Dinar Woes: Iraqi Currency Traders Break Sanctions
In Iraq, where barely anyone has a bank account, the trade in foreign currencies is largely unlicensed. Now money traders are smuggling US dollars to sanctioned Syria and Iran. And the Iraqi govt may well be using the situation for its own political ends too, according to this report from NIQASH.
The Iraqi dinar is at risk. That is the pronouncement made by Khadir Sadoun, who sits on the sidewalk in the upmarket Arasat neighbourhood in central Baghdad. But Sadoun didnt study business or economics, he probably doesnt even know about the sanctions on Iran and Syria that are causing the risks he is talking about. In fact, it is the market place has taught him all he knows.
And my business is flourishing, Sadoun adds, as he wraps a rubber band around a pile of currency. For the first time in years, Iraqis are exchanging their local dinars for US dollars in this way, the trader said, indicating the large piles of cash he was working with.
Over the past few weeks, the market exchange rate has seen the Iraqi dinar plummet against the US dollar. In part this is due to the current, increased demand for the US dollar. This is regional: international sanctions have been imposed on two of Iraqs neighbours, Iran and Syria, and, as local analyst, Basim Antoin, explained: over the past few months theres been an increase in currency smuggling and this has led to an increase in demand for the US dollar.
Both Syria and Iran are suffering from a severe economic crisis because of international sanctions imposed upon them, economic strategist and Iraqs former Minister of Planning, Mahdi Al-Hafez, said. This is why they are coming to the Iraqi market in search of hard currency.