Pressures to weaken the national currency against foreign

4/24/2016 0:00

Imad Emirate of Baghdad ..
D economist said. Awad Fadhil Ismail «morning» can not be overlooked tampering with the official exchange rate desired by the government point of view, and interpret it that relatively rise in the value of the Iraqi dinar against the dollar could stimulate speculative expectations in the market for change in the opposite direction, in the sense that speculators are selling currency national and purchase of foreign currency at the official exchange rate in the hope of achieving profit in the near future based on the expectations and the information available to them that the official exchange rate will be a rose fast real-time reaction to the exchange rate in the free market, but relative to the reaction that stabilizes then the market exchange rate In the end .

He said Fadel, this means that the exchange rate in the free market responds by moving towards cope with the change (rise), at the official exchange rate first, then do not soon come back to a previous no decline (which means the possibility of selling the dollar against a larger number of Iraqi dinars), as a result the dominance of non-economically and politically Altukd element, and the adoption of an unstable macro-economic policies and Ataatnasag while maintaining a stable exchange rate with the high expectation the occurrence of a shortage of foreign currency display internal, regional and international factors.

Saying the consequences of this behavior that speculators will continue to sell the national currency and purchase of foreign currency and the practice of upward pressure on the foreign currency value, which indicates the deviation official nominal exchange rate of the dinar exchange rate in the free market and the direction of the last to fall.

This explains part of the growing and continuing demand for the dollar (or supply the growing dinars) with the improvement of the official external value of the dinar

He Fadel that the important thing for the speculators is the relationship between the future exchange rate in the market, that the speculator is different from the trader or investor The former have his request for foreign currency derived from the desire to make profits resulting from changes in exchange rates, it buys foreign currency that is expected to increase value and sell those that are expected impairment (Dinar).

Fadel He concluded by saying: that the local currency is weak monetary authority is trying to defend them administratively, the speculator by selling the local currency amounts and exchanged for foreign currency puts upward pressure further on foreign currency and pressure downward on the national currency, and this trend have speculators to further decline in national currency for a further decline in the auction of foreign currency exchange rate and benefit from the price difference price ...