Al-Sudani took new measures to contain the dollar exchange issue

Shafaq News / On Monday, the Iraqi Prime Minister, Muhammad S. al-Sudani, issued new decisions to alleviate the problem of Dinar-dollar exchange rates.

Shafaq News Agency exclusively obtained a document about the measures, which included:

1- Increasing the number of beneficiaries from the “social protection network” and providing the poor with food baskets.

2-Allowing the government banks to sell dollars to citizens at the official rate (1470 dinars per $) for necessary matters, including treatment, Hajj, travel, and studying.

3-Binding all government agencies to sell all goods inside Iraq in dinars at the official rate.

4-Selling goods and services of some private sector companies at 1470 dinars for one dollar, especially the Airways offices, trade agencies, telecommunications, and Internet companies.

5-Providing the Trade Bank of Iraq (TBI) with 500 million dollars for opening credits for small merchants.

Earlier today, al-Sudani replaced the governor of the country’s Central Bank, Mustafa Ghalib Mukheef, following a weekslong plunge of the Iraqi dinar.

Mukheef, who was in the post since 2020, was replaced by Muhsen al-Allaq, as interim governor.

Al-Allaq, according to the source, was given three months of probation to assess his performance.

“He was invited to attend the meeting after voting him in,” the source continued.

A source, who preferred to remain anonymous, told Shafaq News Agency that Mukheef’s dismissal was taken following deliberations between the Coordination Framework’s leaders and Prime Minister al-Sudani.

The dinar hit new lows on Friday, reaching about 1,670 to the dollar. The currency has lost nearly 7% of its value since mid-November. The official rate stands at 1,470 dinars to the dollar.

The drop in the past two months has affected markets in the oil-rich but corruption-plagued Iraq, where many are seeing their purchasing power take a hit.

Some Iran-backed politicians in Iraq have blamed the drop on recent measures by the U.S. Treasury. The United States has sanctioned several Iraqi banks dealing mainly with Iran, which is under American sanctions, amid concerns that hard currency is being routed from Iraq to Iran. In addition, late last year, the Federal Reserve began taking measures on transactions to slow the flow of dollars into Iraq.

The drop comes when Iraq’s foreign currency reserves are at a record high of around $100 billion.

Shafaq.com

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Al-Sudani: the dinar’s depreciation is temporary

Shafaq News / Iraq’s Prime Minister Mohammad Shia al-Sudani has expressed confidence that Iraq’s central bank (CBI) and trade bank (TBI) will manage to harness the prancing exchange rate of the US dollar against the Iraqi dinar.

Since last month, the Iraqi dinar has wavered against the dollar as the Federal Reserve Bank of New York introduced measures to stop the flow of dollars to sanctioned countries.
That has pushed the dinar exchange rate in the black market to more than 1,600 to the dollar, fuelling public anger over soaring goods prices.

In a press conference at the ministry of trade on Monday, al-Sudani said, “we have taken a series of measures against brokering and tampering with the market.”

“The rising prices are temporary. We will spare no effort to provide the needs of the Iraqi citizens,” he said, “today, we released the food basket for 5,076,649 households enlisted for social welfare.”

“The administrations in the central and trade banks are quite competent and will suppress the soaring exchange rate,” the prime minister added.

The Iraqi central bank has described the currency fluctuation as a “temporary situation” and the authorities have taken measures seeking to stabilize the exchange rate.

These have included facilitating dollar trade in the private sector through Iraqi banks and opening foreign exchange outlets at state-owned banks for those wishing to travel abroad.
Yesterday, Iraqi security forces raided two of Baghdad’s biggest forex markets in an effort to control the soaring exchange rate.

It is still unclear how many traders have been arrested, and there is no official statement yet from the government on the operation.

Shafaq.com

CBI governor’s dismissal amid financial crisis stirs controversy in the Iraqi parliament

Shafaq News / Iraqi lawmaker Hasan Fad’am on Monday defended Prime Minister Mohammad Shia al-Sudani’s decision to dismiss the country’s central bank governor, and his colleague, Sajjad Salim, denounced it as a political move.

Fad’am, a leading figure in the Shiite Coordination Framework, told Shafaq News Agency, “the Framework does not oppose any measures that might control the dollar prices and stabilize the market.”

“The prime minister is backed by the Coordination Framework,” he continued, “it does not micromanage. It commits to the experts’ opinion and trusts the prime minister’s vision.”
According to media reports, Governor Mustafa Ghaleb Makhif told Prime Minister al-Sudani he no longer wishes to stay in the job.

Makhif, who has been in the post since 2020, was replaced by Muhsen al-Allaq, a former central bank governor himself, as interim governor.

Independent lawmaker Sajjad Salem said that the financial crisis in the country has nothing to do with the central bank governor, claiming that his dismissal will result in a backlash.

“The depreciation is mainly caused by smuggling dollars outside the country. Dismissing Governor Makhif, on the other hand, is prompted by the Coordination Framework for political motives. It has nothing to do with the US dollar exchange rate,” he said.
“The Shiite forces consortium wants to take over the central bank. For this reason, they appointed Muhsen al-Allaq as governor,” he continued.

The dinar has lost nearly 7% of its value since mid-November. The official rate stands at 1,470 dinars to the dollar.

The drop in the last two months has affected markets in the oil-rich but corruption-plagued Iraq, where many are seeing their purchasing power take a hit.

Some Iran-backed politicians in Iraq have blamed the drop on recent measures by the U.S. Treasury. The United States has sanctioned several Iraqi banks dealing mainly with Iran, which is under American sanctions, amid concerns that hard currency is being routed from Iraq to Iran. Late last year, the Federal Reserve began taking measures on transactions to slow the flow of dollars into Iraq.

The drop comes at a time when Iraq’s foreign currency reserves are standing at a record high of around $100 billion.

Shafaq.com

CBI governor ousted from his position

Shafaq News / Iraq’s Prime Minister, Mohammed Shia al-Sudani, ousted Mustafa Ghalib Makhif as governor of the Central Bank of Iraq.
The Prime Minister assigned Ali Mohsen al-Allaq to replace him.

It is worth noting that al-Sudani announced taking on several new steps to address the dollar exchange rate crisis.

On Sunday, the Prime Minister chaired a meeting with the Federation of Iraqi Chambers of Commerce to ponder solutions for the Iraqi dinar’s devaluation.

The meeting, according to a readout issued by al-Sudani’s bureau, was attended by the Governor of the Central Bank of Iraq, and the Directors of the Border Crossings Authority, the General Commission of Taxes, the Iraqi Customs Authority, and the Authority Trade Fairs.

The meeting, the readout said, issued a set of recommendations to “stabilize the foreign currency exchange rate, stop manipulation, and prevent damaging the national economy.”

It agreed on involving the Chambers of Commerce and the Federation of Industries in the Ministerial Council of Economy sessions, representing the private sector.

The next meeting, the readout said, will also include the Real Estate Registration Department, the Registrar of Companies, Industrial Development, The National Investment Commission, and the Rafidain and Rasheed Banks.

The attandees recommended opening a new Foreign Currency Selling Window for small traders by the Trade Bank of Iraq (TBI).

The Central Bank will also supply the Trade Bank of Iraq (TBI) with an additional $500 million to open credits for small merchants and rely on the initial invoice and account number of the final beneficiary of the credit for review.

The meeting agreed to provide facilities to importing procedures, reduce the requirements for opening letters of credit, and cancel the General Commission of Taxes order to impose delay fines on importers.

“This meeting will be held weekly to follow up on developments, implement these decisions, and add the agencies mentioned above to attend the meeting,” it said.

In addition, the Prime Minister stated that the coping with the currency fluctuations is a shared responsibility with “ethical and patriotic dimensions”.

al-Sudani laid emphasis on reviewing the tax agency’s work to ensure its follows the legal regulations, stressing that the government will not tolerate any harm to the public.

He expressed the government’s determination to carry out economic reforms and address the deterioration caused by wrong decisions in previous years.

Shafaq.com

The Sudanese gives Al-Alaq a period of three months

Shafaq News / A prominent leader in the coordination framework revealed, today, Monday, the scenes of Prime Minister Muhammad Shia’a Al-Sudani’s decision to dismiss the Governor of the Central Bank and assign Ali Mohsen Al-Alaq to replace him.

The leader told Shafaq News agency, who asked not to be named, that “the decision to dismiss the Governor of the Central Bank of Iraq, Mustafa Ghaleb Makhaif, was made by agreement between the leaders of the coordination framework and Prime Minister Muhammad Shia’ al-Sudani, during their meeting, last night, at the home of the leader of the Al-Fateh Alliance.” Hadi Al-Amiri.

And he indicated that “the decision to exempt was made by a vote of the majority of the leaders of the framework and was supported by the Prime Minister, and the selection of Ali Mohsen Al-Alaq as governor of the Central Bank, was done by the vote of the leadership body of the coordination framework, and also the Sudanese was supportive of this choice.”

He pointed out that Al-Alaq was given a period of three months to evaluate his work and performance, and he attended the meeting with the leaders of the framework and the Sudanese after it was agreed to assign him this task.

And today, Monday morning, Prime Minister Muhammad Shia al-Sudani decided to relieve the governor of the Central Bank of Iraq, Mustafa Ghaleb Makhaif, from his post, while Ali Mohsen Al-Alaq was assigned to run the bank by proxy.

Yesterday, Sunday, Al-Sudani took urgent decisions to “address” the exchange rate of the US dollar against the local currency during his meeting with the Federation of Iraqi Chambers of Commerce to discuss solutions to the fluctuation of the exchange rate of foreign currency.

These decisions come at a time when the exchange rate of the US dollar against the Iraqi dinar has witnessed a gradual rise since November 2022, reaching its highest levels in recent days, as it crossed the barrier of 165 thousand dinars per 100 dollars.

Shafaq.com

“Fear of confinement” disrupts buying and selling of the dollar on the Baghdad Stock Exchange

Shafaq News / A number of owners of exchange offices in the main stock exchange in Al-Kifah and Al-Harithiya confirmed that they no longer sell or buy dollars after raids by the Economic Security and the arrest of a group of owners of exchange offices.

The Iraqi markets are witnessing a continuous rise in the prices of foodstuffs and construction commodities as a result of the continued rise in the exchange rate of the Iraqi dinar against the US dollar, which today exceeded 165 thousand dinars per 100 dollars. And the arrest of a group of owners of dollar exchange offices, which it described as speculators.

One of the owners of the Al-Harithiya Stock Exchange, Raad Al-Dulaimi, said in an interview with Shafaq News agency: We have not sold or bought any dollar for two days after the raids on the Al-Kifah and Al-Harithiya Stock Exchanges, indicating that “our offices are open, but in fact they are closed to anyone who comes to us to carry out the buying or selling process.” For fear of imprisonment, as sometimes they send people to spy on us by impersonating a person who wants to buy the dollar to find out the truth about the price we are buying or selling.

He added, “Economic Security told us that everyone must abide by government instructions, which is to sell at the price that was set by the Central Bank, otherwise legal measures will be taken against him.”

He pointed out that “most of the non-licensed offices have been closed, and strict control has been imposed on other licensed offices,” adding that “the process of selling dollars will shift from the parallel market stage to the black market.”

Shafaq.com

Zain Cash launches the “Western Union” service: you can transfer money around the world easily

Yes Iraq: Baghdad… Zain Cash announced the launch of the Western Union service to provide international money transfer services, to send and receive money through a global network that extends across more than 200 countries around the world.

Zain Cash is considered the first electronic wallet that allows its existing and new customers to benefit from Western Union services in its application on mobile phones in Iraq.

Zain Cash currently processes more than 2 million financial transactions per month, and this process is increasing dramatically. Zain Cash provides money transfer services, bill payment, MasterCard and Visa virtual cards, phone balance recharge and government bill payments, in addition to electronic cards and online payments, and now provides international money transfer services through Western Union.

With the addition of transfer services via Western Union, Zain Cash will have the opportunity to fulfill the requests of subscribers regarding the service of transferring and receiving money to and from their loved ones and friends through a safe, easy and completely digital experience.

Users will be able to access this service through the Zain Cash application on the mobile phone, which is available on the “iOS” and “Android” systems.

Zain Cash, the leading mobile payment company in Iraq, is characterized by its network of more than 10,000 cash deposit and withdrawal agents, which are spread and serve in various regions and governorates of Iraq and are constantly growing.

Yazan Al-Tamimi, CEO of Zain Cash Iraq commented, “Zain Cash has always adopted an innovative and creative approach to promoting financial inclusion and developing simple solutions that provide Iraqi society with access to financial services in a fast, efficient and easy way. And through this cooperation with Western Union, this complex process has now become much easier for millions of Iraqis, as it enables them, through a simple process on the Zain Cash application, to send and receive international money transfers instantly in a secure way.”

Hatem Suleiman, Regional President for Western Union in the Middle East, Pakistan and Afghanistan, said:

“At Western Union, we focus on developing our core capabilities in order to be able to play an effective role in developing, enhancing and developing the financial environment that surrounds the customer. Through our partnership with Zain Cash, we look forward to meeting customers’ aspirations with fast, reliable cross-border money transfer service and easy access to the service. We at Western Union are happy to bring the essence of what we aspire to to new customers and help them transfer money across borders in various currencies.”

Thus, customers can now obtain a Zain Cash account within minutes, and immediately after that, they will be able to transfer funds across borders via Western Union, in addition to the ability to follow the transfer status from within the application. It is worth noting that the Zain Cash application provides integrated digital financial solutions for individuals, small and medium enterprises, companies, public sector entities and non-governmental organizations alike.

It is worth noting that Zain Cash won the award for “Best Innovation in the Telecom Sector” and was nominated for the “GLOMO” Global Mobile Awards 2020 presented by the Global System for Mobile Communications (GSMA), for “Best Mobile Innovation Supporting Emergencies or Humanitarian Cases.” .

Al-Tamimi concluded: “Zain Cash has a firm and strong commitment to Iraqi society, and we focus on providing an important role in the social and economic development of Iraqi society and leading the process of comprehensive adoption of electronic payment solutions.” Adding that Iraq is considered a large human force with a population of 41 million people, in addition to being a young nation, and within this scene, Zain Cash has secured an advanced position for itself to increase reliance on electronic payment solutions and money transfer solutions inside and outside Iraq.

Yesiraq.com

American measures on dollar transfers from Iraq cause panic

The Wall Street Journal published a report saying that the Iraqi economy is collapsing at a time when the United States has begun to take action to prevent the flow of funds from Iran. According to the report prepared by David S. Cloud, Baghdad is beginning to feel the pressure of imposing restrictions on contracts in dollars.

He said that the Iraqis feel an unexpected change in the currency, which led to a rise in the prices of foodstuffs and imported goods, which is an unnoticed change in the policy applied by the Treasury and the Federal Reserve in New York.

The Federal Reserve has been imposing heavy restrictions on international dollar contracts run by Iraqi banks since November in an effort to curb money laundering and the misappropriation of dollars and their transfer to Iran and other sanctioned countries in the Middle East, the newspaper quoted US and Iraqi officials as saying.

The newspaper added that Iraqi banks, since the US invasion in 2003, have been operating on less stringent rules. However, years of weak governments and ongoing crises, from the rebellion against the US occupation to the Islamic State group that took control of large areas of the country, led successive US administrations to delay transforming the Iraqi banking system in order to bring it in line with international money transfer practices.

Since the procedures began, 80% or more of daily money transfers in Iraq, which in some days amounted to $250 million, have been prevented due to lack of sufficient information about the destination of the money or other errors, according to US and Iraqi officials and Iraqi government data. Due to the scarcity of the dollar, the value of the Iraqi dinar fell by 10% against the dollar, which led to a sharp increase in the prices of imported materials, including eggs, flour and cooking oil.

“We have followed the same system over the past twenty years,” said Mahmoud Dagher, director of the South Islamic Bank and a former official at the Central Bank of Iraq. “But the shock of the Federal Bank’s policy is responsible for the crisis within the Iraqi economy.”

And the turmoil of the Iraqi market embodies the cautious and intertwined relationship with the United States, which helped in 2004 to establish the Central Bank of Iraq in a way in which the dollar became the currency of exchange, given that most of the economy depends on cash. In order to provide it to Iraq, American planes transport bales of American currency to Baghdad every few months, but there is a larger flow of dollars that is transferred electronically through private bank contracts or processed in Iraqi accounts in New York where oil resources are deposited in the Federal Reserve.

US officials say that the tight restrictions on electronic transfers of dollars by private banks in Iraq did not surprise officials in Baghdad. It was implemented jointly after two years of discussions and planning from the Central Bank of Iraq, the US Treasury and the Federal Reserve Bank. US officials say that the increase in the exchange rate of the dollar has nothing to do with the new measures. But the new scrutiny of dollar transfers led to an increase in the purchase of dollars and a torrent of criticism from Iraqi officials, banks and importers who held the new policy responsible for the unnecessary financial shock that led to the already bad economic conditions.

Prime Minister Mohammed al-Sudani, who took office at the beginning of the local currency’s decline, said the Fed’s move harms the poor and affects the government’s 2023 budget. “This is embarrassing for me,” he said in an interview with the newspaper, as he said he would send a delegation to Washington next month with a proposal. The policy is suspended for six months. Some Iraqi politicians with strong ties to Iran have harshly criticized the policy. “Everyone knows how the Americans use currency as a weapon to starve people,” Hadi al-Amiri, the leader of the Badr Group, told the French ambassador in a January 10 meeting.

Based on the new procedures, Iraqi banks have to submit transfers in dollars on a new platform belonging to the Central Bank, as they are reviewed by the Federal Reserve.
The system aims to limit the ability of the Iraqi banking system to smuggle dollars to Tehran and Damascus and launder money in the Middle East, US officials said.
Dagher, a former official at the Central Bank, says that the Iraqi account holders, based on the old system, were not required to disclose the party to which they were sent until after the money had been transferred.

A spokeswoman for the Federal Reserve in New York said of the accounts it supervises for foreign governments such as Iraq, “We adopt a strong compliance system for these accounts, which evolves over time in response to new information.”

A US official said the new measures “will limit the ability of malicious actors to use the Iraqi banking system.” The US Treasury and the Iraqi Bank refused to comment on the procedures. The Central Bank of Iraq said in a statement issued on December 15th that the new policy requires complete information from customers who want to transfer funds, including the final beneficiary. “There are a number of errors discovered and banks are required to repeat the process,” and “such procedures require additional time before they are accepted and passed by the international system,” the statement said. And the central bank prevented four banks, the Islamic Bank of Asia, the Iraqi Bank for the Middle East, Ansari Islamic Bank, and the Islamic Holding Bank, from conducting contracts in dollars, according to Iraqi officials and court documents. Directors of the Islamic Bank of Asia and Ansari declined to comment.

American officials have pressed the Iraqis for years to strengthen the banking system. And in 2015, the US Treasury and the Federal Reserve stopped the flow of billions of dollars to the Central Bank of Iraq out of concern that the money would reach Iranian banks and possibly the Islamic State. Iraqi officials supported tough measures with private banks.
Hadi al-Salami, a member of Parliament and a member of the Anti-Corruption Committee, said that the Iraqi parties and militias that control most banks use them to smuggle dollars to neighboring countries, “We want to stop this immediately.” The impact of the new operations appeared through the sharp decline in bank transfers to Iraqi banks, which the Central Bank follows up on its website. On October 17, before the start of the new system, bank transfers abroad reached $224.4 million. On January 17, it fell to $22.9 million, a decrease of 90%.

Iraqi officials say the volatile situation will stabilize as clients fulfill orders. Iraqi bankers and currency dealers say that the tight restrictions aim to stop plans that are used to embezzle dollars. Import traders usually forge invoices that pay for goods that do not arrive and go to unknown destinations.

“Iraqi dollars go 100% to Turkey, Yemen, Syria, Iran, Lebanon, and sometimes to Dubai,” said Hamza al-Sarraf, owner of a currency shop in Baghdad’s Karrada district. Restrictions on electronic transfers have led to panic buying of dollars. Importers who were prevented from electronic transfers in dollars were forced to delay their requests until compliance with the new instructions. The exchange rate for the dollar reached 1,470 dinars, but banks and exchange shops sell it at a higher price of 1,620 dinars.

Rawabetcenter.com

Parliament’s integrity begins with collecting signatures to end the mandate of the central bank governor

Information / special… The Parliamentary Integrity Committee announced, on Saturday, the start of collecting parliamentary signatures to end the assignment of Central Bank Governor Mustafa Ghaleb Makhaif.

“The Parliamentary Integrity Committee has the right to follow up corruption files,” said committee member Hadi al-Salami, in an interview with Al-Maalouma agency.

He added, “The central bank governor has proven his failure and inability to control the rise in the dollar exchange rate, as well as his refusal to send the daily bulletin of hard currency auction sales.”

He pointed out that “interaction and support for the campaign to collect signatures to end the mandate of the central bank governor continues,” stressing “the bank’s need for a personality with experience in financial policy.”

And Parliamentary Integrity announced earlier, its intention to take legal measures against the governor of the Central Bank, after he refused to attend hosting it, to follow up on the issue of the high exchange rate of the dollar.

Almaalomah.me