BAGHDAD-
Iraq on Tuesday nudged up the value of its local currency against the dollar in an effort to stabilise the dinar after tougher foreign transfer regulations sent its value fluctuating.
The government adopted a new official exchange rate, fixing it at 1,300 dinars to the US dollar instead of 1,470, the prime minister’s office said.
Since November, the currency’s street value has been on a roller-coaster ride, which analysts and officials have attributed to efforts to bring Iraq’s banking system into compliance with the regulations of the international electronic transfer system known as SWIFT.
Some days the dinar lost up to 15 percent of its market value against the dollar before recovering, prompting protests by Iraqis concerned about their purchasing power.
On Tuesday, Baghdad “ratified the decision of the central bank’s board of directors to change the exchange rate of the dollar against the dinar, to 1,300 to the dollar”, a statement from Prime Minister Mohammed Shiaa al-Sudani’s office said.
The move has had an immediate impact on the exchange markets, with the rate recovering to under 1,500 dinars to the dollar after brushing past 1,700 in recent days.
But Iraqi economist Barik Schuber warned the improvement was “temporary” and pointed to a drop in demand as “buyers of dollars wait to get the greenback at a lower rate from the central bank.”
“Radical solutions” such as only allowing imports through official lines of credit or more stringent controls over money transfer agencies are needed to resolve the crisis, he told AFP.
For Iraq, adopting stricter regulatory measures means greater transparency, tackling money-laundering and helping to enforce international sanctions, such as those against Iran and Russia.
The new SWIFT-related measures involve more rigorous screening of transactions, particularly by the US Federal Reserve, which rejects suspicious activity.
Iraq’s premier has said the new regulations have revealed fraudulent dollar transactions had been made from his country, citing “falsified invoices, money going out fraudulently”, in particular under the cover of foreign currency payments for imports.
