This page has been last updated as of December 8, 2023

The White Paper clearly states there is work to be done in three sectors of the Iraqi Financials. They include the Iraqi Stock Market, Banking and Insurance areas. So, do you think these areas of financial sectors have been reformed enough to liberate the dinar thus to reinstate it back on the currency exchanges i.e. FOREX and thus complete the currency reform (RV) we as investors are looking for?

Let’s take a closer look at this topic today. I have already mentioned in my past Mnt Goat Newsletters that the White Paper section on this topic is very important and points the way to the reinstatement. If you have not gotten a chance yet, please take few minutes to look over my page on this section of the White Paper. It gives you details right from “the horses mouth”, sort of speaking…lol.. lol.. lol.. Click Here.

In recent information on this topic, I listed many past and present articles showing evidence, enough that these three sectors are reformed and should no longer be roadblocks to the RV. So why do we still sit here with no RV?

In my analysis I can only come up with what we are now witnessing in Iraq with the banks. There are many banks that did not want to obey the currency reform measures in control of the de-dollarization process. Hense forth laws were put in place to rectify these violations of Central Bank of Iraq (CBI) policy in this regard. Thus these banks are now toting the line. A new measure approved by the CBI now allows the banks to directly import US dollars or any foreign currency. Today is December8, 2023 and the currency auctions are still ongoing, however the CBI announced these auctions will end as of January 1, 2024. I believe this was a “warning shot over the bow” to let the banks know they will no longer be getting dollars from the CBI as of Jan 1st and must purchase the dollar directly from US banks. Three of the major banks in Iraq have already embraced this new policy and have ordered dollars from the private US banks. Eight (8) more are scheduled to follow. These banks are now “stakeholders” in the dollars and so each dollar is registered and serial numbers traceable. There are stiff penalties for smuggling or illegal sales of the dollar to the black market (parallel market) causing a rise in the exchange rate of the dollar.

So below I am showing you many past articles about these banks and how the CBI is restricting them from selling dollars in the currency auction market. Remember that this is all changing very rapidly as the currency reform is now cranked up in full gear. Just this week Iraq announced deals with Turkey to use the IQD for payment of imports. But there was a snag and it had to also be pegged to the Euro and lira. Why did the CBI do this?

This was done as a temporary sort of informal peg, if there is such a thing, to allow for the full introduction of the IQD. In the background the IMF is working diligently to arrange for the new basket six (6) currencies for the new peg for the IQD once it goes live on FOREX. This is taking longer than expected to put together but will be completed by January 1st.

____________________________________________

Articles follow:

WITH TENS OF MILLIONS OF EUROS…THE CENTRAL BANK BEGINS COVERING RETAILERS’ IMPORTS FROM TURKEY

December 5, 2023

The Central Bank of Iraq began covering retailers’ imports from Turkey with tens of millions of euros as an initial payment, in implementation of the banking arrangements agreement concluded with Turkey last week.

A government source told Al-Sumaria News, “In implementation of the banking arrangements agreement that were concluded with…Turkey, last week, it started covering imports from retailers Türkiye in tens of millions of euros, through Iraqi merchants paying in Iraqi dinars and the Central Bank strengthening them in euros to settle with Turkish merchants in Turkish lira.

Earlier, he revealed the discussions held by the joint Iraqi delegation in Türkiye…. a statement from the bank; “The discussions conducted by a joint Iraqi delegation (the government, the central bank, the Association of Iraqi Private Banks, and the banking sector represented by a number of private banks) were completed in Istanbul returned to Baghdad on Friday.”

He added, “It was agreed to make banking arrangements between Iraqi banks and their Turkish counterparts through intermediary banks to ensure trade exchange for major merchants and importers and to make and pay transfers in the euro and Turkish lira currencies.”

(WOW! WOW! WOW! Iraq is paying for imports in dinars. We have been waiting for this news for so long now, almost 17 years. Until they reinstate the dinar into the new basket, the CBI must back the dinar with something since we know it’s off the dollar peg and this is yet more proof of that. So the CBI is using Euros and Lira currencies but staying away from the dollar as a temporary measure. This may vary depending on what country they are doing business with. But his is all VERY GOOD news as this is how trade should work. The takeaway is this – we can see the urgency to re-peg to the new basket of 6 currencies. The IMF is working on this now and it is taking longer than expected to get it completed.)

_______________________________________

MILLIONS OF DOLLARS ARRIVED IN IRAQ THROUGH THE TBI BANK AND OTHER SHIPMENTS ARE COMING… A GOVERNMENT SOURCE

December 7, 2023

A government source revealed, today, Thursday, the arrival of shipments of dollars to the Trade Bank of Iraq (TBI), indicating the arrival of other shipments in the coming days.

The source told the official agency, followed by the 964 network , that “shipments of millions of dollars arrived through the Trade Bank of Iraq (TBI), as part of the bank’s plan to supply dollars.” He added, “This came to meet customers’ requests,” noting that “other shipments are scheduled to arrive during the next few days.”

_______________________________________

WHAT’S GOING ON WITH DOLLAR VS IRAQI DINAR (IQD/USD)? 

Vahid Karaahmetovic FINANCE Oct 6, 2023 

The US dollar (USD) has been on a downtrend against the Iraqi dinar (IQD) throughout 2023. 

This depreciation, exceeding 10%, came in part due to the Iraqi government’s earlier decision to prohibit personal and business transactions in US dollars.  At press time on October 6, the USD/IQD trading pair was trading at 1,309, down 10.2% year-to-date.

However, that may not be all when it comes to USD’s declines against the Iraqi currency, as the Middle Eastern country prepares to take additional steps to de-dollarize its economy. 

_______________________________________

Iraq to terminate all USD cash withdrawals by 2024

According to a Thursday report by Reuters, Iraq plans to ban cash withdrawals and transactions in US dollars as of January 1, 2024 – marking the nation’s latest in a series of efforts aimed at restricting the misuse of its hard currency reserves in financial crimes and the evasion of US sanctions against Iran. 

The decision comes as the Iraqi Central Bank (CBI) looks to extinguish the illegal use of some of 50% of the $10 billion the country imports in cash from the New York Federal Reserve every year.

Additionally, it is a move within a broader Iraq’s push to de-dollarize the economy after the greenback became a preferred currency over local notes as the population grew tired of recurring wars and crises in the wake of the 2003 US invasion. 

According to the CBI’s statement, residents who deposit dollars into banks before the end of 2023 will be able to withdraw their USD funds next year. On the other hand, those who deposit the greenback in 2024 can only withdraw funds in local currency at the official rate of 1,320 IQD per dollar. 

_______________________________________

NEW MEASURES COULD WEAKEN IQD DINAR

Several local banks have imposed restrictions on dollar cash withdrawals in recent months, exacerbating an ongoing scarcity issue. 

As a result, the parallel market exchange rate has climbed higher. This situation has arisen due to a surge in attempts to withdraw dollars simultaneously, reflecting widespread financial system concerns. At the same time, some banks also faced shortages as they extended dollar-denominated loans later repaid in dinars.

Mazen Ahmed, the director-general of investment and remittances at CBI, said the dinar could lose some additional value in the parallel market as the new measures went into force, although he sees it as an acceptable knock-on effect.

“The cost we are carrying today is nothing compared to this goal,” Ahmed said, adding that the parallel market USD/IQD rate is mostly used for illicit transactions. “We don’t have a problem with the (parallel) exchange rate hitting 1,700. If they tell me the rate is 1,700, I tell them: ‘You want to import from Iran. You want to smuggle. You have corrupt money that you want to get out.’”

 Ahmed added. As long as transparent and legal transactions take place via the official exchange rate, the rest isn’t important, he added.

_______________________________________

FAKE TRANSFERS… REVEALING NEW DETAILS ABOUT THE DOLLAR CRISIS IN IRAQ

The Parliamentary Finance Committee revealed new details about the dollar crisis in Iraq.

IQ NEWS
Committee member Muhammad Nouri said, that “there are a number of banks that control the window for buying and selling foreign currency, and they are non-Iraqi banks, and the conditions set by the Central Bank are applied to a pre-specified group before it sets the conditions on the banks or “Companies are the only ones in control of the foreign currency buying and selling window.”

Nouri added, “Most financial transfers are (fake) under the pretext of purchasing goods, and here is an indication of the delay in real transfers, given that the fake transfers are supported and backed by a political group and armed factions affiliated with the economic parties.”

Nouri stated, “We find that personal transfers for the purpose of study and treatment outside the country and simple trade are real, but large transfers are not real because they are affiliated with the economics of the parties, and their purpose is to smuggle currency outside the country.”

_______________________________________

COULD THE EURO BE THE KEY TO RESOLVING THE DOLLAR CRISIS IN IRAQ?

The euro is ranked second in the world after the US dollar, as it is considered one of the strong currencies in international trade. The euro is also the second most traded currency in the world after the US dollar, and the British pound is ranked fourth. 

Although I am against the idea of ​​giving each citizen 3,000 US dollars to travel and smuggling hard currency out of the country, but at the same time, if the Central Bank of Iraq continues this policy, I suggest giving citizens the euro as well to travel outside the country in order to reduce the demand for the dollar.