The Iranian riyal instead of the dollar.

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POSTED ON 2024-01-04 BY SOTALIRAQ

The Iranian riyal instead of the dollar.

To whom is the benefit of financing trade between Baghdad and Tehran?

Voice of Iraq | The Iranian riyal instead of the dollar. To whom is the benefit of financing trade between Baghdad and Tehran? (sotaliraq.com)

AyoubSaad

Iraq has started the project of importing Iranian goods in the riyal instead of the US dollar, as it considered this step important and will contribute to increasing trade exchange with neighboring regional countries.

According to experts, this will put a big question mark over how Iraqi traders buy the Iranian currency because this requires either the use of the US dollar or the use of the Iraqi dinar, which will return back to Iraq for the purpose of exchanging it for dollars due to the very modest volume of Iraqi exports to Iran.

Assistant General Manager of the General Company for Foodstuff, Muthanna Jabbar, told Al-Mada that "the project was adopted by the Central Bank of Iraq in coordination with Iraqi government banks, starting with the Iraqi Trade Bank, Rafidain Bank, Al-Rasheed and other accredited private banks."

He adds, "The project depends mainly on reducing the internal demand of importing traders on the dollar currency," noting that "imports from Turkey, Iran, Syria and Saudi Arabia are in internal currency, so it is possible to adopt the internal currency as an alternative currency and calibrate the dollar prices within a specific mechanism in banks."

He continued, "Banks have a network of correspondents covering all locations of the world, as well as connected to stock exchanges, if the importer from China or Iran is originally buying a certain commodity or commodity in the currency of that country."

Jabbar explained that "the credit is opened on the basis of the currency of that country and is calibrated in dollars, so the Iraqi Trade Bank guarantees through the network of correspondents to provide the currency of that country to the merchant applying for the platform for the purpose of import."

"This step will contribute to increasing trade exchange with regional neighboring countries on the basis of the dinar against the currency, which will help strengthen the dinar and reduce the demand for the import dollar," said the assistant general manager of the General Company for Foodstuffs.

It is noteworthy that the volume of trade between Iraq and Iran reaches $ 10 billion per year, and is divided into 95% for Iranian goods, goods and services, and 5% for Iraqi exports, in addition to amounts parallel to the volume of this trade paid by Iraq to the Iranian side in exchange for importing the gas necessary to operate electrical stations.

For his part, economic expert Nasser al-Kinani said, during a brief interview with Al-Mada, that "the issue is not easy, and is in the negative interest of Iraq," noting that "the government is forced to take this measure because it imports from countries with a blockade."

It is noteworthy that the Central Bank of Iran confirmed the start of the project to settle his country's exports abroad in the national currency of the rial, and that the issue of settling Iranian exports through the riyal currency outside the borders has been studied by the Central Bank for several months and that its entry into force will address the requirements of exporters to Iraq and Afghanistan, as well as that the list of the cross-border riyal project has been drafted by the Central Bank and practically two banks have started this project, and soon it will be circulated to all banks in the country.

The American magazine "Forbes" classified the Iranian rial as the weakest in the world against the US dollar, with every one US dollar equivalent to more than 422,<> Iranian riyals, "the difference is greater in parallel markets."

Specialists believe that the continued implementation of the decision to finance trade between the two countries in Iranian currency would benefit the Iranian riyal without Iraq, due to the very modest volume of Iraqi exports to Iran.

According to statistics, Iran imported more than $ 263 million of various Iraqi products, which witnessed a decline of 78% compared to previous years, and Iraq was one of Iran's permanent trading partners over previous years and decades.