Dollar Price Fluctuations Deteriorate Iraqi Markets
Although the exchange rate of the US Dollars has witnessed sharp fluctuations in the past couple months in Iraq and have caused a lot of deteriorations in the economy of the country, the Iraqi Council of Representatives has not yet raised this issue in the parliament nor it has asked for explanations from the Central Bank of Iraq CBI.
Dr. Ahmed Chawsheen, Kurdish member of the Finance and Economy Committee of the Iraqi Parliament, told the Kurdish Globe that although the media organizations claimed that his committee met on May 9th and decided to summon the treasurer of the CBI to the Parliament to discuss the issue of the fluctuations and find a way to stabilize the Dollar price, however, there has not yet been any efforts in this direction.
“Till now the treasurer of the CBI has been summoned by the parliament and attended parliament sessions, but instead of addressing the exchange rate issue, parliament members only raised questions about the loss of money at the bank and other topics,” MP Chawsheen told the Globe.
Although the CBI fixed the US Dollar exchange rate at 1:1189 with the Iraqi Dinar, but the Iraqi market has not witnessed this exchange rate in reality even for one day.
The current Dollar price is between 1:1280 -1:1300 with Iraqi Dinar.
The reason behind US Dollar value appreciation According to MP Chawsheen, who is an economist, any country where the security situations deteriorate, people would lose faith in its economy and its currency and its currency exchange rate would depreciate against other currencies. MP Dler Mahmoud, Decisionmaker at the Finance and Economy Committee of the Kurdistan Parliament, on the other hands, relates the appreciation of US Dollar value in Iraq with lack of a proper management at the CBI.
“No interrogation has been done with the private banks, which has created a chaos in the financial and currency exchange market in the country,” argued MP Mahmoud in an interview with the Kurdish Globe. MP Mahmoud also supports the idea that political and security instability has a significant impact on the exchange rate fluctuations.
Tahsin Najib, an experienced currency trader at the Currency Exchange Market in Erbil, however, claims that the depreciation in the value of Iraqi Dinars is due to “the continuous and gradual collapse of the Iranian economy.”
“The Shiite businessmen from the central and southern Iraq are transferring large amounts of US Dollars to Iran to keep the balance in Iran’s economy,” Najib told the Globe. “If this continues, we will witness more increase in US Dollar prices in Iraq.”
According to Dr. Izzat Sabir, a professor of economy at the University of Suleimaniya, Part of the sick economy of Iran is living on the Iraqi economy, and “due to lack of a reliable stock exchange market in Iraq, there are concerns that Us Dollars are secretly flowing from Iraq into Iranian economy, and when a currency’s availability in the market is decreasing, its price is increasing.”
People and US Dollars
Dr. Sabir believes that Dollar price fluctuations have direct impact on the lives of the people.
“More than 90% of the goods in the Iraqi market are bought with Dollars from outside, and any fluctuation in Dollar price would directly impact the prices,” says Dr. Sabir. “As soon as Dollar price goes up, prices go up proportionately, and people would be hurt.”
Najib, on the other hands, adds that such fluctuations would impact trade activities and tradesmen lose trust in the market and become more concerned.”