Erbil Currency Traders Lose Out As US Dollar Value Fluctuates
|May 28, 2012||Filled under All Dinar Trade Articles|
ERBIL, Kurdistan Region, Some foreign currency traders in the Erbil market lost heavily with a recent fluctuation of the U.S. dollar value.
They estimate their losses to be around 1 billion Iraqi dinars (ID).
Six weeks ago, the value of US$1 was equal to 1.20 ID. The dollar value suddenly increased to 1.30 ID, but plunged a day later to 1.23 ID due to an intervention by the Iraqi Central Bank, which is said to have pumped US$265 million into the market.
These fluctuations in such a short time period inflicted heavy losses on some currency traders, who say they have stopped trading and are waiting for the dollar value to stabilize.
Hussein Muhammad, head of the currency trading council, said, “On May 18, the Central Bank of Iraq pumped $265 million into the market which resulted in a sudden decrease in the U.S. dollar value from 1.28 (ID) to 1.23 (ID).”
Muhammad said that 10 currency traders in the Erbil market lost 40 million ID each.
Currency traders are talking about the possible interference of Iraqi Prime Minister Nuri al-Maliki in the Iraqi Central Bank. They claim that some banks close to Maliki have controlled the Iraqi Central Bank and are playing with dollar value whenever they want.
Arif Kamal, owner of the Arif Currency Exchange, has been in the business for 21 years and says, “The Iraqi Central Bank was pumping dollars into the market via 80 different banks, but since Maliki took control of the Central Bank, he has selected certain banks to do the pumping. However, these banks did not pump U.S. dollars into the markets; instead, they purchased and sucked a lot of dollars out of the market and this caused the latest increase in the U.S. dollar value.”
U.S. dollar traders say they have each purchased $100 from the Central Bank for 117.900 IDs, but after its devaluation they sold it for less. They believe that the Central Bank does this an attempt to cover up its manipulation of the market.
“Some traders have sold their U.S. currency for 119 ID, and when its value rose to 129, they lost 1 million ID for each $10,000,” said Muhammad.
This fluctuation also caused some grudge among the traders, but they managed to share their losses and prevent any disputes among themselves.
Some Iraqi MPs have expressed displeasure with Maliki’s control of the Central Bank because it is meant to be an independent entity, tied to Iraqi Parliament.
Maysoon Damluji, spokesperson for the Iraqiya bloc, told Rudaw that they are worried Maliki intends to seize control of the reserve currency in the Central Bank.
According to data from the Iraqi Central Bank, there are 50 private and public banks in Iraq and they all have the right to purchase U.S. dollars from the Central Bank through auction. The banks need to make a profit of 100 ID from each $100.
Mazhar Salih, deputy to the Iraqi Central Bank governor, said that if any Iraqi bank stopped buying currency from the Central Bank by not participating in the auction, even for one month, its name would be deleted from the list of the existing 50 banks and would not be sold currency anymore.
Salih described the fluctuation of the U.S. dollar as a plot. “This problem happened before; it was an external attack that attempted to devaluate the ID. The banks have foiled this attempt by demanding only 10,000 ID profit from each $100 they sold to the market. There are also instructions that require taking no more than 10 ID as profit from each U.S. dollar,” Salih said.
Salih added that they will take necessary measures against banks that violate these instructions by barring them from Central Bank auctions. “We have plans to decrease the value of U.S. dollar further and make one U.S. dollar equal to 1,000 ID,” said Salih.
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