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Iraq's Reserves Enough to Maintain Currency Peg, Says Central Banker
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Iraq's Reserves Enough to Maintain Currency Peg, Says Central Banker
Iraq's Reserves Enough to Maintain Currency Peg, Says Central Banker
Alaa Shahine and Ahmed Feteha | 14-09-2015, 10:38 AM | Iraq |
Any devaluation would be limited, says Iraq's central bank governor
Central bank Governor Ali Mohsen Ismail said Iraq has enough foreign reserves to maintain its currency peg but didn’t rule out a minor devaluation to shore up government revenue hurt by the slump in oil prices and the war on Islamic State militants.
The central bank’s reserves are enough to cover more than six months of imports, higher than what is typically needed to maintain the exchange-rate, Ismail said in an interview in Cairo on 13 September. The peg is a “key anchor to the economy,” the International Monetary Fund said in August.
“There is no fear for the dinar,” the governor said. However, if “the pressure remains, we could marginally change the exchange rate to increase revenues of the finance ministry,” he said. “But this is just an option that needs to carefully studied because we don’t want to give away what we have achieved in terms of the inflation rate, which is perfect now.”
Iraq, OPEC’s second-biggest oil producer, is engulfed in armed conflict with Islamic State militants who took control of major Iraqi cities and some oil facilities last year. The country has announced plans to raise $6 billion in bonds and received emergency IMF aid to plug a ballooning budget deficit.
Ismail said the budget shortfall will be lower than the 25.4 trillion dinar ($20.9 billion) originally planned because the finance ministry is already cutting spending.
The yield on Iraq’s $2.7 billion Eurobonds due 2028 has surged 1.7 percentage points this year to 9.588 per cent, the highest since 2009, according to data compiled by Bloomberg.
http://www.businessweekme.com/Bloomberg/newsmid/190/newsid/1116/Iraqs-Reserves-Enough-to-Maintain-Currency-Peg-Says-Central-Banker
Alaa Shahine and Ahmed Feteha | 14-09-2015, 10:38 AM | Iraq |
Any devaluation would be limited, says Iraq's central bank governor
Central bank Governor Ali Mohsen Ismail said Iraq has enough foreign reserves to maintain its currency peg but didn’t rule out a minor devaluation to shore up government revenue hurt by the slump in oil prices and the war on Islamic State militants.
The central bank’s reserves are enough to cover more than six months of imports, higher than what is typically needed to maintain the exchange-rate, Ismail said in an interview in Cairo on 13 September. The peg is a “key anchor to the economy,” the International Monetary Fund said in August.
“There is no fear for the dinar,” the governor said. However, if “the pressure remains, we could marginally change the exchange rate to increase revenues of the finance ministry,” he said. “But this is just an option that needs to carefully studied because we don’t want to give away what we have achieved in terms of the inflation rate, which is perfect now.”
Iraq, OPEC’s second-biggest oil producer, is engulfed in armed conflict with Islamic State militants who took control of major Iraqi cities and some oil facilities last year. The country has announced plans to raise $6 billion in bonds and received emergency IMF aid to plug a ballooning budget deficit.
Ismail said the budget shortfall will be lower than the 25.4 trillion dinar ($20.9 billion) originally planned because the finance ministry is already cutting spending.
The yield on Iraq’s $2.7 billion Eurobonds due 2028 has surged 1.7 percentage points this year to 9.588 per cent, the highest since 2009, according to data compiled by Bloomberg.
http://www.businessweekme.com/Bloomberg/newsmid/190/newsid/1116/Iraqs-Reserves-Enough-to-Maintain-Currency-Peg-Says-Central-Banker
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