World Bank Questions Iraq Currency Peg

by **Ponee** Fri Jan 30, 2015 1:47 pm

A report published on Thursday by the World Bank focuses on the implications of low oil prices for eight developing countries — Egypt, Tunisia, Lebanon, Jordan, Iran, Iraq, Yemen and Libya — and the economies of the GCC (Gulf Cooperation Council).

The Plunging Oil Prices report questions the practice of pegging the Iraqi dinar to the US dollar, noting the that value of the dinar has been falling against the dollar in the parallel market:

“Iraq pursues a policy of a de facto peg to the U.S. Dollar, and therefore monetary policy is constrained in tackling the current shock.
“The Central Bank of Iraq (CBI) had kept the Dinar steady through January 2009.
“In 2014, the nominal exchange rate in the official market remained stable against the U.S. Dollar at 1,166 IQD/1 USD, but the rate in the parallel market increased.
“The CBI has recently taken steps to simplify foreign exchange market regulations, but has not eliminated all existing exchange restrictions and the multiple currency practice.
“With the peg, fiscal policy carries the burden of macroeconomic stabilization, but in this case does not have the space to do so.“

http://www.iraq-businessnews.com/2015/01/30/world-bank-questions-iraq-currency-peg/

by Goldiegirl Sat Jan 31, 2015 10:38 am

Maybe the world bank should have looked into this before they gave or loaned Iraq 6 trillion dollars.

Something isn't right with all of this. The world bank is held in the USA and a Chinese guy is currently president. Wonder what back room deals are going on here. question

by **Kevind53** Sat Jan 31, 2015 11:14 am

I think they are simply pointing out the difficulties of having a pegged currency. I think what we saw with the Swiss was for the same reason, although in their case they were losing value because the currency the Franc was pegged to (Euro) was losing value. In Iraq it's sort of opposite in the IQD is pegged to a currency (USD) that is stable/gaining value in a situation where theirs should be floating down somewhat. IF I understand the dynamics correctly, that could cause severe inflationary pressure in Iraq.

World Bank Questions Iraq Currency Peg

World Bank Questions Iraq Currency Peg

Re: World Bank Questions Iraq Currency Peg

Re: World Bank Questions Iraq Currency Peg