Imad Muhammad Ali Abdul Latif: Professor of Financial and Monetary Economics, Faculty of Administration and Economics, University of Baghdad
summary:
1. It is essential that the mechanism for determining the exchange rate, whether adjusted or changed, be treated with great caution; Because it affects the people’s livelihood and Iraq’s obligations to its companies, the dollar value comes from two aspects: first, it reflects the importance of government revenues and, second, it represents the establishment of all goods and services consumed by members of society.
2. One of the things that prompted the widening gap between the official exchange rate and the parallel market exchange rate was the successive changes in the official exchange rate by the Government.
3. The current exchange rate gap is due to higher domestic demand for the dollar due to domestic economic, investment, and business activities and financial transfer restrictions by the US Federal Bank.
4. The sale of the dollar from the Ministry of Finance to the Central Bank of Iraq and thus, through the auction of the currency contributes to the profits of the Central Bank for each dollar sold by 10 times the number of dollars sold per day, which contributes to an increase in the general rate of prices by 0.77%, and then from banks to investors by 0.76% in the prevailing rate of expenditures. Dollar sales in the parallel market also contribute to an increase in the overall rate of prices by (12.2%).
5. A list of goods, services, and origins for Iraq’s imports can be adopted, disaggregated by importance by the Central Bank of Iraq, such as food, medicine, and others. Exchange rates for essential goods may be at auction (1200) IQD per $ 1. (1350) dinars per $1 for ordinary goods and (1550) dinars per $1 for luxury and durable goods.6. To regulate import leave for investors and traders, which would compensate by increasing or manufacturing import alternatives within Iraq.
7. Deposit part of the oil dollar revenue in a central area of Iraq’s trade, through which all commercial, financial, and economic transactions are settled, such as China in the Middle East, Switzerland in Europe, and so on. This area is called the Point of Settlement POS.
8. Issuance of dollar bonds by the Ministry of Finance and the Central Bank of Iraq; to complete the process of covering Iraq’s international commercial, financial, and economic transactions and to have these bonds reimbursable as government bonds guaranteed by the Iraqi Government.
9. It is vital to work out a specific and thoughtful extent to which the exchange rate of the dollar will move towards the Iraqi dinar in the market, both by the Ministry of Finance and the Central Bank, so that the exchange rate may move up or down according to the requirements of the Government’s need to boost its oil revenues in Iraqi dinars, such as ± 10.
10. Opening a counterbalancing secondary window for the central bank by the Ministry of Finance through Rafidain and Rasheed bankers, used to support the Iraqi dinar and coordinate with the central bank in preparation for expanding the foreign exchange market.
11. Merging all banking companies with commercial banks operating in Iraq, or converting them into independent commercial banks, to control and tighten the circulation of foreign exchange, particularly the United States dollar.
12. The exchange market could be part of the Iraqi stock market to develop it, increase its ability to attract funds in dinars and dollars, increase its efficiency in recycling funds, and direct them towards government investments (through government securities) and private investments
1. It is essential that the mechanism for determining the exchange rate, whether adjusted or changed, be treated with great caution; Because it affects the people’s livelihood and Iraq’s obligations to its companies, the dollar value comes from two aspects: first, it reflects the importance of government revenues and, second, it represents the establishment of all goods and services consumed by members of society.
2. One of the things that prompted the widening gap between the official exchange rate and the parallel market exchange rate was the successive changes in the official exchange rate by the Government.
3. The current exchange rate gap is due to higher domestic demand for the dollar due to domestic economic, investment, and business activities and financial transfer restrictions by the US Federal Bank.
4. The sale of the dollar from the Ministry of Finance to the Central Bank of Iraq and thus, through the auction of the currency contributes to the profits of the Central Bank for each dollar sold by 10 times the number of dollars sold per day, which contributes to an increase in the general rate of prices by 0.77%, and then from banks to investors by 0.76% in the prevailing rate of expenditures. Dollar sales in the parallel market also contribute to an increase in the overall rate of prices by (12.2%).
5. A list of goods, services, and origins for Iraq’s imports can be adopted, disaggregated by importance by the Central Bank of Iraq, such as food, medicine, and others. Exchange rates for essential goods may be at auction (1200) IQD per $ 1. (1350) dinars per $1 for ordinary goods and (1550) dinars per $1 for luxury and durable goods.6. To regulate import leave for investors and traders, which would compensate by increasing or manufacturing import alternatives within Iraq.
7. Deposit part of the oil dollar revenue in a central area of Iraq’s trade, through which all commercial, financial, and economic transactions are settled, such as China in the Middle East, Switzerland in Europe, and so on. This area is called the Point of Settlement POS.
8. Issuance of dollar bonds by the Ministry of Finance and the Central Bank of Iraq; to complete the process of covering Iraq’s international commercial, financial, and economic transactions and to have these bonds reimbursable as government bonds guaranteed by the Iraqi Government.
9. It is vital to work out a specific and thoughtful extent to which the exchange rate of the dollar will move towards the Iraqi dinar in the market, both by the Ministry of Finance and the Central Bank, so that the exchange rate may move up or down according to the requirements of the Government’s need to boost its oil revenues in Iraqi dinars, such as ± 10.
10. Opening a counterbalancing secondary window for the central bank by the Ministry of Finance through Rafidain and Rasheed bankers, used to support the Iraqi dinar and coordinate with the central bank in preparation for expanding the foreign exchange market.
11. Merging all banking companies with commercial banks operating in Iraq, or converting them into independent commercial banks, to control and tighten the circulation of foreign exchange, particularly the United States dollar.
12. The exchange market could be part of the Iraqi stock market to develop it, increase its ability to attract funds in dinars and dollars, increase its efficiency in recycling funds, and direct them towards government investments (through government securities) and private investments
