Iraqi Dinar Discussion Board

[Aerospace]

I tried explaining this to people years ago, but most just ignored it.
The CBI was so determined to fight inflation and stabilize the exchange rate that they didn’t give a crap about the economy.
They maintained a high reserve rate and high interest rate. That’s a VERY tight monetary policy. That’s great for the value of the dinar, but stinks for the economy and it has shown. Iraq's economy, aside from oil, is pathetic.
The banks would not lend money. They could make more money by depositing it and gaining interest. That explains the last sentence in that article.
Now… to spur the economy, they have to move to a looser monetary policy. They have to promote borrowing and spending instead of saving. They do that by lowering interest rates and lowering reserve requirements.
Problem with that. It could lead to inflation, which means the dinar could devalue.
Yes… the dinar could go down in value.
You guys who think this can only go up, may be in for a rude awakening and a good lesson in basic economics.