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Financing China's trade in yuan...an Iraqi move that will reduce demand for "trade dollars" by 20%
2023-02-23
A clerk counts Chinese yuan and US dollar banknotes at a branch of Bank of China in Taiyuan, Shanxi province, China, January 4, 2016. REUTERS/Jon Woo CHINA OUT. NO COMMERCIAL OR EDITORIAL SALES IN CHINA. TPX IMAGES OF THE DAY
Yes Iraq: Baghdad
Iraq continues to take exceptional steps, some of which are unprecedented in the field of the economic and commercial sector, driven by the dollar crisis and the American urging to regulate the trade process in Iraq and its financing mechanisms, until Iraq began to go towards financing part of its trade in a currency other than the dollar in an attempt to reduce the demand for the dollar inside Iraq for trade purposes.
The Central Bank of Iraq launched the second reform package as part of its efforts to reduce the price of the US dollar against the Iraqi dinar, and among what was included in the new package was allowing the financing of foreign trade with China in the Chinese currency, the yuan instead of the US dollar.
The Central Bank of Iraq said that it had begun to take urgent measures that would compensate for the dollar shortage in the local market, which prompted the Iraqi Council of Ministers to agree to revalue the Iraqi dinar against the dollar this month.
"This is the first time that imports from China are funded in yuan, and Iraq's imports from China are funded by dollars only," said Adviser to the Prime Minister for Financial Affairs, Mazhar Salih. Saleh explained that
“the first option depends on the central bank’s reserves of yuan, while the other option will exploit the bank’s reserves in US dollars in JP Morgan Bank and the Development Bank in Singapore,” noting that
“those banks will work to convert dollars into yuan, and pay to the beneficiary.” final in China.
The trade exchange process between Iraq and China amounts to more than 50 billion dollars annually, of which Iraq imports more than 10 billion dollars from China, while it exports about 40 billion dollars of crude oil.
The volume of Iraq’s annual imports from all countries of the world is more than 50 billion dollars, and thus
this step will clear 20% of the commercial operation in Iraq from dollars, i.e. reduce the demand for dollars by 20%, meaning that more than 10 billion dollars to finance imports will go to demand in the Chinese yuan.
The $10 billion is equivalent to more than 68 billion Chinese yuan, and thus Iraq will need this amount of Chinese sums to cover its annual imports.
And while Iraq exports $40 billion in crude oil to China annually, questions arise as to why Iraq did not address China to charge $10 billion of it in Chinese yuan annually, for the purpose of using it for trade with China, instead of relying on JPMorgan and other banks to sell Iraqi dollars into yuan, at a time when Iraq can obtain Chinese currency directly from the country of origin.
https://yesiraq.com/تمويل-تجارة-الصين-باليوان-خطوة-عراقية/
