Iraq's Foreign Reserves Highest in History

This article was translated from an established Iraqi news source. What you may want to know: 

• Foreign exchange reserves are assets denominated in a foreign currency a nation's central bank holds.
• These may include foreign currencies, bonds, treasury bills, and other government securities.
• Most foreign exchange reserves are held in U.S. dollars, with China having the largest amount.

In a statement on Wednesday, the financial adviser to Prime Minister Mazhar Muhammad Saleh said that the government defended economic stability in two directions, pointing out that the country has the largest foreign currency reserves in its history and that the exchange rate treatment package aims to prevent profiteering at the expense of the economy.

Iraq's foreign currency reserves are the largest in history and exceed 100 billion dollars, representing the country's central reserve portfolio. He noted that "the market requests that the monetary authority provide the official reserves at the official exchange rate of 1320 dinars per dollar for financing foreign exchanges for the private sector."

"The country's foreign currency reserves have achieved the highest benchmark indicators for more than (fifteen commercial months) while the global standard is about (three months)."

He stated, "The demand for foreign currency is met through the Central Bank of Iraq's platform and by increasing bank balances in various currencies to support the private sector's foreign trade. Following international governance rules and standards, this accounts for 85% or more of external transfer needs. However, there is also a need for cash dollars to finance specific trade operations involving no more than five specific commodities. Some entities in the market are attempting to procure these cash dollars outside of formal trading mechanisms by utilizing the parallel market (which only makes up 10% of the overall demand for foreign currency and is primarily intended for traveling purposes outside of the country) to fund their informal trade."

In his words, "These are commercial acts that are not legally recognized by the financial, commercial, and banking departments, for various reasons, including tax evasion, customs evasion, and quality control evasion."

The speaker emphasized that the current economic and monetary policies can control illegal commercial activities in the parallel market. These policies are crucial for maintaining economic stability, particularly in ensuring an adequate supply of essential goods at affordable prices, directly impacting citizens' lives. This is achieved through two main strategies: firstly, by providing additional food, pharmaceuticals, and high-demand products at a stable exchange rate of 1320 dinars per dollar through collaboration between the state and private sector; secondly, by implementing new measures to supply various foreign currencies (in addition to the US dollar) to meet the travel needs of individuals going on trips such as Hajj, Umrah, and tourism. These measures also aim to make payment card usage more flexible for travelers from nearby or faraway countries.

As he noted, "the package of policies is intended to contain the noise generated by foreign currency speculators on the parallel market that threatens economic stability," adding that "the basic trends in economic policy are currently isolating the effects of the parallel or black market and limiting its illegal activities from the stability of the overall price system in the country."