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Bubble exchange rates and the stability of the Iraqi dinar challenges * d. Haider Hussain Al Tohme / center Euphrates Development and Strategic Studies
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Sharing »الاثنين يوليو 06, 2015 8:36 pm
The form of the sharp deterioration experienced by the Iraqi dinar exchange rate recently a new threat
to the process of growth and financial and economic stability in the country, especially with the decline in activity
and economic growing unemployment and poverty rates due to fiscal austerity imposed by the budget
2015. As is the case for oil prices, constitute the Iraqi dinar exchange rate obsession chronic for living the simple citizen; because most of the goods available link in the market price of the dollar, which means also close association between the dollar exchange rate and levels of inflation in the country, when rising dollar exchange rate (increase the number of dinars needed to buy one dollar) automatically go up prices of imported goods in markets more; because of the greed of traders on the one hand, and Thothm of future rises in the dollar exchange rate from the other. The Iraqi dinar lost in a record period of more than 15% of its market value, while the Iraqi dinar exchange rate decreased from (1220 dinars to the dollar) to (1420 dinars to the dollar). It can highlight the most important factors that contributed to the sliding of the Iraqi dinar exchange rate recently as follows: 1. the financial dominance of the performance of monetary policy, has emerged clearly after determining central bank sales ceiling of the dollar to $ 75 million a day (Article 50 of the budget in 2015), and to assign the central bank collects customs taxes on goods imported. 2. deterioration price of crude oil in the world markets and successor of the scarcity in the flow of foreign exchange for the country, adding to the expectations of speculators to re-evaluate the dinar Iraqi in line with the decline in oil revenues. 3. The financial and administrative corruption permeation auction sale of foreign currency for years because of poor oversight and the dominance of political wills to enter the auction, as well as the existence of suspicions of corruption multiple in private banks involved work in the currency auction, and the involvement of a large number of them smuggled dollar abroad, and the lack of deterrent and decisive laws limit it. 4. twice the independence of the Central Bank and restrict his freedom in formulating monetary policy and choose the appropriate monetary instruments to achieve the financial and monetary stability, and try to power the government swallow monetary institution as an independent body. 5. collapse of the productive apparatus of the country and the loss of the ability to produce the most basic goods and transformation of the Iraqi economy to a large market for industrial goods and agricultural imports, which increased the demand for foreign currency to pay for imports uncontrolled bill. 6. deterioration of the security situation and the increasing acts of violence in the country with the control of the organization "Daash" on multiple Iraqi cities, making the outlook pessimistic especially from the presence of venture capitalists huge in the country hand and foreign investors on the other hand, and this is what made the direction of movement of the dollar towards the outside constantly. 7. At the political level, the political climate and cramping sectarian with the class did not support the political minimum of economic and monetary stability in the country; because of expectations the ongoing collapse of the political process or a coup political topple the government and its institutions. 8. political quota system, which extolled the political scene in Iraq cast a shadow over the economic landscape, through the removal of experienced and competent of all the ministries of economic and financial institutions for the benefit of a layer of eager politicians for money and power, increasing the deviation and the deterioration of the work of these institutions in the performance of their duties. In order to achieve stability in the Iraqi dinar exchange rate, the government should show greater flexibility with central bank decisions and try to decode the correlation between the functions of the central bank and other institutions (such as the Ministry of Finance). On the other hand, should the Central Bank of Iraq to develop tools new cash, non- auction currency, to stabilize the dinar's exchange rate from about Iraqi oil sale exclusively in Iraqi dinars. And tighten sanctions on the financial and banking authorities frivolous stability of the dinar exchange rate by promoting rumors and smuggling of currency and acquisitions on the dollar to achieve economic and political goals. Researcher at the center of the Euphrates Development and Strategic Studies [You must be registered and logged in to see this link.] <http: [You must be registered and logged in to see this link.] com> *
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One • Topic Page 1 of 1
Sharing »الاثنين يوليو 06, 2015 8:36 pm
The form of the sharp deterioration experienced by the Iraqi dinar exchange rate recently a new threat
to the process of growth and financial and economic stability in the country, especially with the decline in activity
and economic growing unemployment and poverty rates due to fiscal austerity imposed by the budget
2015. As is the case for oil prices, constitute the Iraqi dinar exchange rate obsession chronic for living the simple citizen; because most of the goods available link in the market price of the dollar, which means also close association between the dollar exchange rate and levels of inflation in the country, when rising dollar exchange rate (increase the number of dinars needed to buy one dollar) automatically go up prices of imported goods in markets more; because of the greed of traders on the one hand, and Thothm of future rises in the dollar exchange rate from the other. The Iraqi dinar lost in a record period of more than 15% of its market value, while the Iraqi dinar exchange rate decreased from (1220 dinars to the dollar) to (1420 dinars to the dollar). It can highlight the most important factors that contributed to the sliding of the Iraqi dinar exchange rate recently as follows: 1. the financial dominance of the performance of monetary policy, has emerged clearly after determining central bank sales ceiling of the dollar to $ 75 million a day (Article 50 of the budget in 2015), and to assign the central bank collects customs taxes on goods imported. 2. deterioration price of crude oil in the world markets and successor of the scarcity in the flow of foreign exchange for the country, adding to the expectations of speculators to re-evaluate the dinar Iraqi in line with the decline in oil revenues. 3. The financial and administrative corruption permeation auction sale of foreign currency for years because of poor oversight and the dominance of political wills to enter the auction, as well as the existence of suspicions of corruption multiple in private banks involved work in the currency auction, and the involvement of a large number of them smuggled dollar abroad, and the lack of deterrent and decisive laws limit it. 4. twice the independence of the Central Bank and restrict his freedom in formulating monetary policy and choose the appropriate monetary instruments to achieve the financial and monetary stability, and try to power the government swallow monetary institution as an independent body. 5. collapse of the productive apparatus of the country and the loss of the ability to produce the most basic goods and transformation of the Iraqi economy to a large market for industrial goods and agricultural imports, which increased the demand for foreign currency to pay for imports uncontrolled bill. 6. deterioration of the security situation and the increasing acts of violence in the country with the control of the organization "Daash" on multiple Iraqi cities, making the outlook pessimistic especially from the presence of venture capitalists huge in the country hand and foreign investors on the other hand, and this is what made the direction of movement of the dollar towards the outside constantly. 7. At the political level, the political climate and cramping sectarian with the class did not support the political minimum of economic and monetary stability in the country; because of expectations the ongoing collapse of the political process or a coup political topple the government and its institutions. 8. political quota system, which extolled the political scene in Iraq cast a shadow over the economic landscape, through the removal of experienced and competent of all the ministries of economic and financial institutions for the benefit of a layer of eager politicians for money and power, increasing the deviation and the deterioration of the work of these institutions in the performance of their duties. In order to achieve stability in the Iraqi dinar exchange rate, the government should show greater flexibility with central bank decisions and try to decode the correlation between the functions of the central bank and other institutions (such as the Ministry of Finance). On the other hand, should the Central Bank of Iraq to develop tools new cash, non- auction currency, to stabilize the dinar's exchange rate from about Iraqi oil sale exclusively in Iraqi dinars. And tighten sanctions on the financial and banking authorities frivolous stability of the dinar exchange rate by promoting rumors and smuggling of currency and acquisitions on the dollar to achieve economic and political goals. Researcher at the center of the Euphrates Development and Strategic Studies [You must be registered and logged in to see this link.] <http: [You must be registered and logged in to see this link.] com> *
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