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Calls for doubling measures to bridge the price gap between the dinar and the dollar
Economical 2023/03/08
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the mainstay of the emirate
Specialists in economic affairs stressed the need to double the measures that would bridge the price gap between the dinar and the dollar, and to work seriously to control speculation that played a major role in the rise in the prices of goods and materials in the local markets, praising at the same time, the monetary policy measures that took place. Implemented by the Central Bank with the aim of addressing the function of inflationary expectations that the parallel market has become generating.
In a move aimed at curbing the dollar, whose prices are still witnessing an upward trend that reached the limits of 156 thousand dinars per 100 dollars, the Central Bank decided at the end of last week to increase cash sales of foreign currency to banking companies by two million dollars per week, which will contribute, according to specialists. Economists, on the decline in the parallel exchange rate and its approach to the official one in the coming days.
The financial advisor to the Prime Minister, Dr. Mazhar Muhammad Salih, stated in recent statements that “the February 7, 2023 decision to raise the exchange rate of the dinar against the dollar to reach 1300 per dollar instead of 1450 dinars per dollar is a pattern of strict monetary policy to fight inflation and combat inflationary activities.” And its new expectations and functions generated by the markets are incomplete, that is, commodity and monetary, after harsh years of monetary adjustment in which the Central Bank of Iraq has provided, since 2020, all monetary means to support public finances without the fiscal policy itself showing any financial adjustment in maximizing non-oil revenues or reducing Area of double-decimal unemployment or high levels of poverty through spending.
Saleh added, public finances resorted to maximizing domestic borrowing, bringing the total internal debt to nearly $50 billion, provided by the Central Bank of Iraq by monetizing public debt at a rate of 63 percent. reserves that are not commensurate with the low exchange rate in the parallel market, which led to a drop in exchange rates by 10 percent compared to annual inflation at the same rate and about 10 percent as well, which necessitated the intervention of the Central Bank of Iraq with an important policy package, foremost of which is addressing the function of inflationary expectations that the parallel market for exchange has become generating As prices began to rise, so it was necessary to raise the external value of the Iraqi dinar, which represents the new monetary policy in addressing inflationary expectations by using an economic variable, the exchange rate, to represent an explicit nominal stabilizer that imposes stability in the general level of prices and reduce inflation growth rates.
In turn, the academic and economic researcher, Dr. Abdul Karim Al-Issawi, said in an interview with "Al-Sabah" that what matters to the Iraqi street is how to bridge the gap between the two prices (official and parallel to the dollar), which has reached high levels, in addition to the lack of complexity in the process of obtaining dollars by small traders who They finance their imports, which results in continuous price hikes.
Al-Issawi believes that “the Central Bank of Iraq concluded an agreement with the (JP Morgan) group to act as a mediator and settlement between the private sector and the exporters of Iraq, which is very necessary and would create a kind of transparency in external financial transfers to Iraq, pointing out at the same time, that dealing With foreign transfers through the (SWIFT) system, it still needs additional time in order to be adapted by banks, so it is necessary to take treatments that speed up the response to the need of ordinary individuals for the dollar and work to increase the outlets for selling foreign currency and not limit it to specific banks.
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