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Figures published on the website of the Central Bank of Iraq show a significant drop in the rates of sale of foreign currency through the official counter of the currency auction owned by the bank, which is threatening, according to specialists who have reported. maintained at the Al-Hurra site, from the influx of local currency amounts that the finance ministry needs to pay salaries.
According to central bank figures, dollar sales amounted to less than $ 8 million in the last sale, compared to more than $ 200 million per day before the decision to reduce the value of the dinar was adopted. Iraqi.
Nawzad Abdul Jalil, the owner of a foreign exchange company that deals with the Central Bank, said: “His company has cut off its relations with the bank due to the availability of the dollar in the market at prices below the prices at which the bank sells this currency. “
The price difference reaches double digits, about twenty Iraqi dinars per dollar
Nawzad confirms that what is happening now is “unprecedented” because it has never happened that selling dollars in local markets for less than what the Central Bank of Iraq sells, and foreign exchange companies have never stopped dealing with the bank. “We were fighting over the bank auction because of the big profits it provides,” Nawzad said.
Business reporter Basem Hamza says the reason for the lack of demand for foreign currencies sold by the central bank is due to several reasons, including the fact that the central bank sold about $ 1.5 billion the week before the decision to cut. local currency at low cost, and much of that money is still in circulation. In the market.
According to Hamzah, “the Iraqi market is almost saturated with money, especially since imports have fallen considerably after the increase in the number of imported materials and the population has gradually turned to local alternatives.”
Hamzah also attributes the decline in the demand for currency to the fact that “those who sold oil outside the control of the central government are now selling dollars to obtain the local currency, which has increased the amount of dollars in the Iraqi market.”
The Central Bank of Iraq warned, according to the owners of the banking companies, that the “Al-Hurra” website told them, that the companies should not buy dollars from the bank.
“The bank has threatened to freeze permits to participate in auctions for a full year for companies that continue not to buy foreign currency at auctions,” said Ali al-Rikabi, owner of a Najaf company.
“The bank wants to provide funds in local currency to cover the payment of employee salaries and other obligations, and merchants’ adherence to this currency is an act that was not expected given the decline in its currency. “Said economist Ghanem Al-Suhail.
Al-Suhail believes that the bank will tend to print new banknotes to cover the local currency shortage, but he says that “a period of two to three months will be sufficient to restore market stability after eliminating the surplus of treasury of foreign currency “.
According to Al-Suhail, “the smuggling of foreign currency has decreased considerably and the prices of local raw materials, especially foodstuffs, have started to return to stability, and we have seen the opening or planning of large food production and manufacturing projects locally, and Iraq has started exporting agricultural materials and those are all positive things. “
A report released by the “Bloomberg” agency last month warns that the devaluation of the Iraqi currency can only save the country and get it out of its current crisis if it is accompanied by more painful measures, including a significant reduction in spending. public.
The report says failure to cut spending will have serious economic consequences, in a country whose citizens already suffer from many hardships.
The Iraqi government is trying to approve the current year’s budget, but obstacles such as the reduction of the exchange rate and the stance of the Iraqi Kurdistan region on oil exports threaten to block its passage.
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