Despite Government Measures, Iraqi Dinar Continues to Fall against USD

The Governor of the Central Bank speaks before the Parliamentary Finance Committee about the exchange rate. (Iraq News Agency)
The Governor of the Central Bank speaks before the Parliamentary Finance Committee about the exchange rate. (Iraq News Agency)
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Despite Government Measures, Iraqi Dinar Continues to Fall against USD

The Governor of the Central Bank speaks before the Parliamentary Finance Committee about the exchange rate. (Iraq News Agency)
The Governor of the Central Bank speaks before the Parliamentary Finance Committee about the exchange rate. (Iraq News Agency)

The Iraqi dinar continued to fall against the US dollar, despite the government’s vigorous measures. This decline negatively affected commercial transactions in most of the wholesale markets in Baghdad and the provinces.

On Monday, the exchange rate reached IQD 1,540 to the dollar in the parallel market, compared to IQD 1,320 to the dollar in the official currency auction approved by the Central Bank.

A wholesaler in the Shorja commercial souk in Baghdad told Asharq Al-Awsat that the market was witnessing a great stagnation, adding that the movement of buying and selling has declined recently due to the fluctuating exchange rates.

He noted that traders are worried that the Iraqi dinar would continue to fall against the dollar, touching the ceiling of IQD 1,700 for one dollar, as happened at the beginning of 2023, thus contributing to the rise of commodity prices and basic materials.

The trader did not rule out that the recent US sanctions on 14 Iraqi banks and the central bank’s ban on dealing with them in dollars was behind the new exchange crisis, although the central bank is pumping more money into the currency auction.

Last week, the US Treasury imposed sanctions on 14 Iraqi banks in a crackdown on Iran’s dealings in dollars.

The Wall Street Journal quoted US officials as saying they were taking action against the banks after uncovering information that they engaged in money laundering and fraudulent transactions, some of which may have involved sanctioned individuals and raised concerns that Iran could be benefitting from the dealings.

The continuous decline in the exchange rates of the dinar against the dollar prompted Prime Minister Mohammad al-Sudani to meet with the Governor of the Central Bank, Ali al-Alaq, on Sunday, in the presence of financial advisors and the director general of investment in the bank.

According to a statement, al-Sudani was briefed on “clarifications about the most important facilitations provided by the Central Bank, which include allowing small merchants and individuals to finance their imports without the need to establish a company, through government and private banks that have direct relations with correspondent banks.”

Participants in the meeting also emphasized the need to maintain the compensation for citizens and companies who buy dollars at the unofficial rate.

During the meeting, al-Alaq revealed “the bank’s intention to resume selling cash dollars through licensed banks in Nineveh governorate.”



China Approves Plan to Raise Retirement Age from January 2025 

Commuters ride an escalator at a subway station during the morning rush hour in Beijing, Friday, Sept. 13, 2024. (AP)
Commuters ride an escalator at a subway station during the morning rush hour in Beijing, Friday, Sept. 13, 2024. (AP)
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China Approves Plan to Raise Retirement Age from January 2025 

Commuters ride an escalator at a subway station during the morning rush hour in Beijing, Friday, Sept. 13, 2024. (AP)
Commuters ride an escalator at a subway station during the morning rush hour in Beijing, Friday, Sept. 13, 2024. (AP)

China's top legislative body has approved a proposal to raise the country's retirement age, the official Xinhua news agency said on Friday, accelerating an overhaul of decades-old laws to tackle the economic pressure of a shrinking workforce.

China's retirement ages are currently amongst the lowest globally.

Reform is urgent with life expectancy in China having risen to 78 years as of 2021 from about 44 years in 1960 and projected to exceed 80 years by 2050. At the same time, the working population needed to support the elderly is shrinking.

The retirement age will be raised for men to 63 years old from 60, while for women in white collar work it would be raised to 58 years from 55. For women in blue collar work it will be adjusted to 55 from 50.

The changes are set to come into force on Jan. 1, 2025.

Having people work for longer would ease pressure on pension budgets with many Chinese provinces already reeling from large deficits. But delaying pension payouts and requiring older workers to stay at their jobs longer may not be welcomed by all of them.

Hundreds of thousands of people took to social media after Xinhua reported that China's top lawmakers discussed the topic on Sept. 10, with many expressing concern there would be more job seekers chasing too few openings.

By raising the retirement age, the government can increase the labor force participation rate, helping to mitigate the adverse effects of population aging, said Xiujian Peng, senior research fellow at the Center of Policy Studies at Victoria University in Australia.

"The government must take action. If the population continues to decline, the shrinking of the labor force will accelerate, further negatively impacting economic growth."

Xing Zhaopeng, ANZ's senior China strategist said the move would likely have "no impact on the short-term economy. In the long run, it will help to avoid premature labor shortages and maintain stable productivity growth."