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Iraq’s decision to permit trade settlements with China in Renminbi (RMB) instead of the US Dollar only covers commercial imports by the private sector from China, the governor of the Central Bank of Iraq (CBI).
Ali Al-Alaq told Zawya Projects that the decision taken in February 2023 to allow trade from China to be settled directly in RMB covers only commercial imports from China by private sector companies and not oil trade.
The Iraqi government’s economic adviser, Mudhir Salih, who was quoted in the February report by Reuters, later clarified to the local media that the decision doesn’t apply to oil trade between the two countries.
Oil trade between Iraq and China is settled in US dollars via oil payments account at the United States’ Federal Reserve, which is the custodian of Iraq’s foreign currency earnings since the US invasion of Iraq in 2003.
Saleh explained that this step is in line with the growing role of the RMB at a time when many countries are looking to diversify their sources of foreign currencies.
In 2022, China imported year, China imported around 55.5 million tonnes of crude oil from Iraq, according to a February 2023 report by yicaiglobal.com.
Iraq ranked fifth among the top 10 crude oil exporters to China's independent refineries, local news website Shafaq News had reported in April, citing China's Customs Administration statement.
Read more: Iraq to award more projects to Chinese firms
(Reporting by Majda Muhsen; Editing by Anoop Menon)
