Recently, the Central Bank of Iraq announced the latest measures to improve foreign exchange reserves, including allowing direct settlement of the country's trade with China in Renminbi.
Iraq's central bank said in a statement on the 22nd that the direct settlement of trade with China in RMB will be achieved through two ways: one is to increase RMB reserves through RMB accounts opened by Iraqi banks in Chinese banks; the other is to increase the US dollar reserves of Iraqi banks through the accounts of the Iraqi central bank in JPMorgan Chase and Singapore DBS Bank for RMB exchange. Mudhir Salih, an economic adviser to
the Iraqi government, told the media that this would be the first time that Iraq would allow the settlement of imports from China in Renminbi, which had previously been settled in US dollars. Amar Ibrahimi, an official of the Supreme Audit Commission of
Iraq, told Xinhua that the measures announced by the Iraqi Central Bank show that the RMB is becoming more and more important in the international market, and these measures will make trade between Iraq and China more convenient.
China is Iraq's largest trading partner, and Iraq is China's third largest trading partner among Arab countries. As the second largest oil producer in OPEC,
Iraq's crude oil export revenue accounts for more than 90% of the country's fiscal revenue. Previously, the Central Bank of Iraq opened an account at the New York Federal Reserve to store foreign exchange earnings such as oil exports, but in November last year, the New York Federal Reserve began to impose stricter controls on the international dollar transactions of Iraqi commercial banks in order to curb money laundering and illegal transfers of dollars to Iran and other severely sanctioned Middle East countries. 80% or more of Iraq's daily dollar wire transfers are blocked . Iraq, which was already in deep economic crisis, has been "stuck in the purse", leading to the continued depreciation of the country's currency against the US dollar.
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