In the Iraqi Kurdistan region and in the country’s Shia Muslim holy sites, exchanging U.S. dollars for Iranian riyals was once a major problem.
But the exchange industry has been heavily affected by blocking restrictions to avoid COVID-19 and deep economic unrest in any of the countries.
Traders in Sulaimaniyah, the largest city of the moment in Iraqi Kurdistan and near the border with Iran, have undergone dramatic changes.
In March, before restrictions to stop the pandemic that killed more than 5,000 Iraqis and set more than 130,000 on fire, a dollar was exchanged for 150,000 Iranian riyals.
Today, a yield of 250,000 riyals, AFP told the currency exchanger Amanaj Saleh.
Iraqis who cannot locate paintings can now make money by investing in Iranian riyals Photo: AFP/Shwan MOHAMMED
Tehran and Washington would possibly disagree, as the Iraq war began earlier this year, but Iraqis don’t have the challenge of keeping a combination of rival banknotes in their wallets.
Betting on an uptick in the Iranian currency, and hoping that the coronavirus crisis will temporarily pass, many Iraqis rushed to buy low-priced riyals.
The dollar industry appeared to be a good source of income for the currency crisis, which destroyed countless livelihoods.
A survey conducted through the humanitarian organization International Rescue Committee (IRC) found that 87% of respondents said they simply no longer paint because of the disease.
A fall in the value of oil, which represents almost all government revenues, plunged Iraq into an economic crisis Photo: AFP/Shwan MOHAMMED
Iraq is going through the worst economic crisis in its recent history, hit by a fall in oil costs that represents almost all government revenues.
The government’s austerity cuts will be severe.
“Since the advent of the coronavirus and the economic crisis it has caused, other people who can no longer paint are making an investment in the Iranian currency to make their capital paintings,” Saleh said.
But the trader, a guy with a little gray moustache sitting under a huge $100-box replica, warned that everyone had discovered a profit on the bet.
“Those who bought Iranian riyals at the exchange rate of 200,000 riyals by now are reselling them at the declining rate: 250,000 riyals consistent with Array,” he said.
Many Iraqis use the United States and their own dinars interchangeably, with solid rates between the two currencies.
Iraqis waiting in currency exchange in Sulaimaniyah Photo: AFP/Shwan MOHAMMED
It is the gigantic fluctuations between the dollar and the Iranian rial that attracts those who hope to win with the difference.
U.S. sanctions have stifled Iran’s economy, and the closure of official Iran-Iraq borders has added to the problems.
Hazar Rahim, an employee of Sulaimaniyah, found out the hard way.
“A few days ago I bought five billion Iranian riyals,” he told the AFP. “I bet on the market, but I was surprised. Within hours, the rial came down and I had lost $13,000.”
Two of the holiest Shiite sites, Karbala and Nadjaf, are located in southern Iraq. Millions of Shiite pilgrims, most of them from Iran, make a stopover every year.
They bring Iranian riyals to spend and trade. In recent years, visitors have raised up to $5 billion, which is located in a country where almost all tourism is done to devout sites.
It has also created thousands of jobs and accounted for about 2.5% of GDP, according to official figures.
But with restrictions on the position due to the virus, the department stores and restaurants that were once occupied by visitors are closed.
Iranian arrivals had already declined amid serious economic hardship in the country since the United States withdrew from the Iran nuclear deal in 2018 and reinstated punitive sanctions.
Coronavirus in Iran, the worst in the region with more than 17,000 deaths and 310,000 infections, has worsened the country’s situation.
The crisis has reduced Iranian exports, devaluation and inflation.
According to the International Monetary Fund, Iran’s GDP is expected to decline by 6% by 2020, after falling by 7.6% last year.
In Iraq, meanwhile, more difficult times are also looming. The economy is expected to contract by nearly 10% this year.
But with few obvious alternatives, dozens of Iraqis continue to turn to coin traders in the hope that times will change, the rial will accumulate and they can deposit coins.