Iraq’s central bank under currency attack
Demand for the greenback at the central bank auctions has risen since November to about $200 million to $300 million a day, compared with about $160 million in the prior 12 months, the deputy central bank governor, Mudher Salih, said in an interview in
Jan. 10. Baghdad
“Now we are checking the applications to buy dollars from the auctions more closely. We are afraid that some of it may be related to money laundering,” Salih said. “We are now under a currency attack because of the regional situation.”
Iranians are having trouble accessing foreign currencies due to the rial’s plunge, U.S. Treasury Undersecretary David Cohen said Dec. 1. The Iranian currency weakened this year after the
and allies prepared for further sanctions that may include an oil embargo, the state-run Mehr news agency reported on Jan. 2. The allies accuse U.S. Iran of a covert plan to build nuclear weapons, a charge ’s government denies. Iran
Pressure on Reserves
Rising demand for dollars “is affecting our dollar-sale auction,” Salih said. “This isn’t in the interest of the Iraqi economy and it will suck foreign currency reserves.” Foreign exchange reserves in
, holder of the world’s fifth-largest crude deposits, touched $60 billion this year, the most in its history, he said. Iraq
At its Jan. 11 auction, the central bank sold $252.25 million in notes at a fixed selling price of 1,170 Iraqi dinars for each U.S. dollar, data on its website show. “A lot of money in dollars and also deposits which are supposed to be invested in
are being exchanged to U.S. dollars to fund the trade in neighboring countries,” Salih said. Iraq
The country will reduce its budget deficit to 11 percent of economic output this year from 14 percent in 2011, Salih said. In 2013, the central bank will cut three digits from the currency, reversing a policy it introduced in the 1980s to address the government’s budget deficit.
The yield on the country’s six-month treasury bills fell 110 basis points, or 1.1 percentage points, to 8.2 percent at the last auction on Dec. 13, according to data compiled by Bloomberg. That was the lowest yield since August 2010.
With yields above 8 percent,
has no plan to issue sovereign bonds this year, the deputy governor said. Iraq last sold $2.7 billion of bonds six years ago to restructure debt accumulated during the era of former President Saddam Hussein, who was ousted from power by a U.S.-led military invasion in 2003. The last Iraq U.S. combat troops left in December. Iraq