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.