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The most difficult option.. Warnings of the danger of floating the Iraqi dinar without achieving an “important condition”
4/25/2024
Baghdad
Economist Nabil Al-Marsoumi warned today, Thursday (April 25, 2024), of the dangers of floating the Iraqi dinar, noting that such a step could lead to the dinar witnessing a violent collapse and rampant inflation that would jump prices to insane levels.
Al-Marsoumi said in a post on the social networking site “Facebook”, followed by “Baghdad Today”, that“some are proposing a solution to address the double price of the dollar against the dinar and the existence of a large gap between the official and parallel prices through a free float of the Iraqi dinar,” indicating, “ie Turk.” The dinar is in the market to find its price against foreign currencies through the interaction of the forces of supply and demand.
Al-Marsoumi added, “Such a decision has some economic positives,”adding, “But the economy should not be taken in its abstract aspect, but rather insofar as it relates to people, especially the poor.”
He continued, "In light of Iraq's lack of a national private sector that could contribute to increasing the supply of dollars in the Iraqi market, and because of the large volume of imports, which reach 67 billion dollars annually, the only party that owns the dollar is the government,” explaining that “in the event that the government decides not to intervene.” In the exchange market, it is expected that the dinar will witness a violent collapse and rampant inflation that will cause prices to rise to insane levels that will cause severe damage to citizens' living standards, and the poor will become more miserable, and will later lead to social tensions and a major rift in the social peace.”
It is noteworthy that the floating exchange rate or currency float is the currency exchange rate that has been floated so that it has become completely liberalized, so the government or the central bank does not interfere in determining it directly, but rather it is released automatically in the currency market through the supply and demand mechanism that allows the price to be determined. Exchange the national currency against foreign currencies.
It is worth noting that the price of the dollar in the local markets is still experiencing a state of uncertainty between rises and falls, even though the official price in the Central Bank of Iraq is 132,000 dinars per 100 dollars, but in the local markets it is witnessing an increase of more than ten points and may at times reach double this. The number is despite the numerous measures and packages launched by the Central Bank of Iraq, where some attribute that the reason for this confusion in prices is the result of smuggling operations and speculation in the black market for currency.