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Speculation Over Iran's Role In Iraqi Dinar Devaluation

Iran has been accused of meddling in Iraqi financial affairs after the Iraqi dinar lost value against the dollar at the beginning of March, writes Omar al-Shaher.
Men count wads of Iraqi dinars using money counting machines at a currency exchange shop in Baghdad October 1, 2012. Many Iraqis have lost faith in their dinar currency but to some foreign speculators, it promises big profits. The contrast underlines the uncertainties of investing in Iraq as the country recovers from years of war and economic sanctions. Picture taken October 1, 2012. To match IRAQ-ECONOMY/DINAR REUTERS/Saad Shalash (IRAQ - Tags: BUSINESS POLITICS) - RTR38QU4
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There were conflicting accounts of the reasons for the rise in the value of the US dollar against the Iraqi dinar earlier this month. Politicians and economists have said that Iranian companies boosted the value of the dollar against the dinar by entering the Central Bank of Iraq’s (CBI) auction for hard-currency sales and buying large quantities in order to smuggle them into Iran. On the other hand, a former senior official at the CBI said the rise is linked to increased government revenue from oil sales, leading to an increase in government spending.

The weekly bulletin released by the CBI says 1,260 Iraqi dinars are now trading to the dollar, a level not been reached since last year.

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