SULAIMANIYAH: In Iraq’s Kurdistan region, trading US dollars for rials from Iran was once big business.

But the money exchange trade has been hard hit by coronavirus lockdown restrictions and deep economic issues in both countries.

Traders in Sulaimaniyah, the second city of Iraqi Kurdistan and close to the border with Iran, have seen dramatic changes.

In March, before restrictions to stem the pandemic which has killed more than 5,000 Iraqis, one dollar traded for 150,000 Iranian rials. Today, one dollar fetches 250,000 rials, money changer Amanaj Saleh said.

Tehran and Washington may be at loggerheads, but Iraqis have no problem keeping a mix of the rival banknotes in their wallets.

Betting on a rebound in the Iranian currency — and hoping the coronavirus crisis would pass quickly — many Iraqis rushed to snap up rials on the cheap.

The dollar-rial trade seemed like a welcome alternative income during the financial turmoil.

A survey by the International Rescue Committee aid group found 87 percent of people questioned said they could no longer work because of the disease.

Iraq is going through its worst economic crisis in its recent history, hit by a slump in oil prices that account for almost all public revenues. Government austerity cuts are expected to be severe.

“Since the appearance of coronavirus and the economic crisis it has caused, people who can no longer work are investing in Iranian currency to make their capital work,” said Saleh.

But the trader, a man with a small moustache sitting under a huge framed reproduction $100 bill, warned that not all had found profit in the gamble.

“Those who had bought Iranian rials at the exchange rate of 200,000 rials for one dollar, now resell them at the lower rate: 250,000 rials for a dollar,” he said.

Many Iraqis use American dollars and their own dinars interchangeably, with the rates stable between the two currencies.

It is the big swings between dollars and Iran’s rial that attract those hopeful of winning on the difference.

US sanctions have long stifled the Iranian economy, and the closure of official border crossings between Iran and Iraq has added to the country’s woes.

Hazar Rahim, a laborer in Sulaimaniyah, found this out the hard way. “A few days ago, I bought five billion Iranian rials,” he said. “I was betting on the market but was taken by surprise. In a few hours, the rial dropped and I lost $13,000.”

The pandemic crisis has reduced Iran’s exports, causing devaluation and inflation. According to the International Monetary Fund, Iran’s gross domestic product is expected to shrink by up to 6 percent this year.

In Iraq, tougher times loom as well, with the economy expected to contract 10 percent this year.

But with few apparent alternatives, dozens of Iraqis keep coming to the money traders in the hope that they can cash in.

–AFP