Iraqi Dinar Discussion Board

[Aerospace]

If you understood the basics of what you pretend to know, you would understand.
http://www.cbi.iq/xl&wr/key%20financial.xls
Look near the top… all those interest rates listed… they are all dropping.
That is evidence of a loosening of the monetary policy. Now then… with rates still around 13-14 percent, that is still probably considered a tight monetary policy rate… but those rates are down from 20-21 percent.
When interest rates are dropping… that by definition means a loosening of monetary policy.
It is econ 101... Very basic. A high school econ class would teach that.

http://wps.aw.com/wps/media/objects/1001/1025108/notes/umenotes14.pdf

The Fed has at its disposal a number of
tools that it can use to engage in
monetary policy. We will study:
– Open market operations
– The discount rate
– Reserve requirements

So in Iraqs case, the open market operations would be the auctions. They continue to do the auctions so no change there.
The discount rate, they have lowered it. That is loosening.
Reserve requirements, they have lowered it, That is loosening.

If they stop the tight monetary policy, that does not mean the value will be free floating.
It will still be a pegged currency.
The difference will be the supply could grow too fast, causing inflation. They would still have to defend the peg, and they might be forced to lower the value of the dinar.