."

He pointed out that "the monetary policy deals with the dollar, and resorting to the system of two currencies (domestic and foreign in trade) because there are precautions in dealing with foreign currency and its stability, as well as the stability of transactions in it as well."

Saleh's opinion was reinforced by a government source and ruled out the collapse of the local currency of Iraq, as happened to the Turkish lira recently and the Iranian toman, due to "the difference in monetary policy from one country to another."

The source added that "the collapse of the local currencies of a number of Arab and regional countries surrounding Iraq will have a significant impact on trade exchange operations with these countries."

He acknowledged that restricting financial dealings by some stakeholders in hard currency will have a relative impact on the Iraqi economy and the Iraqi market, because Iraq's economic policy depends on oil, whose value in global markets still ranges between 75 and 80 dollars per barrel.

Concerning the advantages of devaluing the currency, Counselor Mazhar Muhammad Salih confirms that the benefits achieved from devaluing the Iraqi currency are great and cannot be neglected, and that the talk about returning to the old exchange rate has become a thing of the past.

He adds in a press statement that changing the exchange rate gave strength to many of the country's economic joints, which is consistent with the statements of the Central Bank, which confirmed that raising the exchange rate led to an increase in the competitiveness of the local product, as well as reducing the pressure of expenditures on the Ministry of Finance by 23%, which enabled The Ministry of Finance was able to overcome the crisis resulting from the drop in global oil prices during 2020 and the first months of 2021.

While the economic expert, Hammam Al-Shamaa, explained in a press statement that changing the exchange rate has positives for the government and greater negatives for the Iraqi people, indicating that the government benefited from the currency devaluation in strengthening its financial budget by providing 23% of the salaries of employees who receive salaries from the government, such as retirees. and daily wages.

On how, he explained that the salaries of Iraqi employees were spent in dinars, while the state’s oil imports were in dollars, and therefore, instead of the state reducing the salaries of state employees and retirees and the possibility of facing a popular reaction, it decided to devalue the currency, which enabled it to avoid the reaction that would have occurred. Although the result is the same in both cases.

The government announced an increase in the size of the cash reserve in the Central Bank, after changing the exchange rate, which led to an increase in the size of the reserve by an estimated 15 billion dollars to reach nearly 65 billion dollars.

Experts identified the damage to the Iraqis in 3 points, the first of which is the decline in the value of the Iraqi people’s revenues in the public and private sectors by 23%, in addition to the Iraqis’ loss of confidence in the government, which was reflected in the rise in consumer prices by a much greater rate than the change in the exchange rate.

In this context, the economist Ali Al-Fraiji said, "The Iraqi market depends very heavily on imported goods, especially from Turkey and Iran, and as a result, any economic collapse in the countries exporting to Iraq will affect one way or another because of the wrong state policy in dealing with crises. economic situation to which Iraq is exposed.

[ronscarpa]

Thanks Yota691 ... an interesting article. Perception weighs heavy...IMO..! 

[Fairways&Greens]

7 minutes ago, ronscarpa said:

Thanks Yota691 ... an interesting article. Perception weighs heavy...IMO..! 

I agree. Things are lining up well for Iraq and time is of the essence. The CBI has to be excited about mattress money coming in out of fear of inflation. Hope they pull the trigger 🔜. 

[GreedyDinar07]

No one wants to deal with a worthless dinar inside or outside of Iraq... Good!! I don’t blame them... the Iraqi people are tired of their Monopoly money games.... the dinar maybe strong but no one gives a damn about the strength of it until it has value....

[Sage449]

Ouch! 🤨 Not the direction on the dinar looking for, unless meant to clear the deck.

[DoD]

LMAO!!! You newbie’s are hysterical, a little advice for you folks that don’t own Dinar and continue to to troll DV. 
When the CBI has been talking about removing the large notes from circulation for the past 5-6 years, it appears their plan is working. 
Newbies, stay out of the rumor (BS) section and read the news. 
The CBI would be tickled pink if the Iraqis turned in ALL their Dinar and used the USD. Oh, and me too.. 

[3 bucks new rv rate]

5 hours ago, yota691 said:

The Iraqi market is abandoning the dinar.. and the government is reassuring: there is no collapse

Large traders, even retail owners, turn towards the dollar and refrain from the dinar to overcome any sharp fluctuations or similar collapse that occurred in neighboring countries and the region such as Iran, Turkey and Lebanon, which may cause heavy losses to them.

These fears have prompted citizens to expedite the disposal of the local currency in their possession and replace it with dollars, as well as limiting sales and purchases of hard currency by some owners of companies, car showrooms, and some interests whose dealings are linked to the dollar, for fear of a sudden collapse of the dinar against the dollar.

then what is the iraqi government waiting for to avoid the sudden collapse of the dinar? come on iraqi government, don't just talk talk talk, but do something with the dinar ( more action ). i guess if the CBI can rv at the rate 1 iqd=3 USD, the iraqi citizens will definitely use the dinar in and out of iraqi country because the dinar's rate is higher than the dollars and they will surely abandon the dollars immediately,   On the other hand, may be this is just a part of plan that the GOI and the CBI have done to scare the iraqi citizens and then, they let the iraqi citizens exchange all their dinars ( mattress money ) for dollar and use the dollar in and out of iraqi country. and, after the CBI already suck all their mattress money in from the iraqi citizens, then all of a sudden, three or six months later, BOOM the CBI just revalue their currency and the iraqi citizens who own dollars can only exchange their dollars for a new lower denoms. this is just my opinion.

[dinarbeleiver]

They are talking about the dinar a lot recently good and bad, I wouldn’t be surprised if we start seeing articles on the zeros project which will be frequent and lead to a zeros education campaign with the new lower denominations.