XXXXX Invitation to peg to a basket of currencies

6/12/2014 0:00

Spared the tremors
BAGHDAD - Mustafa al-Hashemi

Called bank adviser to the Iraqi dinar's peg to a basket of currencies instead of the dollar coin confined to what the economy avoids shocks that may occur due to the low price of the dollar globally.

Said Dr. Essam Mahola told (morning) that China and Russia have expanded to scrap the dollar and the adoption of their currencies in trade exchanges between the two, including may affect the future value of the dollar is related closely vendor only of the general budget which is oil.

And signed last April, Prime Ministers Vladimir Putin , and Chinese Premier Wen Jiabao, agreement allowed its provisions to their countries greater opportunities than they are by Kqutin Two economic Dharptin to raise the level of trade, Alloys Used in that their currencies the ruble and the yuan, which was considered by observers and economists as a deliver a knockout blow to the U.S. dollar, which is a unit of global trading sole.

said Mahouelle that the adoption of a basket of currencies such as the euro and the pound sterling and the other as a cover for the currency would enhance the value of the dinar, too, stressing the need to take this step after studying the impacts and its impact on oil prices to avoid shocks that may occur in the global markets and minimize its impact on the economy of Iraq.


* What is a basket of currencies?

- The Central Bank of the selection of a group of currencies to form the basket as the basis of choice is usually the intensity of bilateral trade with these countries thereby giving a coin every state and weight in determining the rate of exchange into the basket (depends on the ratio of exports and imports with key partners to total trade: total weights = 100 .), over time, change the intensity of trade with the countries of the basket, and then change the currency weights in the basket, or may change the components of the basket itself, even keeping the CBI on the real value of the currency as not to compromise the commercial position of the State, or to business partners.

Analysts say that the most important advantages of the introduction of a basket of currencies to maintain the rate of real exchange to avoid any exaggeration in the rate of exchange or understatement in the value of the currency and the relative stability of the rate of disbursement, as the rise in the value of a particular currency in the basket, meaning a decrease in other currencies for that currency, and vice versa.


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