By Omar al-Shaher for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

According to experts, the hard-currency auction governed by the Central Bank of Iraq (CBI) — the authority in charge of implementing monetary policy in the country — has ushered in the formation of financial groups, in which board members of Iraqi private banks are investing.

Every day since 2004, the CBI has held an auction through which hard currency is sold to banks, companies and traders in exchange for evidence of import and transaction receipts. The auctions aim to prevent market speculation and stabilize the exchange rate of Iraqi dinars to the US dollar. The CBI — which does not deal with individuals — sells $1 for 1,118 Iraqi dinars.

The exchange rate has been fluctuating following an arrest warrant issued against the former governor of the CBI, Sinan al-Shabibi, at the end of last year. During his term, Shabibi tightened the auctions as information leaked about smuggling money from Iraq to Iran to meet the latter’s needs for hard currency amid international sanctions.

As a way of dealing with the accusations, the CBI prohibited any bank or company with capital of less than $400,000 from taking part in the currency auction. Additionally, all participants had to submit their participations to the criminal division in the Ministry of Interior, the economic crime unit and the money-laundering division of the CBI for approval.

By Omar al-Shaher for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

There were conflicting accounts of the reasons for the rise in the value of the US dollar against the Iraqi dinar earlier this month. Politicians and economists have said that Iranian companies boosted the value of the dollar against the dinar by entering the Central Bank of Iraq’s (CBI) auction for hard-currency sales and buying large quantities in order to smuggle them into Iran. On the other hand, a former senior official at the CBI said the rise is linked to increased government revenue from oil sales, leading to an increase in government spending.

The weekly bulletin released by the CBI says 1,260 Iraqi dinars are now trading to the dollar, a level not been reached since last year.

A member of the Iraqi parliamentary finance committee said the value of the dollar increased against the dinar because some Iraqi banks have stopped converting dinars to dollars and have sold dollars to exchange companies at prices favorable to the banks.

Hussein al-Yasiri said some banks have stopped selling dollars to regular customers and instead have been selling them to exchange companies. This has prompted Iraqis to buy dollars from the exchange companies at prices favorable to the companies. The exchanges are not subject to government monitoring.

Ahmed al-Alwani, head of the Iraqi parliament’s economic committee, said Iran’s need for hard currency as a result of international sanctions has prompted Iran to mobilize Iraqi partners to help the country get dollars through the CBI auction.

By John Lee.

The Iraqi authorities have reportedly released the deputy governor of the Central Bank of Iraq, Mohamed Salih, who has been detained for more than month on charges related to corruption.

In October, Prime Minister Maliki removed the head of the central bank, Sinan al-Shabibi, accusing him of mismanagement and currency manipulation. He is understood to be still outside the country.

(Source: AIN)

By John Lee.

The Acting Central Bank Governor, Abdul-Basit Turki, has told Reuters that Iraq’s economy should grow 9 percent this year, as it increases its oil production.

He also predicted international currency reserves of between $105 billion and $110 billion by the end of this year.

Central Bank predictions for last year were for growth of around 10 percent, and reserves at the end of December of around $70 billion.

(Source: Reuters)

By John Lee.

Sinan al-Shabibi (pictured), the former head Iraq’s Central Bank who was removed for suspected mismanagement and currency manipulation, has dismissed the charges against him as baseless and trumped up.

Speaking to AFP, he said authorities had compromised the bank’s independence to access its reserves, adding that the government had been “spoiled” by a stable exchange rate for several years.

He said a warrant for his arrest had blown relatively minor foreign exchange fluctuations out of proportion.

While diplomats and analysts have interpreted the move as a power grab by Nouri al-Maliki, the premier’s office has reportedly nsisted it was not behind the moves.

Speaking from Geneva, Shabibi said:

“Since 2009, they wanted to fire me, and they wanted money from the reserves … I think the main problem… is basically the reserves, because they thought we have a lot of reserves, and they want to use it for financing … The government wanted some money from the central bank… Of course, the law does not allow that, the central bank law.

“And of course, they say that there are differences in exchange rate policy. I don’t think these differences require firing the central bank governor.“

Asked if the warrants for him and other officials affected the bank’s independence, Shabibi replied: “I’m sure, yes.”

By John Lee.

Iraq’s Interior Ministry says its forces have stormed Central Bank building in Baghdad and arrested 36 officials on suspicion of corruption.

“A security force belonging to the ministry implemented an arrest warrant issued by the judicial council against a numerous officials of the Central Bank without any problem,” the ministry said in a statement.

It said the ministry is constitutionally under obligation to implement any arrest warrant it receives from the judicial system whether it relates to government officials or ordinary citizens.

The arrests come following a government decision to sack Central Bank Governor Sinan Shabibi on charges of corruption, and replace him with Abdulbasit Turki.

The Commission of Integrity says it has evidence that Shabibi and other officials are involved in embezzlement particularly in operations through which the bank sells dollars to the public to withdraw liquidity in markets.

There is a special arrest warrant against Shabibi but he is reported to be outside the country and it is not clear whether he will return to face the charges

(Source: Azzaman)

Perhaps the biggest story of recent days was the shock dismissal of the Governor of the Central Bank of Iraq (CBI), Sinan al-Shabibi, and the issuing of arrest warrants for him and many of his staff.

The nature of the allegations against Mr Shabibi are not entirely clear, but appear to center around manipulation of the exchange rate between the Iraqi dinar (IQD) and the US dollar.

Considering the fact that the exchange rate has been managed within a relatively tight range for quite some time, this accusation looks a little strange.

But there has been tension between the Central Bank and the government for years. In January of last year, Nouri al-Maliki secured a court ruling placing the Central Bank under the control of the cabinet, rather than the parliament, much to the displeasure of al-Shabibi.

The latest charges have been brought by Iraq’s Commission on Integrity, whose former head resigned last year, alleging political interference in his inquiries.

Suspicions abound that the Central Bank affair is an attempt by al-Maliki to increase his control of the bank. While we wait for more details to emerge, the international business community will be watching developments closely.

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Iraq’s cabinet has named an interim replacement as governor of the country’s central bank.

Prime Minister Nouri al-Maliki’s spokesman Ali Mussawi said, “the cabinet decided to authorise Abdelbassit Turki, the head of the Board of Supreme Audit, to run the central bank indefinitely”.

The former head of the Central Bank of Iraq (CBI), Sinan al-Shabibi, was suspended from his post by the country’s anti-corruption watchdog, the Commission on Integrity, as part of an inquiry into alleged currency manipulation.

(Source: Naharnet)