A parliamentary committee reveals an American scheme to destroy the dinar and the Iraqi market
The Planning and Follow-up Committee of the Parliamentary Government Program revealed, on Wednesday, an American scheme to destroy the local Iraqi currency and the market through a systematic policy, indicating that some political parties are implementing the scheme.
Deputy Chairman of the Committee, Muhammad Al-Baldawi, said that “the United States of America, through some political blocs and ministers, is seeking to destroy the Iraqi dinar and the complete collapse of the market, as happened in Lebanon.”
He added, “Raising the price of the dollar against the dinar was the first government step within the scheme, and then seeking to implement the reform white paper, which increases taxes on basic commodities for the citizen.”
Al-Baldawi pointed out that “the local market witnessed during the past few days a frightening rise, which reached by 50 percent for some basic materials and flour, at a time when some ministers sing about the illusory economic achievement, which will repeat the scenario of Lebanon and others and destroy the currency irreversibly.”
A member of the Parliamentary Foreign Relations Committee, Mukhtar al-Moussawi, had revealed, in a previous statement to “The Information”, the threat of the United States of America to Iraq from the consequences of contracting with China, Russia and Iran. link
Raising the price of the dollar against the dinar increases the suffering of Iraqis
The rise in the price of the US dollar against the Iraqi dinar exacerbated the suffering of the people of Mesopotamia, which prompted citizens to austerity to manage their affairs, amid difficult living conditions.
Increasing the selling price of the dollar
And the Central Bank of Iraq decided last December to raise the price of selling the dollar to banks and exchange companies to 1460
dinars, from 1182 dinars to the dollar, with the aim of compensating for the decline in oil revenues caused by the deterioration in oil prices, and the Central Bank attributed the main reason behind the devaluation of the dinar to bridge a gap Inflation in the 2021 budget after the collapse of global oil prices, which is a major source of Iraqi financial resources, and he stated that “the financial crisis that Iraq was exposed to due to the Corona pandemic led to a large deficit in the general budget,” and he pointed out in his statement that the purchase price of one dollar from the Ministry of Finance. Finance will be 1450 dinars, while the price of selling the dollar to banks through the foreign currency sale window is 1460 dinars.
And the Parliamentary Finance Committee revealed earlier, that the exchange rate will remain at its current position during the next five years.
Low purchasing power
The rise in the price of the dollar and the devaluation of the Iraqi dinar caused a decrease in the purchasing power of citizens.
Ali Ahmed, the owner of a store, said that “the prices of food commodities began to rise gradually since last October, and in the past two months they witnessed a significant increase,” and stressed that “the citizen started screaming about the general situation in which he is living due to the large increase in prices.”
Muhammad Mohsen, a seller of fruits and vegetables in one of Baghdad’s central markets, considers that the purchasing power of Iraqi families has decreased due to the dollar’s rise against the Iraqi dinar, and also because of the repercussions of Corona, and adds, “Most of the professions were affected, and some of them closed their stores.”
The Iraqi authorities had taken a series of measures to reduce the high prices in the local markets, but the prices continued to rise.
Economist Evan Shaker said, “More than nine months have passed since the decision to reduce the value of the Iraqi dinar against the dollar, by approximately 23 to 25 percent, and the government’s main goals behind reducing the value of the Iraqi dinar against the dollar were to support the local industry and stop dollar smuggling. outside the country by selling the currency auction, as well as covering the expenses of employees’ salaries.”
Shaker believed that “the majority of the goals set by the government by devaluing the Iraqi dinar during this period could not be achieved, and failed to support and develop the local industry, and also during this period, Inflation rates jumped in record numbers, which negatively affected the citizens,” and stressed that “the government failed to stop the smuggling of hard currency (the dollar), and that its decision to reduce the value of the dinar was in a random manner without taking into account the purchasing power of citizens, and even without taking into account the overall Iraqi economy. A decision that is far from modern economic thought.
Shaker stressed that “the government was supposed to reduce the value of the Iraqi dinar against the dollar gradually, and in a smooth manner, but the decision was implemented in a sudden manner without any prior injunction, and it did not happen gradually, which caused a great shock to the Iraqi economy, and also caused an unexplained recession. unprecedented in the Iraqi markets, and heavy losses affected most sectors.”
He pointed out that “the government was supposed to reduce the value of the Iraqi dinar gradually between five to seven percent, and with the implementation of the reduction, the central bank was supposed to inject large liquidity by giving loans to small and medium enterprises, and after a certain period, and in the event Achieving the desired goal of the targeted growth rate, the second step begins by reducing the value of the dinar in the same proportion as the previous one, while pumping liquidity again in the same proportion.
If the desired goal of growth was not achieved, the reduction could have stopped at a certain number, because the economy is flexible and on The decision-maker has to be flexible in managing the economic file.” Shaker regretted the “random method of devaluing the Iraqi dinar against the dollar, which harmed both the public and private sectors.”
One of the solutions
But the expert in international economics, Nawar Al-Saadi, saw devaluing the local currency against the dollar as one of the solutions that some countries resort to, the aim of which is to support the local product, to reduce the phenomenon of wasting currency in imports, or in some cases, in exporting countries that reduce its local currency, to benefit from the currency difference for importers from other countries, as is happening now in China.
Providing the right ground
Al-Saadi added, “What happened in Iraq, the exact opposite of this concept, as the government, in the beginning, when it announced the reduction of the dinar, the goal was to bridge the financial deficit in the budget, support the local product, and reduce the phenomenon of import from abroad, but in fact, the value of salaries decreased indirectly and announced, on the For example, an employee who was receiving a salary of 600,000 Iraqi dinars, the value of this salary at that time was equal to 500 US dollars, but now, the value of the same salary is equal to 400 dollars, and with the increase in prices on goods and services in general, this led to a sharp contraction In the Iraqi market
Economic activity has been paralyzed in general, and inflation rates have increased by four percent, according to the Central Bureau of Statistics in Baghdad. Before going to this step, provide the appropriate ground by supporting the industrial and agricultural sectors in the country.”
Al-Saadi continued, “We always say that without the presence of strategic projects such as the iron and steel industry, and petrochemical industries, the government’s decision will not be useful in supporting the Iraqi industry, because the industry in Iraq is transformative and is limited to giving priority to products manufactured abroad
In addition to the fact that Iraqi manufacturers import all raw materials, and inevitably they will be affected by the rise in the price of the dollar,” and stressed “the need for the government to return the readings of the financial present, especially after the breakthrough in the oil variable, and the rise in oil prices again, and the development of treatments and quick solutions to remedy the situation in the country for fear of the explosion of unemployment and poverty rates and the lack of control over the effects of that.” In the near future”.
The Iraqi Ministry of Planning revealed last April that the poverty rate in the country had risen to between 26 and 27 percent, amid high unemployment rates and a lack of employment opportunities in the public and private sectors. link
Big collapse of the Iranian currency
Shafaq News/ The Iranian currency recorded, on Wednesday, a major collapse against foreign currencies, shortly after the government of new President Ibrahim Raisi gained the confidence of the Islamic Consultative Assembly.
According to the “Aftab News” website, the price of one US dollar amounted to 280,810 Iranian riyals on the black market, while the value of the euro amounted to 320 thousand and 120 riyals, and the value of the pound sterling reached 387,560 Iranian riyals.
Since the beginning of last June, the exchange rate of the dollar has been constantly rising, and the Iranian national currency has lost about 15% of its value during this period.
Iranian officials did not say the reason for the sharp rise in the value of the dollar, but the Iranian Treasury recently reported that only “three percent” of oil revenue was generated this spring, with the withdrawal of the Iram network.
Oil was the most important source of foreign exchange in Iran in the period before the US sanctions imposed by the administration of former President Donald Trump, with annual sales of $60 billion.
According to the budget law, the government of former President Hassan Rouhani allocated $33.5 billion for oil exports for this year, of which $19 billion is a share in the general budget, but only 3% of the expected figure was achieved this spring.
The price of the dollar at the beginning of last year was 160,000 Iranian riyals, but it reached its peak last November at about 320,000 riyals.
Iran faces a problem in providing hard currencies, including the US dollar; Because of the sanctions imposed by the administration of former US President Donald Trump, after withdrawing in 2018 from the 2015 nuclear agreement, the Iranian government was also prevented from accessing its blocked funds in foreign banks.
The depreciation of the Iranian riyal affected the living and economic conditions in the country, as the prices of basic materials rose several times, and gold prices and the prices of cars and homes rose several times as well, and all the measures taken by the government of former Iranian President Hassan Rouhani failed to limit the price hike.
Source: Dinar Recaps
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