Hatem George Hatem *: Policy of the Central Bank of Iraq for the exchange rate of the dinar for the period 2014-2016 - critical review

by Hatem George Hatem
- Posted on 06/09/2018

an introduction

The exchange rate of the Iraqi dinar against any foreign currency ( the dinar exchange rate henceforth) means in this paper the amount of the relevant foreign currency necessary to buy one Dinar. [1] As is clear from the title, this paper is concerned with discussing the appropriate policy of the Central Bank of Iraq for the exchange rate of the dinar during the period 2016-2016 in light of the terrible decline in the dollar value of Iraq's oil revenues, which resulted from the collapse of the price of crude oil during the same period.



This paper is in three parts. The first part focuses on clarifying the location of the policy of the Central Bank of Iraq for the dinar exchange rate among the measures taken to counter the repercussions of the collapse of oil prices during the period 2014

2016 on the course of the Iraqi economy. This section begins by explaining the amount of damage caused by the sharp fall in the price of crude oil after 2014 in the dollar value of Iraqi exports from this resource in the years 2015 and 2016. The paper then goes on to review the measures taken to counter the repercussions of this decline in oil revenues and the associated severe atrophy in the flow of foreign exchange into the national economy. The final section of this section is dedicated exclusively to the dinar exchange rate. It begins with the presentation of the basic parameters of the central bank's policy of the dinar exchange rate and the conceptual framework governing this policy. It then reviews the mechanism adopted by this bank in its management of the dinar exchange rate; The dinar exchange rate against the dollar and the dinar exchange rate against a number of other important foreign currencies during the period 2014-2016, respectively.

[1] Two exchange rate definitions are available. The exchange rate is defined as the price of one unit of the local currency calculated or expressed in foreign currency or the amount of foreign currency required to buy / sell one unit of the local currency. This definition is the most internationally adopted at present

Dornbusch, Roger, Stanley Fischer and Richard Startz. Macroeconomics , op. cit., p. 576.

The following reference shows the motives behind the widespread use of this definition in recent years

Dunn, Robert M. Jr., and John H. Muttin. International Economics , London and New York: Routledge, 2000, p

The second definition is inverted the first definition. According to this definition, the exchange rate represents the price of one unit of foreign currency calculated or expressed in local currency or the amount of local currency necessary to buy / sell one unit of foreign currency. This definition has been adopted in a number of scientific studies, to name but a few

Catoa, Luis AV "Return to Basics: Why Exchange Rates," Finance and Development, September 2007, p. 48

The Central Bank of Iraq adopts the latest definition of the exchange rate in its official statistics on the dinar exchange rate. See

" Annual Statistical Bulletin " issued by the Directorate General for Statistics and Research of the Central Bank of Iraq. The preparation of this statistical bulletin for the years 2003-2017 is available at https://cbi.iq/news/view/492

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Hatim G. Hatim - Review and evaluation of exchange rate policy 2014-2016-formated 2


http://iraqieconomists.net/ar/2018/09/06/حاتم-جورج-حاتم-سياسة-البنك-المركزي-ال/

Hussein Attwan Mahoush: Commenting on an article by Professor Hatem George Hatem (b) Measuring the effect of the change in the dinar exchange rate against the dollar on the gap between the general sum of revenues of the Iraqi general budget and the total of its expenses -
by Hussein Atwan
- Posted on 06/09/2018


Price stabilization is a gateway to economic growth. Central banks have always taken price stability as a central objective pursued through monetary policy with their various instruments to provide an environment conducive to economic growth, which was provided by the relatively monetary policy in Iraq. However, unregulated fiscal policy, as well as lack of coordination between the two policies, The wheel of economic growth in Iraq, as the birth of the structure of the general budget of the country over the past years, dominated by consumerism rather than investment, a significant expansion in total demand, which led the Iraqi economy to the point of limited capacity For the production of goods and services both negotiable and non-negotiable, and thus turned the public budget to a source to generate price imbalances in the joints of the Iraqi economy all.

The commitment of the monetary policy administration to stabilize the exchange rate of the Iraqi dinar to achieve price stability in the hope of reaching economic growth stems from the fact that control of the exchange rate variable is the only way through which sterilization prices can be sterilized through sterilization of excess liquidity, The effectiveness of traditional monetary policy instruments (interest rate, monetary aggregates), due to the weak financial depth in the Iraqi economy.

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Hussein Atwan Mahoos - Commentary on the article by Professor Hatem George - editor
"The opinions and articles published do not necessarily reflect the trends adopted by the network of Iraqi economists, but express the opinion of the book only who bears the responsibility of legal and scientific"


http://iraqieconomists.net/ar/2018/09/06/حسين-عطوان-مهوس-تعقيب-على-مقال-الاستاذ/