Iraqi PM replaces Central Bank governor over currency drop | Business and Economy News

Iraq’s prime minister has replaced the governor of the country’s central bank after the Iraqi dinar plunged for weeks, state news agency reported.

Prime Minister Mohammed Shia al-Sudani made the move after governor Mustafa Ghaleb Mukheef told him he did not want to continue this work, the Iraqi News Agency reported on Monday.

Mukheef, who has taken the position since 2020, has been replaced by Muhsen al-Allaq, the agency added.

In a televised address, al-Sudani said: “Today, the request for discharge of the central bank governor has been approved, as well as the retirement request of the president of the Commercial Bank of Iraq. “

Without mentioning names, al-Sudani added that successors to key positions “are known for their experience, ability and integrity.”

Al-Allaq, a former central bank governor, was appointed “acting governor,” a sign that this could be a temporary position.

The dinar hit a new low on Friday, reaching around $1,670. The currency has lost almost 7% of its value since mid-November. The official rate is at 1,470 dinars to the dollar.

The slump over the past two months has hit markets in Iraq, where many are seeing their purchasing power suffer.

Abu Ranad, a Baghdad resident, said he had to double-check the price labels every time he went to the supermarket.

He told Al Jazeera that the stores that inflate the prices of goods “always blame the exchange rate of the dollar because the products are imported.” “In this case, the government should pay us in dollars,” he added.

US ‘closely scrutinizes foreign transfers’

Analysts and officials say the decline in the currency’s value coincides with efforts to make Iraq’s banking system compliant with the international electronic money transfer system, known as SWIFT.

Muzhar Saleh, an adviser to the prime minister, previously told AFP news agency that these steps, which began in mid-November, were required to access Iraqi funds held in the United States.

Iraqi banks now have to make “transfer money on an electronic platform, verify claims… and if it’s” [the US Federal Reserve] in doubt, it blocks the transfer,” he explained.

Safwan Abdulhalim, an economist, said it was clear the US Federal Reserve was “thoroughly scrutinizing foreign remittances from Iraq, especially to countries that are not friendly to the US like Iran, Lebanon, Syria and Yemen”.

“As a result, Iraqi daily bank transfers from the US were cut from $240 million to just $22 million a day,” he told Al Jazeera.

Some Iranian-backed politicians in Iraq have blamed the drop on recent measures by the US Treasury Department. The United States has sanctioned several Iraqi banks that deal mainly with Iran, which is under US sanctions, amid concerns that hard currency is being moved from Iraq to Iran. Late last year, the Federal Reserve began taking measures on transactions to slow the flow of dollars into Iraq.

The drop comes at a time when Iraq’s foreign currency reserves are at a record high of around $100 billion.

Al Jazeera’s Mahmoud Abdelwahed, reporting from Baghdad, said the government had launched a campaign “against illegal currency trading” and pledged to hold further discussions with Washington to stabilize the exchange rate. exchange.

Still, “many Iraqis are still worried about price increases ahead of the fasting month of Ramadan, especially for imported goods like gas and wheat,” he said.

Adopting the SWIFT system is supposed to allow for greater transparency, tackle money laundering and help enforce international sanctions, such as those against Iran and Russia.

Officials close to Tehran, such as Hadi al-Ameri, head of the Iraqi parliament’s pro-Iran Fatah Coalition, say it is a deliberate policy by Washington to “starve the people”.

Meanwhile, in nearby Lebanon, mired in the worst economic crisis in the country’s modern history, five European nations are investigating the troubled Central Bank Governor, the Riad. Salameh, on allegations of public money laundering in Europe. Switzerland first opened the investigation two years ago, followed by France, Germany, Luxembourg and Liechtenstein.


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