Economical 2023/08/21
Yasser Al-Mutwali
believes that the general public, who are not specialists in economics and finance, believe that the criterion for the strength of a country's economy is the exchange rate of its currency against the dollar, or any other currency or means.
While most economists in the world unanimously agree that this theory is not valid, we are often faced with a question;
Does the value of the currency reflect the strength of the economy of that country?
What concerns me as a specialist in economic affairs is to show the reality of the strength of the Iraqi economy and that the fluctuation of exchange rates does not mean the reality of the country's economy , as financial and economic experts agree that the exchange rate for any currency is an accounting number agreed upon between global central banks and does not reflect the strength of the country's economy.
To analyze the facts of this theory, let's take a comparison between the Saudi currency and the Jordanian currency, to verify the correctness of the theory from its error.
With regard to the Saudi riyal, for example, (one dollar equals 3.75 riyals), 100 dollars equals 375 riyals), and as for the Jordanian currency (one dollar equals 70 piasters, every 100 dollars equals 70 Jordanian dinars.
The question is: Does this mean that the Jordanian economy is stronger than The Saudi economy?
Of course not, because the volume of Jordan's GDP is 50 billion dollars, while the volume of the Saudi GDP is nearly a trillion dollars.
From that we conclude that the exchange rate does not reflect the strength and durability of the economy.
Therefore, fixed exchange rates are a purely administrative government decision, not It is related to the strength of the economy, and
if we follow international experiences in dealing with the size of their currencies, Argentina, Turkey and Italy have worked to delete six zeros from their currencies, which is a treatment to regulate currency circulation and reduce its volumes in dealing, and this proves that the exchange rate is an accounting number, nothing more, and a government decision.
There are trends in some countries that work to liberate the value of their currencies by floating them because the exchange rate of the dollar is floating and liberalized, and here the estimates of governments remain with such a decision.
Finance and economic experts attribute the reason for the floating to the inability to fix the exchange rate indefinitely, and this is related to the extent of economic and political stability.
The closest example of this is the Lebanese currency, in which the exchange rate has remained constant for decades, every 100 dollars equals 1,500 pounds, but it was soon exposed to chaos and instability until the exchange rate collapsed, unfortunately, which is what is happening to it now.
In conclusion, the Iraqi economy is strong and solid, but the fluctuation of the exchange rate is caused by the political and economic instability in the country.
https://alsabaah.iq/82794-.html
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An expert proposes solutions to limit the rise in the dollar in the parallel market
Economical 2023/08/19
Baghdad: Haider Fleeh Al-Rubaie,
the economist, Munaf Al-Sayegh, proposed a set of solutions to control the parallel exchange rate and undermine the dollar, pointing out that
the presence of two different exchange rates could confuse the local market and lead to a kind of imbalance in economic performance, while
he praised the targeted measures In order to limit the rise of the green currency in the parallel market,
he called for "liberalizing the exchange rate" in accordance with the levels of supply and demand and foreign trade activity, as well as working to change the pattern of the balance of payments and the trade balance.
According to specialists in economic affairs, the Central Bank succeeded in controlling the exchange rate of the parallel dollar, and put an end to the booms that that currency witnessed in previous times, indicating that
the packages of decisions issued by the monetary authority led to strengthening confidence in the national currency, stressing at the same time,
The fluctuation of the exchange rate is no longer an influencing factor in the prices of goods and materials that are now imported at the official price of the Central Bank. Al-Sayegh told "Al-Sabah":
"The presence of two different exchange rates leads to a negative impact on economic performance,
especially if it is linked to the pattern of consumption activity and thus will undermine government efforts aimed at enhancing its ability to provide quality services," stressing the
need to "establish development paths that work on Diversifying economic activity in line with the urgent requirements of society, such as continuous energy, efficient education, health institutions, as well as the provision of high-quality services, indicating that
these steps are sufficient to achieve an active and flexible economy capable of constantly diversifying while creating sustainable development opportunities and diverse and renewable job opportunities within the requirements of economic performance and its obligations. local and international.”
In order to find remedies for the economic effects of the existence of two different exchange rates for the local currency, the jeweler believes that the exchange rate must be liberalized in a flexible manner, according to the levels of supply and demand, as well as the levels of commercial activity of foreign trade, in addition to the need to work to change the pattern of the balance of payments and the trade balance in a way that leads to its transformation Gradually from negative to positive.
Al-Sayegh also stressed the importance of changing the spending pattern in the budget towards the productive investment that leads to serious development paths, taking into account the change in foreign trade patterns from consumer goods to productive goods linked to a specific economic activity, as well as the trend towards making a fundamental change in the pattern of performance and activity. Finance for public and private banks, enhancing the efficiency of government programs aimed at pushing development projects that support economic activity in general, and expanding small and medium entrepreneurial projects among young people.
https://alsabaah.iq/82642-.html
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