Exchange rate fluctuations accounted for expert attention
Select an economist many reasons behind the fluctuations in the value of the Iraqi currency and economic imbalances structural considering that the exchange rate holds an pivotal role in monetary policy in terms of its use as a target or a tool and as an indicator of the competitiveness of the state through its effect on the components of economic growth, such as investment and the degree of openness to international trade and capital flows and the evolution of the financial sector.
The parallel market
He d. Kamal Al-Basri’s “morning” that the increased demand for foreign currencies and the weakness of the business environment of economic and fiscal policy and weak productive capacities of local and growing presence remittance companies and financial brokerage firms (parallel market) and the emergence of areas of trade at border crossing points all of which led to volatility in the Iraqi currency. noted that the Iraqi currency optical recovering derived from the content of the economy and it can not be to stabilize the value of the currency away from economic reality.
And Asharalbbar to that the reality of the Iraqi economy suffers from a weakness in the effervescence basic Through meditate in the components of GDP for the year 2011 we will see that different sectors are for GDP oil, 54.74 percent and agriculture 4.15 percent and the industry is about 1.83 percent, noting that the Iraqi economy depends on the oil sector, saying that the problem when oil revenues are much bigger than the financial returns obtained from taxes reasoned that finding a state asset financially significant disposal easy gain (not achieved at the expense of the financial resources of citizens), noting that all of this will result in economic policies sterile represented an increase of salaries and wages away from labor productivity accounts and the creation of employment for non-productive purposes useful that all this will result in inflation Balasarklah on policy support is an updated economic distortion in the structure of the economy.
He also will result in policies spend uneconomical represented activities have no economic justification كالمنح aid and open circles foreign diplomatic, cultural do not add real value to the economy and to the citizens and be at the expense of the areas of economic urgency relate to the lives of citizens. attributed visual reasons behind the fact that the private sector in the States developing marginal and weak he is to ايتمتع support as is the case in the public sector, but rather concentrated support in the areas of economic commercial and service noting that the absence of the real role of the private sector means the absence of creativity and speed adjustment with market needs and provide employment outside the public sector, pointing out that the uniqueness of the public sector production and the absence of rival to the private sector will inevitably lead to the continued deterioration of the efficiency of the production of the public sector, he said.
He pointed out that this matter requires government intervention and protection of the public sector through financial support and customs protection policy (currently support the annual $ 3 billion). Thus, the government is working to protect the institutions of productivity inert at the expense of the citizen who finds unchanged compelled to buy goods or services at a higher price and the quality is poor useful that this sacrifice is usually also emphasizes global experiences to not lead in the short term and not run into improved performance and efficiency of the production of the public sector.
He optic that exchange rate Atatheraola measures the central bank, which represents management major in the state to identify and manage monetary policy so as to contribute to the achievement of economic goals that are looking her state, and secondly commercial banks and remittance companies financial terms intervene in the market to execute the orders of their clients or for its own account, where you These centers collect orders customers and they Palmqasat banking, and thirdly brokerage firms are intermediaries militants who collects orders purchase or sale of hard currency for the benefit of several banks or dealers others away from transparency. drew visual to it, and over the past few months, decreased the value of the Iraqi dinar against foreign currencies until he was sometimes the market parallel 1300 dinars per dollar, after it was stable on the rate of 1185 dinars per dollar, despite the stability of the selling price of the Central Bank’s 1166 dinars with a commission of 13 dinars of remittances any 1179 dinars and 1171 dinars to the sale of cash and this indicates to the high demand for dollar in the domestic market.
He attributed this to several factors in the forefront of external factors which formed the political and economic crises in neighboring countries (Syria and Iran) and embodied in need of these countries to the dollar coin and foreign currency, which he got a drop of the local currency in those countries and reflected down the price of exports to Iraq, and the creation of windows to attract the dollar from Iraq to those countries during trading attractive to the Iraqis and the same time a source of hard currency to the Iranians and the Syrians. On the other hand there is a thread social and family with these countries may also be an outlet for the exit of the dollar but it is difficult to predict Bmekdarh. decline investors The other factor is the business environment, economic, represented by the factors that cause the result to the escape of domestic capital and the decline of foreign investors, including political instability and the absence of the rule of law in economic transactions. There is no doubt that the time period that followed the 2008 has seen an improvement in the security situation and then in the rate of inflation and the exchange rate. However, the economic environment is still repulsive acts do not encourage project planning medium-or long-term. Which led to limited activities on some business and commercial projects yielding profit fast, but I doubt that the percentage of it turning to other countries suffering from scarcity of liquidity arising from the impact of the financial crisis that began in late 2008. fiscal policy in addition to other factors, including politics public finances witnessed in previous years high rates of government spending at rates greater than any other country in the world (increased public spending of 34.6 trillion dinars in 2004 to 117.1 trillion dinars in 2012) and most images spending is consumer lead to a rise in spending outside world as well as the led to a rise in the net of the Iraqi currency traded amounting to 36 trillion dinars in 2013, bringing the demand for foreign currency, where the value of imports of Iraqi 37.3027 billion dollars in 2010 to 40.6325 billion dollars in 2011 at a rate of change stood at 8.9 percent., as well as double taxation policies and instability and political and economic weakness of the local productive capacities.
For the purpose of finding a solution to the fluctuation in the value of the Iraqi currency sees visual need to reduce pumping hard currency (cash sales) in the central bank auction and the adoption of increased foreign remittances and increase the price of cash sales at the central bank auction for the equivalent selling price in the auction of foreign remittances in order to cancel the profit realized because of the difference between the two rates .. and proposes a mechanism buying and selling foreign currency for remittance companies and financial companies to mediate done by banks licensed in Iraq in order to reduce transaction is eligible and procedures adopted and compel traders and dealers in the areas of trade exchange between Iraq and neighboring countries to deal transfer financial and letters of guarantee, rather than buying cash. in addition to the commitment to a transparent auction information and cash transfers and development of an electronic information system.
He called visual in his speech to the need to adopt radical solutions to long-term by reviewing the financial policy of the state and reduce inflation in spending, operational and need to speed up plans for banking reform in order to facilitate the procedures for exchange the cash and improve the tax code and work to expand horizontally while reducing tax evasion.
Deletion of zeros
He also called for activating the law of customs tariff because of its important role in providing incentives for producers with feature economic, leading to a reduction in the volume of imports as well as improved revenue workforce and improve the business environment, the economic order to raise the efficiency of production for companies and institutions of local productive that will reduce imports and increase intake of foreign exchange through export, as well as attract foreign investment and use the mechanisms of modern electronic distribution of salaries and the use of instruments, banking and encourage saving. pointed to the possibility that be to issue a new currency or deletion of zeros from the current currency positive effects psychic dealers in local currency.