Iraqi PM's Financial Advisor assures stability despite fluctuation in exchange market
Shafaq News/ On Monday, the financial and economic advisor to Iraqi Prime Minister, Mazhar Mohammed Saleh, commented on the resurgence of the US dollar exchange rates against the Iraqi dinar in the local markets.
Saleh clarified to Shafaq News that "Iraq's fixed exchange rate system is based on the highest international reserves in Iraq's history and its monetary policy, covering foreign currency at over 100% of total exports currently."
"Given the strength of the official central exchange market, the exchange rate of the dollar to the dinar in the parallel market today in the country does not pose any relative importance in influencing the stability of the overall price level, which has stabilized at this pricing level due to the dominant official exchange rate currently affecting the funding of foreign trade (imports) at 1,320 dinars per dollar. This stable exchange rate trend is reflected in the stable external value of the dinar, where prices for goods and services largely do not exceed an annual inflation rate of 3%." He explained.
According to Saleh, "In light of the strength of the supporting foreign reserves for the Iraqi dinar, valued at over $100 billion as liquid foreign assets, the official exchange market will remain dominant in containing any noisy or mysterious information affecting the parallel exchange market in the short term due to sudden international or regional political events or adjustments in some regulatory instructions for the cash market."
Al-Sudani's advisor emphasized that "since the disappearance of the dollarization phenomenon in domestic transactions, especially in contracts, obligations, and payments within the country since last year and its prohibition by law, the impact of the parallel exchange market today affects only a narrow economic scope of prohibited transactions practiced by non-regular markets, accounting for 10% of the total supply and demand transactions for currency."
Saleh affirmed that "the stability of the dinar exchange rate to the dollar observed in the country, even in secondary (non-regular) markets, is genuine and entrenched stability derived from the effective impact of price and quantity factors of monetary and financial policies and their integration in imposing overall price stability in the country and containing inflationary expectations previously caused by parallel exchange market forces in recent years."
"The secondary market (non-regular) due to the freedom of external transfer is subject to the influence of the official exchange market rate, which continually expands its operations in favor of dealing at the fixed official exchange rate." He concluded.
