Baghdad Struggles to Halt Devaluation of Iraqi Dinar

In a separate statement, issued May 13, the parliament announced that Suhail had “chaired the Finance Committee’s meeting in the presence of CBI governor Abdul Basit Turki.” Suhail stressed “the need to determine procedures taken by the CBI’s administration to address the fluctuation in the dinar’s exchange rate against the dollar.” The parliament also emphasized, “It is important to know the true causes of this fluctuation, which will negatively affect the [quality of] life of the Iraqi citizen.”

The CBI’s governor, according to the statement, "gave a presentation of the CBI’s policy and recent activity, particularly the CBI’s auctions and its administration’s procedures to combat the fluctuation of the exchange rate for the dollar." In addition, members of the parliamentary finance committee reviewed “their suggestions and recommendations on the developments in the auction and dollar-exchange methods.” They also stressed “the need to take measures to prevent some of those who trade with the money of the Iraqi people from exploiting the CBI’s auction.”

CBI officials refused to make comments to the media, but on May 13 local media circulated a statement by a banking source described as "high-level." According to the statement, "The CBI’s foreign currency reserves amount to $74 billion” and that “this amount is the highest Iraqi foreign currency reserve ever.”

Economist Jawad al-Shammari said in an interview with Al-Monitor:

The CBI follows a vigilant policy when dealing with the media. It is probably the party that leaked information on the increasing Iraqi foreign currency reserves in order to calm mounting fears as a result of the sharp decline in the value of the dinar against the dollar.”

“The CBI holds daily sessions to sell foreign currency with both governmental and private participation. The sales can be either in cash or in the form of overseas transfers in exchange for commission.”

4 Responses to Baghdad Struggles to Halt Devaluation of Iraqi Dinar

  1. Mahdi 21st May 2013 at 20:16 #

    This is what happens when incompetents take over the control of the CBI. Apparently it was not enough for to take over illegally the CBI, they had to add currency instability to the mix. The main persons listed in this article that planned an institutional Hold Up on the CBI are:

    Abdul Basit Turki
    Qusai al-Suhail
    Osama al-Nujaifi
    Haider al-Abadi

    Incredible that they all agreed with Al-Maliki in october 2012 to remove the old administration of the CBI.

    The major error that Abdul Basit Turki made was not to meet the demand for USD in the daily auctions since he illegally took over. Now that the country is in political turmoil and the demand for USD is at its peak for years, he finds himself in a situation where he has to open the valves in a panic mode. This is too little too late!

  2. Sus 22nd May 2013 at 00:10 #

    It's simple. USD demand high cause everything is priced in dollars. Everything imported. Nothing being produced or exported so no dollars coming in. Foreign projects in dollars and profits mostly repatriated back out.
    Simply no demand for dinars.
    So what do you do?
    You encourage pricings of certain sectors to only be carried out in dinars.
    You remove dollarisation pressure a bit.
    Israel were great at this.

  3. Nasab 22nd May 2013 at 12:14 #

    Iraq is a major oil exporting country and it exports most if it (nearly 2.5 million barrels per day), which in turn creates an important inflow of foreign currency in the county

    It should have enough foreign exchange reserves to meet foreign currrency demands from the private/public sector and keep the Dinar stable. The CBI's $70 billion in foreign exchange reserves is not small by any standards. Why the current CBI administration has put itself/and the domestic currency market in such a mess is a mistery to most observers.

  4. Hussan 28th May 2013 at 10:46 #

    Hi
    I have a little knowledge in economy. But I can see that the value of £1=$1.509 this morning. This means that the British people find too expensive to go for holiday in USA. Also I found that Iraqi Dinar is doing alright. If I sell my Iraqi Dinar this morning of course if there is a buyer I would get more pounds. I do understand what all this fuss about.