Experts: reduce the effects of the parallel market contributes to the stability of the exchange rate

11/20/2013 12:00 AM

They called to reconsider granting leave enter the currency auction

Baghdad - Mostafa Hashemi

Confirms experts and specialists need to minimize the effects of the parallel market to stabilize the market and the exchange rate of the dinar against the dollar , pointing to the importance of maintaining the economic experiences participating in the auction currency.

Effects of the parallel market

In this context, the economic expert called the appearance of Dr. Mohammed Saleh to minimize the effects of the parallel market exchange rate of the dinar against the dollar , because the reduced significantly contribute to the stability of the exchange rate of the dollar.

 He said in a statement to the (morning) that it is necessary to reconsider granting banking companies and financial transfer licenses to enter the auction currency because plentiful harm the economy and affect significantly the stability of the dollar in the local market . , And pointed out that those companies lacking greatly to the experience that qualifies them to compete private banks while private banks have become familiar enough experience to enable them to post the central bank to control the exchange rate of the dollar .

Recalling the establishment of private banks that fall under the Association of private banks in reducing the price of the dollar last summer through coordination with the Central Bank after the Iraqi market has seen an unprecedented decline in the exchange rate of the dinar against the dollar.



Currency auction


Saleh explained that he was supposed to be the central bank sells dollars to companies in order to sell them at a price that it deems appropriate for civil sells to banks at subsidized price to create a state of balance and entrench the freedom to choose the citizen to the point of buying of the dollar .

 Indicating that the dollar buying from an auction sale of the currency ( for banks ) Best of the citizen from the sale of Central dollar exchange offices in local markets they seek to achieve fictional profits at the expense of the economy .

Calling to reduce the number of intermediaries in the sale of the dollar directly and that the sale is not the official price as it gets at the moment in exchange offices in local markets.

 Also, higher interest rates reduces investors and businessmen on the assumption , while falling encourage investment , which is reflected in the follow-up the economy and improve the value of the local currency. Stressing the importance of reducing the rates of inflation, as the lead inflation to the devaluation of the national currency and accordingly changed exchange rate.

Supervision and control

For his part, adviser to the Iraqi Institute for Economic Reform d . Ahmed al - Husseini : that of the duties of the central bank supervision and control over the parallel market and not on the banking companies , because the parallel market plays a big role in the pressure on the economy by crowding out banks in the currency auction .

He said in an earlier statement (morning) that the role of the central bank oversight may be suffocating at times on these companies for the purpose of providing an opportunity for banks to exercise its natural role in the work, as the private banks began to complain about the existence of competition from banking companies , which greatly influenced in the deterioration of the activities of these banks. and pointed out that the banking companies newly registered not possess experience in the market and its real mechanism of action , and this is what caused by a volatile exchange rates of the dollar and rising rates in the domestic market .

Monetary variables

For his part, academic economic d . Essam المحاويلي that the large number of companies competent in brokering the sale of the currency in light of monetary policy in Iraq has caused a burden on monetary variables other , and thus would be a burden on banks in general by calculating the interest rate and draws customers for banks.

He pointed out that the number of banking companies large increase of the proportion of demand while the supply is limited what is causing the gap request because the money supply today is managed from the central bank , and therefore, the monetary policy of Iraq did not unleash the market to take its course , because the amount of money supply is controlled by a Central Bank and the request is not specific and is open due to the increased registration banking companies shall affect the stability of the currency through the creation of demand versus supply gap is limited to what is causing the currency economic problem for the country.


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