Tuesday 11 January 2022 Dr.. Hamed Rahim
The economic theory reveals the details of the impact of the exchange rate on open economic activity through significant relationships in the quantitative specific sense.
The change in the exchange rate of the national currency in Iraq sparked great controversy, most of which took on a political aspect and polemics that made the public misunderstand this step economically, and the economic impact was clear in the increase in inflation rates from
(0.1%) in 2019 to (8.6%) in the last statistic, which expanded the poverty area. The declared goal of that step included a set of variables, including limiting imports, supporting the productive sector, and providing financial space for the government to finance the deficit, but the nature of the structural imbalance in economic activity made that goal not find an actual application space, so the currency window usually increases its daily sales, reaching as an average of Approximately (200) million dollar.
Investment is also a variable that is dependent on other factors, including security stability, infrastructure, and others, which makes the effectiveness of changing the exchange rate in this framework relatively limited.
Perhaps the only success is finding a financial space for the government to finance the planned deficit in the current world budget, and this was also accompanied by clear misinformation in The speech is represented by an attempt to depict that the value of the decrease in income amounted to (22%) in reference to the size of the devaluation in the currency exchange value, and this is not accurate because the low value is actually reflected in the indicated inflation rate, and the reason for the continuation of window selling rates to this extent is due to reasons related to corruption Accompanying the window’s activity referred to in the announced reports, and most importantly, the two trading partners of Iraq, namely Turkey and Iran, their national currencies are of low value in a way that far exceeds the value of the Iraqi dinar, even with the recent devaluation, which has kept Iraq low in the face of torrential goods imported from the outside.
The theoretically desired effect of devaluing the national currency includes addressing the deficit in the balance of payments by increasing exports and reducing imports, noting things that must be met, including the flexibility of the national production apparatus and control over trade outlets, and most importantly, the availability of accurate statistics on social groups and productive economic activities, which depend on The importer to feed the inputs, and then follow (social leverage) policies to reduce the potential negative impact on social groups as well as provide economic support through tax policies, subsidies and other policies provided to economic units.
Accordingly, development policies require that the exchange rate be dealt with and reduced, but on condition that all of this is taken into account, i.e. all these policies must be one basket, starting from the availability of accurate statistical data, leading to finding effective policies to counter the potential negative effects, and perhaps the advantage that we possess The government’s financial abundance resulting from oil sales, which enables the government to provide financial resources for processing LINK