Baghdad Struggles to Halt Devaluation of Iraqi Dinar

Shammari believes that “this measure — which aims to control the dinar exchange rate against the dollar — is no longer effective due to the daily, increasing gap between what the CBI offers in the auction and the actual market need.

Haider al-Abadi, head of the Parliamentary Finance Committee, confirmed having “received reassuring messages from CBI officials on controlling the exchange rate fluctuation.” Abadi said that the CBI took measures enabling citizens to obtain foreign currency from public and private banks, including transfers for travel or treatment. He reiterated, "The problem is limited to the gap between supply and demand for US dollars in the Iraqi market.”

The CBI holds daily sessions to buy and sell foreign currency with the participation of Iraqi banks, except for public holidays, during which the CBI suspends these auctions. The sales can be either in cash or in the form of overseas transfers for a commissioning fee.

Omar al-Shaher is a contributor to Al-Monitor’s Iraq Pulse. His writing has appeared in a wide range of publications, including France’s Le Monde, the Iraqi Alesbuyia magazine, Egypt’s Al-Ahaly and the Elaph website. He previously worked for Al-Mada, covering political and security affairs, and as a correspondent for the Kuwaiti Awan newspaper in Baghdad.

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 #

    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.