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The Latest Central Bank Iraq News – currency, banking, dinar, reserves, prices, inflation, IQD, revaluation, redenomination – brought to you by Iraq Business News

New 50,000 IQD Notes and Coins

The Central Bank of Iraq has reportedly announced the production of new 50,000 IQD bills and coins from the beginning of the New Year.

The new dinar bill and coins will be printed in Arabic and Kurdish.

The Bank’s Deputy Governor said that they want to produce bills of higher value than the current largest denominationi, the 25000 bill.

He explained that the coins will be produced to “make commodity marketing easier for people”.

(Source: Erbil Governorate)

(Dinar image via Shutterstock)

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CBI “Lifts Custody” over Warka Bank

By John Lee.

The Central Bank of Iraq (CBI) has announced that its board has decided to “lift custody [guardianship]” over Warka Bank on August 25, 2013, following a final decision made by the Financial Services Court on 26th May, 2013.

Warka Bank announced on its website that:

This decision comes in accordance with the decision issued by the court appeal in favor of Warka Bank for Investment and Finance.

A copy of the announcement can be viewed here.

(Sources: Warka Bank, Rabee Securities)

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Central Bank Governor Promises Bright Future

By John Lee.

The Governor of Iraq’s Central Bank, Abdulbasit Turki, has said that Iraq’s financial capabilities are stronger than any challenges the country might be facing.

Speaking at a celebration to mark the 10th anniversary or Iraq’s Commercial Bank, he said

The near future will be a surprise … our potentials are greater than any challenges we are going to face.

According to a report from Azzaman, Turki took over the Central Bank’s administration almost 10 months ago following a period in which the bank’s former leadership was alleged to have pursued policies detrimental to the country’s economy and the exchange rate of its national currency, the dinar.

Central Bank’s coffers are reported to be brimming with hard cash with reserves estimated at more than $70 billion.

Turki said the short period in which he has been at the helm of the country’s most influential financial institution has provided him with evidence that Iraq will overcome its economic difficulties with great leaps forward in the near future.

He did not elaborate, but hinted that his bank was negotiating with international banking institutions to open branches in the country and at the same time encourage foreign investment.

We have met delegations from some of the world’s largest banks who are willing to start operating in Iraq,” he said.

Turki said his institution wants to turn Iraq into an arena for investment, particularly by foreign firms and entrepreneurs to rebuild its infrastructure.

Iraq is open to all investors willing to invest in it and reconstruct its institutions,” he said.

(Source: Azzaman)

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Currency Auctions by CBI Called Into Question

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.

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Iran’s Role In Iraqi Dinar Devaluation

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.

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Deputy Governor of CBI Released

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)

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CBI Expects 9% Growth, Reserves of $105-$110bn

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)

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Ex Central Bank Chief Accuses Govt

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.

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