Friday, May 3, 2024

"TO FLOAT OR NOT TO FLOAT" BY ARIEL, 3 MAY

ARIEL

 To Float Or Not To Float

If Iraq decides to come out with a fixed exchange rate of 3.00 (assuming you mean 3.00 Iraqi Dinars per 1 US Dollar), it would mean that the central bank commits to maintaining this exchange rate by actively buying or selling its currency in the forex market. This can provide stability and predictability for international trade and investment, but it also requires the central bank to have sufficient foreign currency reserves to defend the fixed rate. This is exciting. Because if they come out with a fixed rate we do not have to wait for them to gradually increase the value where we would initially have to go to the bank and exchange a little of our Dinar just to pay bills while we sit on the rest of it waiting for it to get to 3 dollars. So if they stick to this plan you all will wake up with a strong rate where you can exchange all of your IQD at the fixed price.

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