A Fistful of Dinars: Demystifying Iraq's Dollar Auction

[currenzcraze]

A Fistful of Dinars: Demystifying Iraq's Dollar Auction

19th April 2024 in Iraq Banking & Finance News, Iraq Industry & Trade News

By Ahmed Tabaqchali, Chief Strategist of Asia Frontier Capital (AFC) Iraq Fund, for the London School of Economics (LSE) Middle East Centre.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

A fistful of Dinars: demystifying Iraq's dollar auction

The Central Bank of Iraq's (CBI) dollar auction has been a continuous source of controversies and conspiracy theories. The main accusations facing it include: the siphoning of dollars to Iran, money laundering, and currency smuggling.

Missing from this melee is an understanding of the economy's key structural imbalances: mainly that the Iraqi economy is wholly dependent on oil export revenues, and demand for goods and services is met through imports handled by a largely informal private sector.

Consequently, the government's oil revenues are the economy's major source of dollars, and the private sector depends on the auction as a significant source of dollars to pay for these imports. As such, it is the inherent imbalances in the economy's structure that led to contradictory and unsustainable compromises within the functioning of the auction, and not unsubstantiated conspiracies.

This piece aims to demystify the role and the functioning of the auction. It does so through reviewing:

1. the oil and dollar lifecycle within Iraqi economy;
2. the private sector's dollar supply-demand dynamics; and,
3. the causes of the currency's upheavals in November 2022, and their aftermath.

It concludes that the measures undertaken in response to the upheavals have helped resolve most of the compromises that bedevilled the dollar auction in the past.

However, lasting change requires addressing the economy's structural imbalances head-on through implementing fundamental economic reforms centred around redefining the oversized role of the government in the economy and society.

[Laid Back]

The dollar auction must come to an end.

 

Go end of dollar auctions 

Go free market economy 

Go stronger dinar

[NWGUY]

It appears that Iraq is starting to move in the right direction.  I am starting to feel really good about the revaluation happening very soon.   

[southbeach]

When auctions end in what June,? does that mean US currency exchanges can no longer import IQD from the CBI auction floor and we can’t buy more?

[BETTYBOOP]

3 minutes ago, southbeach said:

When auctions end in what June,? does that mean US currency exchanges can no longer import IQD from the CBI auction floor and we can’t buy more?

I don't know of the au tions are definately ending in June 

[southbeach]

Xchange of America is out of IQD.. Just tried to order.  Big company.

2 minutes ago, southbeach said:

When auctions end in what June,? does that mean US currency exchanges can no longer import IQD from the CBI auction floor and we can’t buy more?

[southbeach]

Just now, BETTYBOOP said:

I don't know of the au tions are definately ending in June 

Well this year anyway

[NWGUY]

I would bet that until they revalue their currency, that they probably are not selling any more.  Which is another good sign for it happening sooner than later.   Once they revalue the currency, they can change the currency to a new currency, and then they will probably sell it at the new rate.   JMHO  

[T B]

 

[screwball]

Auctions end when they go international! There is a date I June just can’t remember what it was

[southbeach]

The question was, when that happens will they prevent US currency exchange companies from importing dinar from CBI auction floor?

[horsesoldier]

After 21 years we're way beyond mystifying: we're in the most bewildering surreal episode of the Twilight Zone ever.

[Longtimelurker]

3 minutes ago, horsesoldier said:

After 21 years we're way beyond mystifying: we're in the most bewildering surreal episode of the Twilight Zone ever.

I organized all my iqd, receipts etc the other day and realized I bought my first iqd in 2012. I'm pretty sure I've been telling everyone it was 2009... twilight zone is right ✅️ 

[3n1]

2 hours ago, Longtimelurker said:

I organized all my iqd, receipts etc the other day

 

thats funny LTL , not sure i can even find mine 

[horsesoldier]

2 hours ago, Longtimelurker said:

I organized all my iqd, receipts etc the other day and realized I bought my first iqd in 2012. I'm pretty sure I've been telling everyone it was 2009... twilight zone is right ✅️ 

Odd, I just finished organizing all my anxiety meds by strength 😄 

All the best 

[screwball]

When they lift sanctions on 28 banks so they can pay for imports, auctions will end correct? I bet those banks were quick to join the payment systems!