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Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Established in 2006 as a Community of Reality

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Established in 2006 as a Community of Reality

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    The risks of going back to the old exchange rate.. Nabil Al Marsoumi

    Rocky
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    The risks of going back to the old exchange rate.. Nabil Al Marsoumi Empty The risks of going back to the old exchange rate.. Nabil Al Marsoumi

    Post by Rocky Mon 21 Feb 2022, 6:16 am


    [size=30]The risks of going back to the old exchange rate.. Nabil Al Marsoumi


    2022-02-21
    [/size]
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    [rtl]Nabil Al Marsoumi wrote:[/rtl]

    There are demands by a not small number of members of the Iraqi parliament aimed at restoring the exchange rate of the dinar to what it was previously, which raises a number of observations, including:
    1. The reduction of the Iraqi dinar exchange rate was not a purely technical decision taken by the monetary and financial authorities alone, but rather a technical-political decision that was approved by the political blocs and the Parliamentary Finance Committee, which also had a reform paper in which 33 measures were taken, including the recommendation to reduce the exchange rate of the dinar.
    2. Changing the exchange rate will lead to financial destabilization in Iraq, speculation in foreign currency, confusion in the Iraqi market, loss of confidence of international financial institutions in the monetary and financial authority in Iraq, and a negative impact on the investment environment in Iraq.
    3. Restoring the dinar exchange rate to what it was previously requires an increase in the allocations for the salaries, wages, retirees and social protection section by about 17 trillion dinars.
    4. Linking the dinar exchange rate in a country that adopts a fixed price system to an external variable, which is the price of a barrel of crude oil, which is determined in the global market and which is characterized by high volatility exposes the dinar exchange rate to severe risks, especially in the event of a significant drop in its prices, especially since Iraqi oil revenues constitute more of 90% of public revenue.
    5. Returning the dinar exchange rate to what it was previously will not lead to the return of commodity prices to what they were because prices enjoy high flexibility when rising, but they have weak flexibility when declining, especially since prices are not currently affected by the low exchange rate of the dinar alone, but by other variables as well. Including the global rise in the prices of imported goods, and the damage to the supply chain as a result of the Corona pandemic, which led to a rise in shipping and transportation costs.
    6. The sudden and significant change in the exchange rate of the national currency within a short period would affect the structure of domestic prices, internal and external trade, production, consumption, investment and foreign cash reserves, which would have a severe impact on the overall economic stability in Iraq.
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