Iraqis demonstrate in Baghdad demanding revaluation of dinar

Hundreds of people demonstrated in front of Iraq's Central Bank headquarters in Baghdad on Wednesday protesting against the recent decline of the Iraqi dinar's value in exchange for the US dollar, which caused prices of imported consumer goods to skyrocket and plunged the oil-rich but corruption-plagued country into a deeper recession.

Hundreds of protesters came from different Iraqi provinces and waved the Iraqi flag, chanting slogans demanding the Iraqi government as well as the parliament to put an end to the dinar's decline.

The protesters have given their demands to the newly appointed governor of Iraq's Central Bank (ICB), giving a one-week deadline for the authorities to deal with the issue otherwise they will take to the streets again.

"We have one peaceful goal, which is the demand of the Iraqis, and it is lowering the exchange rate of dollar-dinar to the previous range, as the poor people are struggling to cope with the current living standards," Hilwa Abas Sarwat, a public sector employee from Babylon province, told The New Arab at the demonstration.

"The Iraqi government can make a decision to raise the rate of the national currency in exchange for dollars, but why do they not make such a decision, maybe they want to make the people starve," Sarwat added. 

"The decline of dinar value against the dollar and the deterioration of the economic situation forced us to take to the streets. Our demands are: the dinar-dollar exchange rate should be regulated, putting an end to wasting the public funds as well as the foreign currency auctions by the ICB, observing blacklisted banks, and halting the smuggling of the hard currency to Iran," Hussein al-Taee, a political opposition, told TNA.

"Sudani [Iraq's prime minister] cannot stop the currency outflow to Iran because certain private banks - owned by the outlawed militias - are tasked with smuggling dollars and money laundering. Sudani is incapable of putting them accountable because they are more powerful than his government," al-Taee said. 

To restrict the further decline of the dinar, Iraq's prime minister, Mohammed Shia al-Sudani, on Monday replaced the Iraqi Central Bank governor, Mustafa Ghaleb Mukheef, with Muhsen al-Allaq. But the replacement has slightly affected the black currency markets across the country.

"Sudani, Halbusi enough with pretexts, just lower the dollar rate," demonstrators chanted over loudspeakers, asking Iraqi PM and speaker Mohammed Al-Halbusi of the parliament to take urgent decisions to support the dinar's value against the US dollar.

ICB in December 2020 devalued the dinar, setting the exchange rate at 1,460 dinars per dollar amid an economic crisis caused by low oil prices and the Covid-19 crisis. Previously, the dollar was traded at 1,182 Iraqi dinars.

Iraq, the second-largest crude oil producer in OPEC after Saudi Arabia, mainly depends on income from selling oil in US dollars. The Central Bank of Iraq then sells the US dollar, as well as other foreign currencies in daily auctions.

Recently, the US Federal Reserve has blacklisted nearly fourteen Iraqi private banks and forced the ICB to launch an online platform in an attempt to limit the overflow of US dollars to countries sanctioned by the US, namely Iran and Syria. 

"But most private banks have not registered on the platform and resorted to informal black markets in Baghdad to buy dollars. This has created dollar shortages as demand has outstripped supply and accelerated the dinar's descent against the greenback," according to Reuters.

"I do not think the Iraqi government is capable of setting the dinar's value at 1,182 because of mismanagement and the lack of expertise. Iraq's financial and economic systems need radical changes, and this needs expertise and advice from giant international companies, the Iraqi authorities should seek advice from them. I think Iraq's government might be able to push the rate at 1,182, as it was during the tenure of former Iraqi PM Mustafa al-Kadhimi," Abdul Ghani Ghasban, editor-in-chief of a weekly Iraqi newspaper Sada al-Taghir [The Voice of Change] and a political analyst, said to TNA.

"These financial and economic crises might lead to a political crisis leading to the collapse of the government because when the people become hungry, will revolt and this fact might not be perceived by the top ruling elites who are benefiting from the ill-begotten money," he added.