Support the local currency strengthens international role 12/5
Support the local currency strengthens international role
BAGHDAD - Imad emirate
there are economic convinced strong that the decline of the Iraqi dinar exchange rate with a surplus in the balance of payments reflects the fact that the national currency undervalued real value, so there is an urgent need for action to raise the value of the dinar in the exchange market through direct and constant intervention of the Central Bank Iraq to reduce the sale price of the dollar against the dinar in the currency auction. This form-oriented basis points in the direction of strengthening the exchange value of the dinar against the dollar, by taking administrative decisions in a row by the monetary authority, this argument completely intact from the point of this analysis Aloguetsada.dmn oriented academic d said. Awad Fadhil importance of this road in the exchange rate management to be desirable high domestic inflation rate, and raise the value of national currency against the dollar from 2004 until the first quarter of 2010 was in line with the objective to be achieved, a stop the rise in the general level of prices, and strive to reduce the rate of inflation at acceptable levels economically, but who got to the monetary authority continued to approach raising the value of the dinar against the dollar (ie reduce the value of the dollar denominated in dinars) after the decline in the rate of inflation and to control it and install the official exchange rate at a level may not necessarily reflect the level of equilibrium in the market.
And when you return to economic indicators easily realize that increasing the degree of intervention in the exchange market and the persistent administrative move towards the low value of the dollar or the selling price was not officially compatible with fundamentals Alkla.ooodh d. Awad when devoting the vast proportion of resources in favor of consumption this with limited capacity in the absorptive INVESTING energy, low competitiveness of industries producing goods traded (except oil), and the tyranny of service activities and the acceleration of price levels and the high level of unemployment and the decline in the relative productivity of industrial and agricultural sector and high production costs All of this leads to the effect brake on Aloguetsad.utaba development: It is practically impossible that a single monetary tool you can achieve more than one goal has not been used other tools to achieve especially necessary adjustments both financial and structural including help to put the economy on track, the dosing sequence in adjust the exchange rate administratively was in itself incompatible with the economy as a whole as a result of this situation that eventually become the national market value of the national currency is determined in response to market forces, which in turn reflect the economic and political situation in the country is desired.
It is normal in this case to become the nominal exchange local currency denominated higher than its market value any higher than its equilibrium, reflecting the possibility of the dinar exchange in the market price moved to a lower level than the level at which settled upon by government intervention and the imposition of decision Aladarei.okhls to say: This economic vision strengthened through the big difference between the dollar sale scheduled to price in a market auction Central Bank and its price generated in the free market by supply and demand forces of reaction, since no longer the difference confined to the rank of decimal but exceeded for up to two places decimal places, and so is no longer within the limits or economically acceptable ranges at the international level and Mahla.alomr other is that private demand for the national currency prevailing market price or the current is less than the total special offer, and that the central bank intervenes in the foreign exchange market to buy the difference in order to support the local currency internationally.
This shows clearly that the Iraqi Central Bank intervenes to artificially create intentional or on the request of the national currency against the Show more foreign currency, so that the quantity purchased from the local currency, which was higher than can be purchased in normal circumstances to sustain high and stable exchange rate.