A member of the Parliamentary Finance Committee, Naji Al-Saeedi, revealed, on Friday, the reasons behind the high exchange rate of the dollar against the dinar in the local market.
Al-Saeedi said in an interview with Ayna News, “Any country exposed to a financial policy crisis, its monetary policy will in turn be affected,” indicating that “Iraq operates today according to the fixed exchange rate system, which is very exaggerated and is supportive of the external product, not the domestic.”
Al-Saeedi added, “The shift from the fixed exchange rate to the creeping exchange rate, especially in periods of financial instability, will have a very negative impact on the expectations side, as if the price is raised to a point or two, it may affect four or five points in the market, and this is for him.” Negative effects on low-income people and the simple citizen, “stressing that” the use of inflationary financing or the new monetary issuance as the government borrowed treasury bonds from the central bank, the latter did not use the existing hard currency reserves, but rather used the new cash issue. ”
He pointed out that “this measure by the Central Bank raised the monetary mass in Iraq from 56 trillion dinars to approximately 80 or less trillion dinars, and this increase leads to monetary inflation and continuing with it leads to an increase in the dollar exchange rate towards the Iraqi dinar, and this is a very natural thing in monetary policy.” As the new monetary issue leads to the exchange rate of the dollar, given that the government did not use real resources to finance the deficit, but rather used inflationary resources. ”
Al-Saeedi stressed, “This procedure is similar to what the previous system used to do, and it is contrary to Central Bank Law No. 56 of 2004 in its Articles 32 and 28.”