16 Sep 2012 9:08

Oil revenues account for the main source of foreign currency in Iraq, and appropriate private sector demand for foreign currency, from the window of the central bank, with it. It depends government spending on them, and commensurate income of the private sector in Iraq with the level of government spending.

And the percentage of sales window to oil revenues until the end of 2010 average about 52 (fifty-two) percent, and dropped to below the 50 percent in the first five months of 2012. The exaggerated statements in the exposure of the exchange market in Iraq to extraordinary pressures from countries, and did not indicate the mechanisms influencing quantity and direction.

The remittances to neighboring countries, or others, can only be compared to imports or investments to the Iraqis there and was the first to address the matter from this portal already. Because resources of foreign currency chest foreign hands of the government essentially, it could be argued that the exchange rate phenomenon market, pure, and it is difficult to control.

Nor may, realistically, to understand the role of the central bank as a mere intervention in the exchange market, they make a mistake or injured. Because the central window (or any alternative mechanism for) represent the supply side, while the supposed concept of the independence of the intervention intervening on the market, in the beginning, and which has no basis in the oil country with distinction, such as Iraq. Recently dropped the exchange rate of the Iraqi dinar against the U.S. dollar for the last buyer, in the market, with the survival of the official exchange rate unchanged.

And became the difference between the official price of the dollar and the price of buyer of last resort great, and represents profit monopoly is not justified to those who can obtain foreign currency from the central bank. expected to take effective measures to reduce this large difference between the official price of less than 1170 dinars to the dollar, the price of buyer of last resort which exceeds 1250 dinars to the dollar. Evidence of continuing excess demand for foreign currency as a result of restricting sales without the possibility of influence on the sources of demand policy instruments Policy or any actions based on the laws or regulation Regulations. And so those who sought not get foreign currency from the central window to buy them from other holders to spend the deals they wanted.

It may not be restricted sales, and ultimately necessarily at the expense of the transfer of funds originating falsehood or private sector investment is desired abroad. It may not prevent those restrictions, financing activities prohibited by law because of the lack of direct in the building of the system required to investigate and audit and binding in all channels and exchanges with overseas outlets. And in any case can reduce the gap by about 80 dinars to 10 dinars to the dollar. He grew this imbalance as a result of actions taken in the context of talking about the documentation is accurate justifications demand for foreign currency and suspicions of money laundering through the conversion of the outside. exchange rate in Iraq was not logistically not initially not in yet, it is appropriate to remove the difference between the official price and the price Buyer latter is possible, and there is no reason to leave the exchange rate on this case. There is no in Iraq’s economy, now, objective grounds for problem called exchange rate stability. Iraqi economy is still far from currency deficit and if there is disorder, or moved away last buyer price for the official price, as it is now, this is due to administrative errors.

It is appropriate to adopt a fixed exchange rate system adjustable, the dinar about foreign currency, officially, and for this purpose may define the terms of a basket of currencies dinar major reserve currency, the dollar, and announce price in units of the Iraqi currency to one unit of foreign currency.

And modifies the initiative, causing exchange rate of the Central Bank or the Ministry of Finance and a joint study of them submitted to the Council of Ministers, which have the power to adjustment based on the law prescribed for this purpose.

May be required to the Council of Ministers to the Ministry of Finance or the Bank to prepare a note to adjust the exchange rate, taking into account: the requirements of balance in the exchange market, and the real investment in the light of the international competitiveness of Iraq and its relevance known real exchange rate, the appropriate level of inflation.

actually not Iraq faces hardship potential of hand International reserves the Iraqi economy works with a surplus in the balance of payments. The accumulated reserves of the Central Bank, which reached 67 billion dollars, according to the latest statement, the result of accidental sale of the Ministry of Finance the central foreign currency (+) and private sector demand (-), and that the latter is less than the first.

This means continuing surplus of foreign currency. course we must deliver foreign currency source of oil to the private sector, but the method adopted through the window of the central bank is not appropriate to the requirements of the best performance and enforce the law .. But through banks and similar institutions, which holds its own to deal with customers and assume responsibility for compliance with laws, including anti-money laundering law, because the fundamental principle in this law “know-your-customer”.

The banks know their customers traders and investors, and other foreign currency-seekers, from the central bank. Due to the absence of regulations and traditions of accurate documentation are suffering a lack of comprehensive data and reliability.

To cover trade in goods and services and the rest of the ongoing operations, and in a manner most capital flows and other channels across the border, the entry and exit. The size of the deal with foreign banks and modes of movement and balances. And we do not have reliable information about the relationship of these flows to changes in the demand for foreign currency from the central window. Iraq needs to clear legal rules to regulate foreign transactions entry and exit. There is also no common understanding among official circles about the permissible and prohibited in trade cross-border only trade in goods, which also upon reservations about specifications, quality and validity of health and others. became useful to resolve the situation of private sector investment abroad in the context of a comprehensive law for the circulation of foreign currency and foreign operations current and capital.

Such legislation provides the basis of documents and reports required and identify irregularities and supports the organs concerned powers. Experience has confirmed the urgent need to re-examine the generality of the system used for the delivery of foreign currency to the private sector. It is important to complete separation between buying foreign currency conversion and the withdrawal of foreign currency notes and that these three processes are managed separately and based on its own controls. And that only the central bank to sell foreign currency to the private sector without buying, which does not need him as long as the private sector in the case of permanent disability of foreign currency.

And sale of foreign currency to banks should not only mean strengthening of that currency balances in return for reducing its total diamonds corresponding value, and banks are on the sales assume responsibility for subsequent lines of the market under the supervision of the central provisions. The drawdown of paper currency and conversion Those other operations.