Officials said on Tuesday that restrictions on the sale of dollars are eased by Iraq's central bank as a step to improve the dinar currency. The central bank constricted the rules in April regarding who could take part in its daily dollar auctions as well as the amount they could buy. This was done in order to stabilize the dinar and stop the unlawful transfer of US currency to neighboring countries under permits.
After reversing those rules on Tuesday, the central bank said it would make the weekly share of cash double of the lenders and allow them to set the price, which was earlier fixed at 1,189 dinars to the dollar. Iraq is recuperating from a long phase of war and political conflicts; its economy is still very centralized.
The current reduction of restrictions also ensures traders’ involvement in the central bank's dollar auctions, which will no longer be the matter of money transfer quotas. The steps were taken because the exchange rate of dinar-dollar is now steady. Deputy Central Bank Governor Mudher Kasim said that superior accomplishment of anti-money laundering rules will stop dollars being sold on to countries that are under sanctions.
Kasim told to Reuters that they passed through a difficult experiment for a year but this experiment finally ended with a grand success. The Iraqi dinar had gone under heavy downward pressure from traders who were seizing dollars to sell on to Syria and Iran. But pans are taken to stop the trade increase the value of the US currency in the Iraqi market, which hurts the local businesses that are reliant on dollars to buy foreign goods.
Waleed Eedi, head of the central bank's statistics and research department said that the slackening of the controls will make the dinar powerful and get rid of the difference between the official and the secondary market price. In May, the central bank allowed dollars to be sold at a fixed rate through two state-run banks, which will helps to push the dollar down from 1,280 dinars to 1,210 dinars and decreasing the gap between the official rate and the market price.
Source [Business Recorder]