A call to reconsider the dollar exchange rate

by **claud39** Thu Jun 10, 2021 10:12 pm

[size=36][rtl]A call to reconsider the dollar exchange rate[/rtl][/size]

Thursday 10 June 2021

A call to reconsider the dollar exchange rate Alsabaah-80819

Baghdad: Haider Al-Rubaie

The economic expert and specialist in crisis management, Ali Jabbar Al-Fariji, warned of the continued growth in inflation rates in Iraq, which is caused by the clear increase in the dollar exchange rate, stressing that the main purpose of the decision to increase the exchange rate is no longer necessary with the cash abundance achieved due to the high price of a barrel of oil .

During the past few days, the currency markets witnessed a clear rise in the dollar exchange rate, as it exceeded the barrier of 150 thousand dinars per 100 dollars, which, according to those concerned with economic affairs, will lead to further increases in the prices of various materials and commodities.

In a gesture, which specialists believe will limit the “jumps” of the dollar exchange rate, the Central Bank has responded to requests to purchase dollars for citizens for the purposes of travel, study and treatment abroad, by feeding electronic payment cards (MasterCard and Visa Card) at the official price set by it.

Justifications for devaluing the dinar

Al-Fraiji told Al-Sabah that "the decision to reduce the value of the dinar did not achieve the goals, and this is evidenced by the movement of the local market and the turbulent economic reality we are living in now."

He pointed to "the absence of strategies to absorb the economic shock by the government, and deal with it to mitigate the negative repercussions left by this decision," noting that "the cash abundance from the rise in the price of a barrel of oil has achieved the goal of covering the salary bill in the general budget."

High rates of inflation

Al-Fraiji explained that "the negatives that accompanied the decision to raise the exchange rate are many, including the confusion factor in the local market, accompanied by an unrealistic rise in the real estate market, as well as the significant effects on the prices of consumer goods and services, which have become a commodity controlled by many greedy traders."

Suggestions to tackle the crisis

Al-Fraiji suggested solutions to reduce the negative effects of the high exchange rate, putting in the foreground, “Reconsidering this decision, and setting a time limit for dealing with it, proposing that the end of 2021 be the time period (one fiscal year only) to deal with the new exchange rate and return the value of the dinar. Then".
Al-Fraiji called for tighter economic control by the government and parliament, strictly, on traders and speculators in the local market to limit the rise in food prices, or consumer goods and others that affect the needs of the local market and the individual.

For his part, the economic affairs specialist, Dr. Sattar Al-Bayati, said that “regardless of the negative effects that the low exchange rate of the dinar had on the market and the decline in the purchasing power of the consumer, the task of stabilizing the exchange rate of the dinar depends on two important factors or two measures. Cash in circulation (money supply) through the use of well-known traditional monetary policy tools (interest rate, rediscount rate, legal reserve ratio, and the open market) to maintain monetary stability, and then economic and not to raise the general rate of prices continuously (inflation).

He continued: "The second is the serious endeavor to diversify resources and achieve good and tangible economic performance for the economic sectors that make up the GDP, i.e. achieving a rate of economic growth based on economic diversification and not just the rentier sector."

He pointed out that «the reason for this is due to the fact that the deliberate depreciation of the local currency exchange rate should be accompanied by a good economic situation based on production and export, and without that, the central bank should reconsider the exchange rate of the dinar because the economic and social effects with their negative repercussions will exacerbate and cause great harm. economy and consumer.

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