The Rise In The Value Of The National Currency Has Local And International Causes
Economic 04/27/2025 Baghdad: Hussein Thaghab The Iraqi dinar‘s exchange rate against the US dollar has witnessed a significant improvement over the current period, supported by a number of internal and external factors.
Most notably, the
country’s large financial reserves, the
prudent monetary policies pursued by the Central Bank of Iraq, and
signs of a thaw in US–Iranian relations have
combined to boost the value of the national currency.
Deputy Governor of the Central Bank of Iraq, Dr. Ammar Hamad, said that the
improvement in the Iraqi dinar‘s exchange rate against the dollar in local markets
is due to the central bank‘s recent policy. He added that
Financial Reserves
the country’s massive financial reserves are one of the main reasons
behind the improvement in the value of the dinar against the dollar, and
we expect the dinar‘s value to continue to improve in the coming period. He pointed out that
the Central Bank of Iraq is working to consolidate the national currency
by adopting policies that are consistent with Iraq‘s
financial capabilities and the
requirements of the national economy.
Dollar Flow
Dr. Nabil Al-Abadi said:
“The past few days have witnessed a significant improvement in the exchange rate of the dinar against the dollar,
which is the result of a combination of internal and external factors.
On the monetary policy side, the Central Bank has taken strict measures, including
restricting the flow of dollars through auction platforms and
imposing strict oversight on banks. It has also
raised the interest rate on dinar deposits,
which has stimulated the transfer of some cash liquidity.
External Factors, such as the
improvement in oil prices and the
accompanying increase in foreign reserves,
have also contributed to this improvement.” He added that
Stabilization
these measures, while effective in achieving short-term stability, remain subject to several risks.
The Iraqi economy’s dependence on oil revenues makes it hostage to global market fluctuations.
Furthermore, some austerity measures, such as
import restrictions,
could negatively impact citizens’ purchasing power
if they are not accompanied by policies that support local production. He stated that
Productive Sectors
ensuring the sustainability of this improvement requires structural reforms,
starting with
diversifying the economic base and
reducing dependence on oil, through
developing productive sectors such as agriculture and industry.
This also requires
a comprehensive overhaul of the banking system and
simplifying customs procedures to boost non-oil exports, as well as
enhancing investment confidence through stabilizing legislative policies. He stated that
improving the exchange rate is not an end in itself,
but rather must be a starting point for deeper economic reform.
International experience demonstrates that
sustainable monetary stability can only be achieved
through a productive economy capable of confronting external shocks.
Global Pressure
Financial expert Dr. Mustafa Akram emphasized that
while there is a reason for the
gap between the official exchange rate and the parallel exchange rate of the dinar against the dollar,
the gap has its causes. He pointed out that the
opening up between the United States and the Islamic Republic has eased global pressure on remittances to Iran,
reducing demand for the dollar in local markets and
strengthening the value of the national currency.
This coincides with ample supply from the Central Bank in the form of remittances and
other forms of financing, which necessitates strengthening this phase. He pointed out the
Electronic Card
importance of the Central Bank of Iraq taking action to
reach an agreement with the United States and
establish an official platform for transactions by
creating an electronic payment card for use in Iran, Russia, and other sanctioned countries.
This would reduce demand for dollars, he noted, noting that
this would
serve small traders and travelers,
address many problems,
reduce smuggling and illegal trade, and
increase the value of the local currency.
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