CBI seeks to restore confidence in the local currency against the dollar

22/01/2012 14:31

Baghdad, 22 December for the second / January (Rn) - distanced the Central Bank of himself from the imbalance that has occurred in the mobility of the local currency on the rates rise and fall in the exchange rate, indicating that the intervention in the exchange rate of the dinar is part of creating a situation of trust in local currency, at the time described economists is that the correct administrative procedures relating to the sale and purchase of local currency.

The Iraqi Central Bank Governor Sinan Shabibi told the Kurdish news agency (Rn) that "the central bank moved recently to raise the Iraqi dinar exchange rate at the foreign currencies, particularly the U.S. dollar in order to restore confidence in local currency and create the opposite direction from the dollar to the spaces of the Iraqi dinar."

Shabibi said, "This gives a positive signal to the dealers in the local market, thereby increasing consumer confidence in local currency."

Economists and experts accused the CBI not to follow a sound monetary policy and is not used for monetary tools correctly, confirming the presence and abundance of foreign currency at the Central Bank can be used in optimal time, as evidenced by achievement of foreign cash reserves up to $ 60 billion.

The price of the Iraqi dinar exchange the end of last week's 1166 dinars to the dollar after a few days ago was 1170 dinars per dollar.

He attributed the Deputy Governor of the Central Bank of Iraq the appearance of Mohammed Saleh high exchange rate of the dinar to the internal factors and external demand led to a rise in the dollar against other currencies.

Saleh said (Rn) that "internal factor is high exchange made in the budget for the current year and who was born strong expectations of the market in the high power exchange in the national economy, as that was a form of demand, especially government spending, which accounts for 60% of the gross domestic product. "

And that "it was a signal to maximize the import market in the presence of apprehension of the restoration of the tariff, which gives the opportunity to import goods for avoiding the new customs system."

Saleh added that the "intrinsic factor, the second to the period of the U.S. withdrawal from Iraq, where the growing demand for the dollar to slide a community think that there is a security vacuum, which encouraged them to convert part of their funds out of Iraq in one way or another."

Saleh continued that "other external factors related to political events taking place in neighboring countries, regional and particularly by the imposition of a financial blockade and the disruption of trading offshore banking with them, which urged the commercial center of Iraq to take the lead in the financing of regional trade, which is considered an extra demand for foreign currency, especially U.S. dollar in the rate of daily average of more than 300 million dollars a day while he was not to exceed the barrier of $ 160 million per day during the last year 2011. "

Saleh pointed out that "This disparity between supply and demand Born bubble forming in the dollar, although I have said it, but it does not fit with the power of the national economy, particularly the real exchange rate of the Iraqi dinar, which exceeds the price of the nominal because of the surplus in current account of balance of payments relative to GDP, which between 5-8%, which is a positive phenomenon in the interest of the Iraqi dinar exchange rate, as well as higher central bank reserves to reach the top level in the history of Iraq. "

For his part, said economist Mehdi Saleh, Douai (Rn) that "this oscillation in the Iraqi dinar exchange rate due to political factors, and other security shadow over the economic outlook in general and on the kinetics of the local currency and the corresponding foreign currency in particular."

The Douai, "The national economy is usually affected by the crisis because of the lack of diversified production base," noting that "the U.S. withdrawal fear among consumers has led to speculation in the dollar, which promotes a culture of savings among consumers significantly."

And works according to the Central Bank of Iraq Law No. 56 of 2004, and held five meetings a week in the daily auction for public sale of foreign currencies.

The Iraqi Central Bank pursued a tight monetary policy in early 2006 in order to curb inflation which stood in the same year accounted for 34% and decreased to 3% in early 2011.

There was a slight increase in the levels of inflation in 2011 to the end of 6% currently, according to data from Central Bank of Iraq and the Iraqi Ministry of Planning.

The experts attributed this rise to the so-called imported inflation (Estrada imported goods), where food prices have risen to 85% compared to 2005, while prices of other consumer goods to 45% compared to 2005, specifically in the dollar zone.

From: Abbas Ghalibi. Manufacturing of: Peace Joseph. Open: Abdullah Sabri