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Don961 » April 22nd, 2021
Al-Kazemi’s advisor determines the mechanisms used to control the exchange rate of the dollar against the dinar
Wednesday 21 April 2021 18:28
(INA) Baghdad: Nassar al-Hajj – The financial advisor to the Prime Minister, Mazhar Muhammad Salih, identified, today, Wednesday, the mechanisms followed by the Central Bank of Iraq to control the exchange rate, while responding to fears of a greater rise in the coming period.
Saleh told the Iraqi News Agency (INA), that “the window of the Central Bank of Iraq for the sale and purchase of foreign currency is a tool for the stability and stability of the exchange rate through daily interventions in the monetary market that mainly aim at withdrawing high levels of liquidity in the Iraqi dinar from the market, which is called (the sterilization policy). Cash) “.
He added, “Where the desired market demand for foreign currency is met by exchanging the dinar for foreign cash that is in the possession of the monetary authority, because that authority is the monetary issuance authority, that is, it is the one who issued the same dinar and it is concerned with preserving the stability of its value and purchasing power.”
He continued, “Those excess levels of cash liquidity in dinars are pressing, generating a demand for foreign currency, which means a demand for foreign goods, services and benefits, as foreign currency contributes to financing Iraq’s foreign trade, that is, import trade, which provides the supply of foreign currency and mainly to the market that is in the bank’s possession.
“The Iraqi Central Bank, no one else, through the accumulation of its efficient reserves of foreign currency represented by the very high coverage of the dinar, so the Central Bank undertakes the sale from its window that practices defense of the stability of the exchange rate within its official prescribed limits of 1450 dinars per dollar.”
He pointed out that “based on the foregoing, the daily monetary policy operations that perform their function by controlling the monetary liquidity in dinars and exchanging it at a stable exchange rate (as a nominal fixer of the external value of money), that is, to absorb that liquidity after exchanging it in the foreign currency at a fixed rate, it must be reflected in the stability of the exchange rate and from Then the price calm and stability successively, because the price is the value of the currency, expressed in money. ” LINK
Source: Dinar Recaps
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