THE DINAR GRADUALLY APPROACHING ITS “OFFICIAL” PRICE against USD The Iraqi Council of Ministers reveals

Iraqi Dinar to USD Conversion

Advisor to the Iraqi Prime Minister for Financial Affairs, Mazhar Muhammad Salih, revealed the dangers of the exchange rate becoming unstable if demands to float the dinar are met, indicating that the dollar exchange rate in the parallel market is currently gradually approaching the official one.

The Pitfalls of Floating the Dinar
Saleh said, “Calls for floating the dinar to end the gap between the official exchange rate and the parallel market may be possible in an economy in which the free market alone influences the movement of the balance of payments and not in an economy in which the rentier government sector is dominant and generates foreign currency reserves.”

The Role of Monetary Authority
Saleh continued: “The monetary authority alone is the main source of supply of foreign currency that meets the desired demand for foreign exchange in the money market, to provide stability in this market and achieve a desired and homogeneous exchange rate through the interventionist role played by monetary policy,” according to what was reported by the Iraqi News Agency (INA). )

Balancing Stability and Market Forces
​He added, "Claims for flotation mean in all cases adopting the prevailing exchange rate in the parallel market to achieve the goal of stability and balance in the official exchange rate itself at a new point reached by the market at the end of the supposed flotation policy and returning to stability again. Also, the flotation scenario means in all cases the withdrawal of the authority." Cash from being an essential central supply of foreign currency, to be replaced by new forces supplying foreign currency from free market makers, which only have a weak, limited supply of foreign exchange, and at the same time they carry an uncontrolled package of inflationary expectations and are called in economic literature the forces generating expectations. "inflationary".

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