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Economic: factors in determining the Iraqi dinar exchange rate

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Economic: factors in determining the Iraqi dinar exchange rate

Hossam Judge *

We have proved the facts and economic and political conditions experienced by Iraq during the last two decades of the last century and in recent years that there are many complex and interrelated factors affecting the control line graph of the Iraqi dinar exchange rate up and down for foreign currencies, the dollar general and in particular

And it proved a mistake to rely on monetary measures by the Central Bank finally, "despite its importance at this stage" However, these measures can be considered as an influencing factor is the only isolation from the rest of the other factors that involve significant aspects of the splash in this area.
In addition to the Iraqi citizens did not even touch the desired results of these measures in terms of goal that we envisage the goal of reducing the rate of inflation, and that has happened is a clear rise in the prices of consumer goods and low purchasing power of the Iraqi dinar, and this confirms the presence of many other factors affecting the the real value of the Iraqi dinar.

Perhaps the economic factor, which depends on the nature of the variables of economicactivities is one of the factors influencing directly in this area as the increase in national income is based on one-way increase in gross domestic product may give false and misleading indicators of real economic growth, the increase is driven by high export prices or a natural resource such as oil or gas and the increase in real GDP should be based on human resources investment and operation of production and service sectors and diversify the sources of wealth of resources and sources of non-oil, so the capital investment, natural resources, petroleum, and calculating returns financial and economic investment in agriculture and industry, and the exploitation of other human resource potential which is characterized by different skills, will achieve a high rate of self-sufficiency and reduce dependence on imports and thus improve the trade balance and balance of payments and this in itself is an important factor in contributing to raising the price of the Iraqi dinar.

And supervision of foreign transfers that could contribute to address the imbalance in the balance of external payments and balance to maintain the external value of the deterioration of the national currency, in addition to identifying an outflow of capital because the money is out of the direct causes of the events of the imbalance in the balance of payments, and the relationship between Alkharahi control over the conversion and exchange rate are evident through the proportional distribution between consumer spending and domestic investment and external, and also freeing the foreign exchange without specific controls lead to the high demand for foreign exchange in relation to what is available locally and from the consequent negative effects The rise in the foreign exchange rate for the Iraqi dinar.

Also, the variables as global economic conditions is one of the factors affecting the dollar exchange rate locally and globally Valmngirat controlled high or low world crude oil prices have an impact on continuity of the machine industry and agriculture of the developed countries in a balanced and stable away from the volatility that could occur on the prices of their products, which may have fluctuated sharply, and the high global crude oil prices if it has troubling implications in higher prices for products exported by the advanced industrial countries, the hardest hit by this rise are the developing countries and underdeveloped non-oil producers that bear is the largest export of the economic crisis of the advanced industrial countries that seeking to offset the rising cost of production through the export of their products at high prices, and all this will lead to influence the exchange rate of the dollar globally and locally Celia or positively by variables and global oil prices and to reduce the effects of rising global oil prices we note that the United States and other industrialized countries exercise kind of pressure on the Petroleum Exporting Countries to raise oil exports to reduce the price of a barrel of oil through the mechanism of supply and demand.

Other factors also affect the speculators and the banking offices of using emergency situations which disturb the security situation and the curfew and other religious events and the month of Ramadan and the festivals and holidays and other emergency situations to raise the price of the dollar, in addition to the implications of a leak in a lot of cash balances in foreign currencies abroad due to the migration of capital from businessmen and industrialists, traders and invest their money outside Iraq, and can imagine the return of these funds and their impact on investment and increase the money supply of foreign currencies and the subsequent rise in the value of the Iraqi dinar.

Perhaps the interdependence between the political and security environment on the one hand and economic conditions on the other hand is one of the factors influencing the control force of the Iraqi dinar compared with other currencies, and can shape it in a "hypothetical equation" so to speak, which confirm that the security and political stability leads to economy's stability and prosperity and thus the stability of the local currency and the opposite is true, since what Iraq has seen during the period of crises, wars and the economic embargo had led to considerable disruption of the infrastructure of the Iraqi Aqsad and continuous change and severe in the local currency exchange rate up or down and secretions political and security situation remains unstable confirm this equation.
There are many examples and evidence to support this view During the period of economic embargo and in proceeding to sign a memorandum of understanding "oil for food and medicine" during the nineties of the last century, many Iraqis believed that this means the beginning of the note or that the lifting of the embargo lifted the economic embargo and actually followed by the well-being and economic prosperity, low prices and the return of the Iraqi dinar to its former glory, which led to the sharp decline in the prices of consumer goods, automobiles, real estate and also the sharp decline in the price of the dollar, but it soon became clear that this note is merely a maneuver or a politically motivated or humanitarian aid to relieve the heavy burdens which was borne by the Iraqi citizen, and that the final outcome of this issue led to substantial material losses incurred many Iraqis as deferred charges and added new overhead shoulder the burdens.

In general, the seriousness and scientific attempts to raise the exchange rate of the Iraqi currency has to take into account the confluence of many factors affecting this area, including the above-mentioned factors.

* Economic Researcher


Thanks wonder how the Central Bank is going to set a new monitary policy and when??

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