Iraq's central bank bars banks from charging traders exchange-rate differences

Summary

• The Central Bank of Iraq warned banks against charging traders rate differences on pre-covered import transfers.
• It said it had already strengthened banks' accounts to cover transfers due before 7 October.
• Importers who paid at the old rate are shielded from absorbing the cost of the change.

The latest

Banks in Iraq may not pass exchange-rate differences on to traders for import transfers already purchased and covered at the previous rate, the Central Bank of Iraq said Saturday. The bank told companies and traders whose transfers fell due before 7 October to contact their banks and confirm execution, and said it had already credited banks' accounts to cover those operations.

Details

• The instruction: The CBI called on companies and traders holding import-financing transfers due before 7 October to go back to their banks and verify the transfers were actually executed, according to the Iraqi News Agency. The statement framed the step as part of the handling of the exchange-rate change.
• The warning: The central bank warned banks against charging traders exchange-rate differences on transfers that had already been bought and covered at the previous rate, Economy News reported. The warning applies specifically to operations priced before the change, not to new purchases.
• The coverage: The CBI said it had already strengthened banks' accounts to cover those transfers, meaning the funding to settle them was provided in advance. The statement did not disclose how much was credited or how many banks received it.
• The monitoring: The bank said it is tracking operations executed by banks both before and after the exchange-rate change, verifying their compliance with its instructions and controls, and that it will follow up on any delay in execution.
• The complaints channel: Traders facing delayed transfers or demands for additional amounts can file complaints through the CBI complaints platform or by email at media.office@cbi.iq, the statement said. No deadline for filing or timeframe for a response was announced.
• Small traders: The CBI said it is working with banks and electronic payment companies to launch dedicated foreign-trade cards for small traders, intended to ease the financing of their imports under mechanisms and controls the bank will set. No launch date or issuing institutions were named.
• The numbers: The statement carried no exchange-rate figures and no monetary values, neither the size of the covered transfers nor the scale of the differences banks were warned against collecting.
• The publication: The statement reached traders through the state news agency and local financial press rather than the central bank's own site, where the most recent posted statement was dated 7 October.

Background

7 October is the cutoff separating transfers priced under the previous exchange rate from those executed afterwards. Transfers due before that date were purchased and funded at the old rate, which is the basis for the central bank's position that traders owe nothing extra on them.

Between the lines

The instruction to traders to go back and confirm execution, combined with the warning on rate differences and the dedicated complaints email, points to the central bank acting on a gap between funds it says it already provided and transfers traders may still be waiting on. The promise to follow up on delays indicates the issue is enforcement at individual banks, not funding.

What's next

Whether the CBI names banks found charging differences or delaying transfers, whether the statement appears on cbi.iq, and the terms and launch date of the foreign-trade cards for small traders.

Source: Iraqi News Agency (INA), Economy News