Iraq’s Central Bank says dollar gap narrowed to 9% from 24%

BAGHDAD — Central Bank of Iraq Governor Nizar Nasser Hussein said Thursday that the gap between the official and parallel dollar rates had narrowed to 9% from 24%, and denied the bank was printing new currency.

Hussein made the remarks to parliament’s Investment and Development Committee, which visited the Central Bank to discuss how the change in the exchange rate is affecting investment, local companies and the wider economy, according to a statement from parliament’s media office. He said no currency was being printed and called talk of printing inaccurate, the statement said.

The statement did not say how the 9% figure was calculated or when the gap stood at 24%. On Thursday morning, Baghdad exchange shops were selling $100 for 168,500 dinars, about 11% above the official rate of 152,000, according to 964media’s daily rate check. Measured against the official market price instead, the gap is just under 10%. In September, before the devaluation, Baghdad shops sold $100 for about 160,250 dinars against an official 132,000, a gap of about 21%.

The denial follows months of speculation about removing zeros from the dinar. The Central Bank denied on Aug. 26 that new banknotes with zeros removed had been printed, and a government source told the state-run Iraqi News Agency on Oct. 1 that no plan or timetable for redenomination had been approved.

Lawmaker Nahida al-Daini, who presides over the committee as its eldest member, led the visit. The committee was briefed on steps the Central Bank has taken to support the economy, the statement said. They include backing state and private banks to offer citizens soft loans of 5 million to 15 million dinars (about $3,300 to $9,900 at the official rate). The statement gave no other details of the loans.

The committee called for limiting the exchange rate’s effect on the cost of investment projects, raw material prices and contract obligations, and on market stability and people’s purchasing power.

It also called for closer coordination between the Central Bank, government bodies and the banking sector, and for easier bank financing, so that investment projects can continue without new burdens on investors or citizens. The committee said it would keep monitoring the economy and draft recommendations to support investment.

The devaluation took effect on Oct. 7. The Central Bank now buys dollars from the Finance Ministry at 1,500 dinars, sells to banks at 1,510 and sets the public rate at 1,520, up from 1,300, 1,310 and 1,320. The bank cited economic and financial pressures for the change and said its foreign reserves were sufficient to meet all monetary needs.

The government says it plans to bring the parallel rate down to 1,550 dinars per dollar. Prime Minister Ali al-Zaidi said Friday that Washington would send $1 billion in cash, and Mahmoud Dagher, an adviser to the Central Bank governor and the bank’s spokesperson, said Tuesday that two aircraft had arrived, each carrying about $500 million.