Heavy losses to speculators on the Iranian Rial and the Dollar in Iraq

Shafaq News/ In Kurdistan and the Shiite cities of Iraq, Iranian businessmen and visitors have long maintained a flourishing economy through dollar-exchange operations against the Iranian Rial (IRR); but the closure of the border due to the COVİD-19 pandemic has stifled these lucrative speculations.

The dollar exchange rate until March -before the closure measures due to the spread of the pandemic; which caused more than 5,000 fatalities out of more than 130,000 infections in Iraq, was equivalent to about 150,000 IRR.

All Iraqis who bet on the recovery of the Iranian currency and purchased the Rial at a low price -in the hope that COVİD-19 crisis would pass quickly, were greatly disappointed.

 Despite the dispute between Tehran and Washington and the escalation between them to the brink of armed conflict in Iraq at the beginning of the year, many Iraqis continued to trade in their currencies.

Today, the dollar is worth 250,000 IRR, according to Amanj Saleh Al-Sarraf in Al-Sulaymaniyah, Iraq’s second Kurdish city near Iran.

Exchanges between the dollar and the Iranian Rial appeared to be a welcomed alternative source of income during the financial crisis, which dried up many resources, while a survey by the International Rescue Committee a -non-governmental organization, showed that 87% of those surveyed were no longer able to work due to the pandemic.

- Heavy losses –

Iraq is going through the worst economic crisis in its recent history, with oil prices collapse -which makes up the bulk of its public resources, the government is expected to make sharp spending cuts under its austerity policy.

"After the outbreak of the Coronavirus (COVİD-19), and the economic crisis it caused, people who are no longer able to work are investing in Iranian currency to run their money", said Saleh Al-Sarraf; sitting in his booth under a large picture of a 100-dollar paper hanging in a frame. He also noted that these deliberations were no longer a win-win for anyone.

Al-Sarraf explained that between the U.S. sanctions that stifled the Iranian economy and the cessation of official trade between the two neighbors, “people who bought the Iranian Rial for 200,000 IRR for one dollar are now reselling it at a lower price of 250,000 IRR for one dollar".

Hazar Rahim, a worker in Al-Sulaymaniyah, suffered from this painful experience. "A few days ago I bought five billion IRR. Within a few hours, the Rial fell and I lost 13,000 dollars".

- Religious tourism ceased –

The same experiences are repeated in Karbala and Najaf, the Shiite cities in southern Iraq.

Annually, millions of Iranian visitors come and spend their Iranian riyals -reaching 5 billion dollars in some years, in a country where there is no tourism but the religious one. The sector also created hundreds of thousands of jobs and about 2.5% of the Gross domestic product (GDP), according to official figures, and According to Agence France Presse (AFP)

But today, with the curfew, shops, and restaurants that used to be full of customers were closed.

Iran's economy collapsed as the United States unilaterally withdrew in 2018 from the Iranian nuclear deal and re-imposed tough sanctions on Iran.

COVİD-19 pandemic -which has caused more than 17,000 fatalities in Iran out of 300,000 infections, has exacerbated the situation in the country; which has been forced to cut its exports, causing currency depreciation and inflation.

The International Monetary Fund (IMF) expects Iran’s GDP to decline by 6% in 2020, after a 7.6% decline in 2019. The Iraqi economy is expected to contract by about 10% this year.

Nevertheless, dozens of Iraqis continue to gather in Saleh's shop; lurking in the price of the Iranian Rial, scrambling to get to the table and exchange U.S. and Iranian banknotes, hoping for better days.