Food Prices in Iraq Plunge After Decision on Oil Sales

Food prices in the Iraqi capital plummeted Saturday and the dinar soared against the U.S. dollar as news spread of Baghdad’s decision to discuss U.N. terms for limited oil sales to pay for urgently needed food and medicines.

Money traders said that this week had been the hardest period for business since U.N. sanctions were clamped on Iraq for invading Kuwait in 1990.

“We just do not know what is happening. For the first time, I cannot read between the lines,” one trader in Baghdad said.

In the past week, the Iraqi dinar has ridden a roller-coaster against the U.S. dollar. From last week’s figure of about 3,000 dinars to one dollar, it shot up to 2,250 per dollar Tuesday as news spread that Baghdad may talk terms, and then sank to 2,850 Friday as pessimism spread. Saturday it rose to 2,000 on news that the powerful Revolutionary Command Council had announced that Iraq was ready to discuss the U.N. oil sales.

Prices of essential commodities, reacting to the news, fell early in the week, rose, and then fell again Saturday.

Hardest hit were small food retailers, cart owners and curb dealers. “I am going bust. It is over. It [rice] lost about 350 dinars in three hours,” said one young man pushing his empty cart in Jamila, which bustled with shoppers Saturday.