Dodgy Dinar: Fake Passports in Bogus Banking, Currency Crisis

The current security problems, which are reminding locals of the violent years between 2006 and 2008 when the country was virtually in a state of civil war, has also seen projects come to a standstill and the movement of cash around the economy slow down. Wealthier Iraqis are leaving the country and foreign firms are pulling their contractors out until things calm down. “Our parent company in Turkey has decided to pull all their Turkish staff out,” said one Iraqi employee of a Turkish construction company building houses in Baghdad. “We haven’t been able to do any business here at all over the past month; Iraqis have stopped building right now.”

Against this troubled backdrop, the Iraqi government is trying to shore up the dinar’s value. They are allowing state and private banks to exchange US$5,000 for dinars at an inflated, official rate for Iraqis who hold a passport and are planning  to travel overseas or for medical treatment. They may only do this once a month.

However unlicensed exchange shops have been quick to take advantage of this. Iraq’s black market money market doesn’t have too many rules or regulations – anyone can buy US dollars from hundreds of both licensed and unlicensed exchange shops. And there’s currently a difference between the official exchange rate and that on the black market of between 8 and 10 percent.

“Getting a license from the bank requires a lot of paperwork and there’s also favouritism at work,” one money changer, Kazim Jassim, from Baghdad’s Mansour neighbourhood, told NIQASH. “That’s why I just started. I’ve been doing this for seven years now and never once has anybody asked me what I’m doing, or tried to stop me,” he explains.

And those money traders are approaching people on the street – especially if they look needy – and asking them if they’d like to make a comparatively quick profit. They give them the US$5,000 to take to the bank. The money is exchanged, then changed again on the black market. The profit of around US$400 is easy money for the money changers and the person who queued at the bank gets US$100 for their trouble.

2 Responses to Dodgy Dinar: Fake Passports in Bogus Banking, Currency Crisis

  1. kattan 2nd June 2013 at 20:58 #

    Abdel Basit Turki needs to resign as the list of his embarrasing mistakes is getting longer by the day.

    I really miss Governor Sinan Al-Shabibi’s administration as the dinar remained stable during the 2006-2007 sectarian strife, remained stable when the Syrian civil war broke up and when the sanctions on Iran were fully imposed. The impact of these events were minimized on the iraqi citizen.

    Abdel Basit Turki has been in charge since last october and the result is Dodgy Dinar, Fake Passports in Bogus Banking, and a Currency Crisis

  2. Toufic 5th June 2013 at 06:43 #

    Simply put, having two monetary systems is the problem. Iraq should look around and learn from the neighoring systems. Lebanon is only the country that allows a dual monetary system, and look at the fate of its currency. Iraq should stop the dual system, banks should stop being exchange shops, and exhcnages should apply official rate for USD/IQD until the rate is fully flaoted. Banks should only accept and dispense Iraqi Dinars, while depositors can have accounts in any foreign currency they prefer. Another thing, the government should stop runing commercial banks. Al Rafidain, Al Rasheed, TBI and the other smaller state owned banks should be valued and sold to public and listed on the stock exhcnage or shut dissolved if their business plan prove uneconomic. Private sector is always more efficient when it comes to managing and corruption will be hugely reduced.