Iraqi Dinar Discussion Board

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Action Central Bank economists welcomed convergence
Baghdad-Sabah

5/19/07


Counting economists specializing in finance and monetary procedures Iraqi Central Bank to lower the rate of the dinar against the dollar selling an important step toward controlling the volume of inflation. (Edit: lowering the rate means raising the value of the currency which is how governments often combat inflation). They emphasized the importance of raising the interest rate up to 12% in achieving the goal of curbing inflation would in the short term to stabilize an acceptable price prevailing in the Iraqi market.

It is noticeable that depression, and confusion author of this action on the stock sale and purchase rates in most of the stores are banking Baghdad must follow this dangerous turn in the stock market in the Iraqi press statements, a number of different Concerned importance of the matter and the enemy remarkable step towards reducing inflation and raise the value of Iraqi dinar and reduce prices goods and services.


In the same context, Ali Ghalib Baban Minister of Planning said that the central bank's decision, which came after extensive study by the stakeholders also aims to encourage holders of capital in addition to citizens in general on saving. (Edit:The Fed in the U.S. does the same thing. By raising interest rates they encourage saving. When people save it takes currency out of the economy. Hence, lowering supply and increase the currencies value). Meanwhile, the Bank Governor Sinan Shabibi Center : that the goal of the Central Bank is currently limited to the fight against inflation, which amounted to about 76% and reduce the height by providing better conditions for economic development and improving the performance of the banking sector and providing stability.


So Dr. Shabibi governor of the Central Bank of Iraq that one of the reasons inflation is increasing cash in circulation, necessary follow a new monetary policy aimed at improving the dollar's exchange rate towards reducing the price of several points in the auction, organized by the Central Bank every day to sell the dollar in order to withdraw money from circulation.


With Counsel explained in the Central Bank of Iraq, Dr Mohamed Saleh appearance that is the central body responsible by virtue of Law No. 56 of 2004 to cope with inflation and reduced levels as a basis of this principle adopted by the monetary policy in discharging its duties, On this basis must the Central Bank that sets policy priorities, and here we mean monetary policy to combat inflationary activities using the tools available. He adds favor : there before monetary policy variables and intermediate or intermediate objectives reflect on the relationship between the impact of these variables to reduce the general level of prices and contain inflation.

Among these variables equilibrium interest rate "long-term" equilibrium exchange rate or inquisitorial, and the levels prevailing exchange, Noting that these variables can control directly unless they are being singled through similar variables and the variables or operational objectives are signals or means Acharateh or information be used to influence stability in the cash market. Among these references technique interest rate, the Central Bank of Iraq, a price indication would be tantamount compass navigation to influence the behavior of interest rates as determined by which the Central Bank lends Why? What banks deposited in the Central Bank?

Under the control of the volume of cash as it is believed that whatever the confiscation of inflation, in the end, monetary phenomenon, Accordingly, the priorities stability longer required logical to build and stimulate the economy. illustrates the benefit of this trend is that inflation mainly to increase the speed of money circulation and abandon what leads to weak demand cash and the growing demand for goods and services as counterproductive, In order to maintain the cohesion of demand and maximize cash levels in order not to turn into strong spending on goods and services on the Central Bank, the use of tools in raising the interest rate has to motivate the structure of interest rates and maintaining the coherence of savings and maximize their purchasing power helps monetary policy to address the high levels of liquidity and containment in the cash market, "bank" without becoming bloc cash adrift towards goods and services. In light Matekadm highlights many of the questions in the forefront Can a CBE unit of curbing inflation and control the volume of cash and MacDewey raise interest rates at the high prices?


Economists stressed the importance of the oldest in the Iraqi Central Bank of procedures to control the volume of inflation, which reached high figures exceeded 70% through the reduction of dollar selling prices against the Iraqi dinar and raise interest rates up to 12% from 10%, which generated a remarkable stability in all price Iraqi markets stagnating in the buying and selling of the dollar in the banking most of the stores in Baghdad. The economists also stressed the importance that the Central Bank will continue this approach, which would curb inflation, which now threatens the stability of all the situation in Iraq, including security and social addition to the economic situation. The observers speculate that the lifting of value the Iraqi dinar against the dollar would reduce inflation and revive the economic situation of Iraqi families, which has suffered greatly because of high inflation rates, which was born the burden of large households now borne citizen addition to the deterioration of the level of savings is clearly. Which prompted the Central Bank to take this action, which many observers several step towards a comprehensive reform of the Iraqi economy.

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