Economy |Today Baghdad Today – Baghdad Mazhar Muhammad Salih, the Prime Minister's economic advisor, confirmed today, Sunday (July 7, 2024), that the fluctuations witnessed by the secondary or parallel dollar exchange market during the past days are not commensurate with the strength of Iraq's international or foreign reserves.
Saleh said in an interview with Baghdad Today, "These are the actions undertaken by speculators looking for emergency profitable opportunities here and there," indicating that "the fixed exchange rate system in Iraq is based on international reserves, which is the highest in the history of Iraq, and its monetary policy, as foreign currency covers a percentage of more than 100% of the total currency currently issued."
He added that "the dollar exchange rate compared to the dinar in the parallel market does not constitute any relative importance in influencing the stability of the general price level, as this general price level has become stable in its components and trends due to the influence of the official exchange rate factor currently dominating the financing of foreign trade (imports), amounting to 1320 dinars per dollar," explaining that "this represents a stable trend for the exchange rate and the stable external value of the dinar revolves around it, which is embodied by the state of stability in the relative prices of goods and services to a large extent, as annual inflation in our country does not exceed 3%. "
He pointed out that "in light of the strength of the foreign reserves supporting the Iraqi dinar, the value of which as liquid foreign assets exceeds 100 billion dollars, the official exchange market, as a general trend, will remain dominant in containing any colored noise or ambiguous information that affects the parallel exchange market in short periods due to urgent international or regional political events here and there or in adapting some instructions regulating the monetary market."
He explained that "after the decline of the dollarization phenomenon in domestic transactions, especially in contracts, obligations and payments within the country since last year and its legal prohibition, the parallel exchange market has become such that its general effects today only form a narrow economic scope of prohibited transactions practiced by informal markets and at a rate of 10% of the total supply and demand transactions for the currency."
Saleh stressed that "the stability of the exchange rate of the dinar to the dollar that the country is witnessing, even in the secondary markets, is a real and solid stability. Rather, it is derived from the strength of the impact of the price and quantity factors of the monetary and financial policies and their integration in imposing overall price stability in the country and containing inflationary expectations that were caused by the forces of the parallel exchange market during the past years," stressing that "the irregular secondary market, due to the freedom of external transfer, is under the influence of the official exchange market rate, whose operations are constantly expanding in favor of dealing with the fixed official exchange rate."
The price of the dollar against the Iraqi dinar has witnessed a noticeable increase in the past few days, as the exchange rate in the local markets reached 150,000 dinars for every 100 dollars. LINK