Is Iraq heading to float the dinar against the dollar?!

Is Iraq heading to float the dinar against the dollar?!

By sd sd -December 13, 2016

 

Books / D.basil Abbas Khudair ...

Dozens of articles published about the reasons for the low exchange rate of the dinar against the dollar prices in light of the Iraqi Central Bank to sell billions of dollars each year, some of which pointed to the need to make local and international about suspicions of corruption surrounding the operations of trading in dollars and that proved some of the existence of acts of money laundering and the smuggling of the country's wealth investigations to third parties, and some of them to finance terrorism, and all that has been said on the subject went unheeded because the Central Bank of Iraq is going in the same direction to sell more dollars are far different from the prevailing market price, it is virtually the dollar, which sells bank is 1184 dinars or 1190 dinars, while the exchange rate (the shops) exceeded 1,300 dinars to the dollar, the prevailing market price in represents a departure from the Help currency auction where the central bank set the dollar exchange rate in local markets in 1200 dinars per dollar maximum is supposed to take action regarding the offenders, and the problem true is that the irregularities regarding prices by offices, companies and banks going on since the birth of the auction, which hundreds of billions commissioned since 2004 and until today without anyone except for some cases that do not fit with the large size of the disagreements accounting, these irregularities publicly held day and night markets are dollar visible and do not work secretly.

The decline of the Iraqi dinar exchange rate against the dollar is not a passing issue and it is a real tragedy should devote proper attention to her as it relates to people's livelihood, especially the poor and low-income them. Most what we consume is imported from abroad, traders raise prices whenever the price of the dinar has fallen despite the imports are financed currency auction in the Iraqi Central Bank, and in practice, the dollarization prevailing in most of the transactions, despite the state refuses to dollarization because the local currency is the dinar, prices of airline Iraqi Airways tickets are identified and sold in dollars, as the various goods and services is calculated their prices in dollars and then be transferred to the the dollar, and this duplicity in dealing makes dollar demand high because local merchants need a dollar, and some citizens are forced to keep the dollar for the purpose of payment or reimbursement, the real problem is that the exchange rate we are not subject to supply and demand mechanisms, but for other reasons not related to the concepts and applications economic, Central sales of the dollar goes down, but the dinar exchange rate rises at a time when getting just the opposite, and suggests that exchange rates outside the Iraqi Central Bank's control and the proof is that the main objective of the establishment of the currency auction is the stability of exchange rates to the purchasing capacity is not affected citizens fluctuating prices, the reality of the case (yesterday) indicates that the dinar exchange rate was 1320 dinars per dollar, and the problem that the seller buys the dollar low price and sell my high price of the dollar due to the instability of exchange rates, as is the case in some countries such as Jordan and Lebanon.

And that there are large differences between the selling price in the Central Bank (1190) and the price in the market (in 1320), a difference of 130 dinars mean that there are millions or billions of dinars every day from the pockets of citizens go out to go into the pockets of the gatekeepers in dollar terms, each dinars more than the exchange rates cause an increase in the prices of goods and services needed by the citizen, because more than 95% of the subsistence needs of the citizen to be imported from abroad and is covered by the central bank, which sells dollars to dealers for the purpose of importation, and are investigating Rlaken traders first from the sale of goods dollar rates prevailing in the market and the second is for profit trade capped the dollar, and at the same time, the citizens suffer a range of first losses from buying needs at high prices and the loss of the national currency by as they go for the sake of security exploits currency auction, who are supposed to bring the needs of the citizen exchange rates prevailing at the central bank and not prevailing in the local markets because they are buying the dollar Central and prices, official and not from markets Altdharbah prices, and missing part of the equation can be summed up by asking that: If the trader imports goods from abroad in dollars bought by the central bank and sell them to Iraqi traders in dollars. Where they come in Iraqi dinars, which buy its dollar currency auction ?? , And the related question is whether the import of Iraq as much as the dollar sold where the tax proceeds for the budget for these imports?! .

Some that believe the reason for decline of the dinar rate against the dollar is to reduce the central sales of the dollar, which is not true belief, because the CBI did not stop selling the dollar or selling prices change even when lower prices for a barrel of oil to $ 20, the dollar has lost sales reached yesterday ( Monday, 12/13/2016) increased by $ 154 million were sold by $ 148 million to 32 banks and $ 6 million to 10 corporate banking, noting that the Iraqi Central Bank sales of the dollar has reached $ 31 billion for the period from the beginning of this year up to yesterday, and that the quantities sold included the living and the dead because the Warka Bank Ahli (for example) that has stopped working since 2010 and closed its branch does not exercise any acts or at its headquarters located in Khilani Square enters the Iraqi Central Bank auction and buy up to $ 5 million a day, while banks and companies and offices banking that share a long dollar a day, they are the same that are repeated their names and its activities since 2004 and until today, all dollar sells off set by the CBI prices, the price reached yesterday more than 1,300 dinars per dollar, although the exact price should not be more than 1200 dinars per dollar by the central instructions, comes high prices of the dollar despite the current rise in global oil prices after Brent crude oil reached more than $ 50 a barrel and the oil Marketing company (SOMO) the implementation of futures contracts for oil for the month of next January 2017 prices close to 50 dollars .

There are those who ask, if the dollar sales going on and oil prices in the case of high why the dollar prices rise and fall of the dinar prices, even though we are duty all important aspect of this question in the emergence of (layer) controls the dollar but there is another cause and respect the belief by some that Iraq will resort because its reserves from the dollar's decline to float its currency along the lines of what happened in Egypt and Syria, Vtaoam currency achieves many returns to Mdechri dollar having seen the Egyptian pound exchange rate decrease of more than 18 pounds against the dollar after it was nearly 6 pounds per dollar, and dropped the lira Syrian to 52 pounds against the dollar after it was five against the dollar, and these expectations (float Iraqi dinar) does not have any credibility at all and can not be done during the current year (despite the economic benefits), and the reasons for not float the currency back to the nature of the local economy being a rentier which means that he relies on oil exports, and that this is linked to monetary factors, including the large monetary mass of the size and other reasons we do not want to go into details now, and it is almost certain that the currency was floated far from the guidelines, which means that adjusting the exchange rate back to its tracks natural commensurate with the Iraqi Central Bank instructions, you need to impose real control on companies and banking offices, combined with punitive measures for offenders, with the need to expand and facilitate the conduct of the dollar outlets for citizens to meet their needs and that of their legitimate rights and not to make it a breeding ground for corruption and stockbrokers and connotations.

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