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Iraq
Iraqis protest devaluation of Iraqi dinar against the US dollar in Baghdad on February 3, 2023. Photo: Rudaw
ERBIL, Kurdistan Region - Iraqis on Friday gathered in the capital city of Baghdad to protest high prices of basic goods caused by a devaluation of the dinar, days ahead of a planned trip by the foreign minister to Washington to discuss the currency problem with American officials.
The Iraqi Central Bank in late 2020 devalued the dinar against the US dollar by 22 percent, dropping it from 1,182 IQD to 1,450 IQD and sparking public outrage. In recent months, the dinar has seen another drop in value of nearly 20 percent. On Friday, the value of a dollar in the market was nearly 1,720 IQD.
The latest depreciation of the Iraqi dinar has been attributed to corruption, smuggling dollars out of Iraq, and pressure from the United States.
A large number of people from the Tishreen (October) Movement - a popular protest movement that toppled the government of Prime Minister Adil Abdul-Mahdi in 2019 - held demonstrations in Baghdad, demanding the government take action to address the currency crisis.
Ahmed Washah is a spokesperson for the Tishreen Movement. He told Rudaw that the government has failed to resolve the currency problem.
"We call for a decrease in the prices of goods in the market because they have gone up by 100 or 200 percent," he said.
Civil servants who are paid in dinars are victims of the crisis, he added, because they lose a lot when they exchange their money for dollars.
"All Iraqis are suffering from high prices and many shops have been closed," one protester told Rudaw's Halkawt Aziz.
As the Iraqi dinar continues to collapse against the US dollar, counterfeit local currency, especially 25,000 notes, are abundant in Baghdad's markets, a dangerous development that businesses and the markets believe the central government must take serious action to curb before it is too late.
Currency exchange markets easily detect counterfeit currencies as they use advanced bill counters, but shopkeepers say it is difficult for them to detect fake notes.
"Anything said [about Iraqi dinar vs dollar] may disrupt the situation. Sometimes it is said that dollars may disrupt the market... sometimes people talk about the cutting off of salaries and once again the market gets disrupted. Now we are dealing with counterfeits that have completely destroyed the market," Jaafar Kazim, a shopkeeper in Baghdad, told Rudaw on Wednesday.
Iraq's Prime Minister Mohammed Shia' al-Sudani met for the second time with officials from Iraq's financial institutions on Thursday to discuss controlling fluctuation in the dinar-dollar exchange rate.
Yehia Rasool, Sudani's spokesperson, said on Thursday that the PM held a meeting with some of the country's top security officials and issued "strict directives" to resolve the issue of currency smuggling, which is considered as one of the reasons for the recent drop in the dinar's value.
Iraqi delegation to visit US
Ahmed al-Sahaf, spokesperson for Iraq's foreign ministry, told Rudaw's Nma Nabaz on Friday that an Iraqi delegation, headed by Foreign Minister Fuad Hussein, will discuss the unstable dinar-dollar exchange rate with US officials in Washington next week.
He said that the delegation will hold high-level meetings with US officials.
"They will have deep discussions regarding the principle of cooperation between both sides in terms of finance and banking. The Iraqi government wants to prevent the consequences of the devaluation of the Iraqi dinar against the US dollar, especially regarding its impact on the lives of people," he said.
He also said that the government has taken several steps to restore the value of the dinar against the dollar, including cracking down on places that smuggle the dollar out of the country, adding that the Iraqi delegation will discuss the measures Baghdad has taken with the Americans.
Iraq's interior ministry said in a statement on Friday that it had seized one million dollars, smuggled in Diyala province without mentioning where the money was bound. h
The date for the foreign minister's trip to Washington has not been publicly announced, but the spokesperson said it will come after February 7.
"The visit will be made from different levels, with the subjects of economy, finance and banking-related cooperation being on the top of the agenda," he noted.
United States President Joe Biden on Thursday spoke to Sudani, reiterating Washington's support for Baghdad and willingness to endorse the premier's program to improve the country's economy, according to a readout from the White House.
Biden also welcomed the upcoming visit of the Iraqi delegation.
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