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The central bank governor comments on the concept of foreign currency reserves and its uses

Iraqi Central Bank Governor Ali Mohsen Ismail commented, on Thursday, about what some are deliberating regarding the uses and concept of foreign currency reserves (cash, deposits, bonds, gold).

Alaak said in a statement, “Unfortunately some people understand the foreign reserves of the Central Bank as a surplus invested abroad … the real financial surplus the government has from surplus funds that invest in various forms such as sovereign funds, investment funds, and generational funds, among others.”

He added, “As for the reserves at the central bank, they correspond to the dinar issued to the government or others. It is a cover for the local currency and it must not be less than a level of adequacy determined by international principles, otherwise the value of the local currency (the dinar) will collapse as happened in the previous system.”

And the relationship continued, “As for how the reserve is managed in terms of the type of currencies and the type of instruments, they are governed by internationally recognized rules and in all central banks, and we follow the same rules and in the subject complex and broad technical details.”

It is noteworthy that when the government borrows internally, it is tantamount to withdrawing from foreign reserves because the dinar that it borrows is pumped into the market and turns into a demand for mostly imported goods and goods and the payment of foreign liabilities, and it (the government) does not place a dollar in exchange for it to lead to the withdrawal and reduction of foreign reserves. For more details about the above statement, please click on the link below. Source