Central Bank’s new measures to control exchange rate

BAGHDAD, 5 January — The Central Bank of Iraq has unveiled a series of upcoming actions designed to support the Iraqi dinar and maintain its strength against other currencies. These measures are expected to positively influence the exchange rate. Additionally, the Central Bank is progressing towards the gradual termination of its electronic platform.

Mohammed Younis, the Deputy Director of the Investment Department at the Central Bank of Iraq stated that “the Central Bank will monitor and follow up on all banks, and customer complaints that reach it in case the banks force customers to convert their accounts to U.S. dollars.” He assured that “this issue is easily monitored and will be accounted for, and banks not complying with this decision will be held accountable.”

Younis added that “this decision and the decisions that will follow in the coming days all aim to benefit the support of the Iraqi dinar and increase confidence in it.” He pointed out that “what confirms the strength of the dinar and the public’s confidence in it is the continuous functioning of the Central Bank of Iraq without defaulting on any need of various sectors, as it currently finances sectors of trade, electronic payment, travel, and others.”

He noted that “in the coming days, there will be more measures in the field of meeting all market needs and supporting the Iraqi dinar and maintaining its strength against other currencies.” He explained that “the Central Bank, in its new procedures, has prevented banks from automatically converting customer accounts from U.S. dollars to Iraqi dinars without the customer’s consent, and allowed customers to open accounts in different currencies.”

Younis emphasized that “these procedures will positively affect the exchange rate in the market, increase the supply of dollars, and contribute to the service and support of important sectors in the economy, including the sectors of exporters and companies working in the government field, in infrastructure development, strategic projects, as well as supporting civil society organizations that contribute to the humanitarian and charitable field in Iraq.”

He clarified that “the main goal behind this update or these instructions is to expand the largest possible segment to obtain cash dollars by meeting their current needs from this dollar, where these instructions have expanded the beneficiaries of cash dollars including civil society organizations, and supported an important segment in the economy, which are the sector of exporters, allowing them to obtain 40% of their incoming remittances as a result of their exports and receive them in cash.”

He pointed out that “the decision clearly defined the mechanisms for its implementation by the banks, focusing on the issue of incoming remittances, allowing some categories to receive their remittances in cash.” He clarified that “this decision relates to incoming remittances and not the cash sale of dollars to travelers, as the cash sale to travelers will continue as it is now, in addition to meeting the needs of customers and companies through this decision, and therefore it will be reflected positively on the exchange rate in the coming days.”

He also said that “there are no restrictions on banks in the field of money transfers, as there are procedures in the field of the gradual termination of the platform of the Central Bank of Iraq through supporting interests to open accounts in foreign banks abroad, and the role of the Central Bank is limited to enhancing these balances and monitoring transfer operations.”

He concluded by saying: “There are no restrictions on money transfer operations in different currencies within the banking system in foreign currencies, but this decision relates to cash dollars (cash withdrawals).”