The Central Bank of Iraq on the exchange rate: changing it confuses the markets and squanders the gains

ERBIL (Kurdistan 24) – The Central Bank of Iraq pointed out on Sunday that any unplanned change in the US dollar exchange rate would lead to economic stagnation and confuse local markets.

In late 2020, the CBI decided to raise the price of selling the dollar to banks and currency exchange to 1,460 dinars from 1,182 dinars in an effort to bridge the inflation gap in the 2021 fiscal budget after the collapse of oil prices, which is the primary income of the financial resources of the whole country.

The CBI said in a statement that the current exchange rate achieved many positive results, the most prominent of which was reducing the state's general budget deficit to achieving a surplus at the end of 2021 and giving local producers and investors an essential competitive advantage with imported goods.

It added that "the repetition of changing the exchange rate within short times without study by relevant authorities leads to economic recession, confuses the work of local markets, increases speculation on foreign currency, and squanders the gains made by the current exchange rate."

The bank continued, "despite the rise in international oil prices, there is no link between this rise and the objectives and results of changing the exchange rate."

"The current rise in oil prices will enable the Iraqi government to properly rebuild the Iraqi economy and build sufficient financial buffers to face any future fluctuations in international oil prices."

This statement came after claims circulated in the media about the existence of government efforts to reduce the US dollar price. The Iraqi parliament hosted the Governor of the Central Bank to talk about the exchange rate, but the Minister of Finance refused to attend despite being summoned. Speculation about the situation led to fluctuating exchange rates in the grey market.