SALEH’S APPEARANCE: THE FLUCTUATIONS IN THE PARALLEL MARKET ARE TEMPORARY AND DO NOT AFFECT THE STABILITY OF LIVING STANDARDS
The economic advisor to the Prime Minister, Mazhar Muhammad Saleh, confirmed on Monday that the fluctuation in global oil prices is not directly related to the volatility of the parallel exchange market in Iraq, explaining that the monetary policy based on a fixed exchange rate supported by reserves exceeding $100 billion provides a strong stability umbrella for foreign currency.
Saleh told Al-Furat News Agency that “the limited fluctuations in the parallel market represent temporary and ineffective reactions that came in response to the launch of the latest fiscal discipline package, which included decisions to re-examine the paths of public spending and enhance the efficiency of revenues, especially through expanding and controlling tax and customs bases.”
He added that “these movements are a natural behavior for markets when they receive new signals from fiscal policy, as supply and demand forces tend to test these signals and adapt to them in stages, before returning to more stable paths that are in harmony with economic and financial fundamentals.”
He pointed out that “the current fluctuations in the parallel market do not reflect a structural imbalance in the exchange market, but rather a temporary adaptation phase with regulatory tools aimed at enhancing financial and monetary stability in the medium term.”
Saleh pointed out that “the limited movements observed in the parallel market do not affect the stability of the general price range, which has maintained a low inflation rate of about 2.5% annually, which reflects the effectiveness of the macroeconomic policy mix.”
He explained that stability is due to the convergence of three main policies:
Monetary policy: A fixed official exchange rate for the Iraqi dinar at 1320 dinars to the dollar. Fiscal policy: Broad support amounting to about 13% of GDP, limits the transmission of price shocks to living standards.
Trade policy: Price defense through the subsidized food basket and the modern market system (hypermarkets), which absorbs the noise generated by the parallel market and turns it into stable white noise.
Saleh concluded by saying that “the parallel market no longer has a significant impact on daily life, after its effect became detached from income and consumption levels and its impact shifted mainly to the asset sector, which is not directly related to the stability of living or social peace.”
