The collapse of the Iranian rial against the dollar, after the United States imposed crippling economic sanctions, has led to currency fluctuations every few hours, negatively impacting exchange offices in the Iraqi Kurdistan Region.
The dire Iranian economy has forced some of them to stop dealing the with the rial altogether after incurring massive losses.
Iraq is directly helping Iran withstand the sanctions by maintaining energy deals that the US has exempted from the sanctions. Indirectly, pro-Iran factions and parties are trying to maneuver trade in Iraq towards Iranian products, by offering facilitations to traders and issuing economic decisions that help maintain the flow of products with Tehran.
The owner of a currency exchange store on the Erbil stock market angrily declared to Asharq Al-Awsat that he has stopped trading with the rial.
He explained that he had lost more than 12,000 dollars in a single day due to the fluctuations in the Iranian currency.
“One day,” he recalled, “I bought a high amount of rials at the request of some of my clients, who said that they needed them for their business. A few hours later, I informed them that the rials were ready, but the currency suddenly dropped and continued until I incurred 12,000 dollars in losses in one day.”
He is not alone. Many other exchangers have complained about the unstable rial, pushing them to stop trading in the currency.
Other businesses have, however, profited from the collapse.
Khaled Mahmoud, a food importer who buys most of his products from Iran, said the drop in the rial has had a positive impact on his business. He explained that a shipment that he used to previously import at 20,000 dollars now costs him 7,000.
He also noted that companies are offering many facilitations, such as lowering customs tax, to encourage trade with Iran.
Hamid Zadboum, head of Trade Promotion Organization of Iran, had previously announced that Tehran was ready to grant Iraqi businessmen attractive incentives to expand their trade with the neighboring country.
Indeed, Iraq is directly and indirectly preventing the complete collapse of the Iranian economy, said economic expert Ahmed Faraj Khoshnow.
“Iraq is the only outlet for Iran to avert the complete economic collapse,” he told Asharq Al-Awsat, citing the exemption of energy deal from the American sanctions.
Fares al-Obeidy, owner of an import and export company, said pro-Iran companies are working on “killing the competition with other imported goods from non-Iranian companies.”
He said they were lowering the prices of Iranian imports and exempting them from customs taxes.
“Several traders have even ceased their business in wake of such unfair practices or after receiving threats from armed factions that are known for their loyalty to Iran,” he told Asharq Al-Awsat.
Khoshnow said that some giant Iraqi companies, which are loyal to Iran, continue to control the local market, allowing Tehran to infiltrate it. The control of some political parties over economic decisions in Iraq will also allow the country to become an outlet for Iran to manage its economic losses to the detriment of the Iraqi economy.
This will be an obstacle to Iraqi Prime Minister Mustapha al-Kadhimi’s goal to develop the economy, he added.