There are several articles published recently that are mentioning the Central Bank of Iraq (CBI). Who by the way, are scrambling to control the outflow of U.S. Dollars in the market. The CBI has put in place the restrictions for the banks and the money exchange centers however, this has not solved any of the problems. Unfortunately, criminal gangs and other entrepreneurs are continuing to gain more U.S. dollars to send to both countries of Iran and Syria. Both countries are under sanctions and their currencies are depreciating rapidly. The U.S. dollars are also in the streets of Iraq as the confidence in the Iraq dinar is not as high as it has been in previous years.
In January 2012 the CBI announced that everything was fine with the Iraq dinar and now in April, you have the dinar depreciating against the dollar. The Governor, Shabibi will have a lot of explaining to do when he meets with the Council of Ministries.
When the Iraqi government gives the go ahead or authorization to the print the new currency the two (old & new) will co-exist with the current 2003 Iraq Dinars. Note that this will increase the money supply. I have previously mentioned this (see posting from 1 March) and now it has been confirmed by the Iraq news media. Also, contrary to what some may be thinking, the new currency will carry the same exchange rate.
The project to print the new Iraq currency has been placed on hold. Prime Minister Malki has signed resolution stating the project will be suspended if not canceled. The Iraq government is very concerned about the elements inside Iraq who are undermining the economy of Iraq. The department of Cabinet Affairs in the General Secretariat of the Council passed a resolution to stop all procedures on the changing of the new currency until further notice.
Here is something to think about, if the CBI had all the authority why did the Cabinet Affairs have to pass a resolution to stop the process?
On another note, all of the council ministers are in support of Nuri al-Maliki, the current Prime Minister of Iraq. These Minister’s are loyal to Maliki and will continue to support him.
Prime Minister Nuri al-Maliki has the unwavering support of Iran and the USA as the leader of Iraq and will seek a third term in 2014.