Will an increase in oil prices support Iraqi Budget & Iraqi Dinar Price?

A number of experts in the financial and economic affairs said that Iraqi government and the Iraqi Central Bank are still unable to pull back Iraq from economic & financial crisis.

Their policies are similar to the previous administrations with just relying on the oil revenues to support its federal budget. The CBI has announced in a official statement that Central Bank of Iraq is not devoted to change the Iraqi dinar exchange rate against the U.S dollar. CBI also denied the implementation of fees or taxes on the sale of the U.S dollar. They confirmed that an increase in the oil prices would enable the Central Bank to inject a large amount of U.S dollars in the Iraqi domestic markets. An economist Maytham said that this announcement from the Iraqi Central Bank directly indicates that CBI hasn’t yet planned to change the Iraqi dinar exchange rate, so the price of the U.S dollar will remain the same.

Oil And Gas Production of Iraq is Improving

Point to be noted that there is a great demand for the U.S dollars in the Iraqi domestic market because the Iraqi Central Bank has decreased the sale of foreign currencies during the past few months. This reduction has created a significant amount of gap between demand & supply in the Iraqi local markets. The Iraqi parliament had suggested imposing tax and customs 8% on traders for purchasing dollars from the Bank. It also increased the exchange rate of the U.S dollars in the past couple of months. Most economic and financial experts believe that a significant amount of increase in the oil prices would enable the Iraqi Central Bank to push larger amount of U.S dollars in the Iraqi domestic markets. It will participate in managing and controlling the exchange rate of U.S dollar against Iraqi dinar currency. But, increasing the sale of U.S dollars will show that CBI and Iraqi government didn’t change their previous policies.

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