The first trading day of Iraq's new dinar rate ended with two of Baghdad's main wholesale markets locked.
The dollar on the street went up, not down. Baghdad closed Wednesday at 167,000 IQD for $100, against just above 163,000 before the decision.
The markets
Shops and warehouses in Shorja and Jamila closed on Wednesday, and several exchange and money-transfer companies closed with them. Traders told Iraqi reporters they were caught off guard and could not price their goods at the new rate. They have suspended their dealings until they can tell whether 1,520 will stand. One Shorja owner called the wholesale trade “completely paralyzed.”
Everything else that moved
- Prices — a market owner in Saladin province said a sack of rice went from 45,000 IQD to 50,000 within hours. A food distributor's agent said major firms have suspended wholesale deliveries.
- The street — $100 opened Wednesday at 168,500 IQD in Baghdad and closed at 167,000. The Central Bank's new public price is 152,000.
- Baghdad's answer — the Central Bank promised to meet every dollar request for trade, bank cards and travelers “without any restrictions.” The state trade bank began supplying foreign currency, and the customs pay-up-front rule was suspended in the same cabinet decision as the rate.
- Parliament — it suspended its agenda to debate the dollar, and the Speaker directed that the Central Bank governor and the finance minister be hosted at Thursday's session. Lawmakers are collecting signatures to reverse the decision.
- The cabinet — the vote on the 9 empty seats has been pushed to next week.
- Tehran — American media report the US military is on alert for possible strikes on Iran. A tanker was hit north of Qatar.
The question
The bank moved its price toward the street, and the street moved further away. Why?
Credit: Written by Reset Intelligence — David E. Atterton, author of Head of the Snake (@EXIT_FIAT). More at resetintelligence.com.
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