Kaperoni

  In Kaperoni

Direct from the IMF in 2014…“14. The de facto fixed exchange rate has served Iraq well. The authorities agreed that a stable nominal exchange rate provides a valuable anchor for inflation expectations in an uncertain environment, and intend to continue implementing this policy for the foreseeable future. In the medium term, staff encouraged the authorities to consider creating the conditions which would make possible a move to a more flexible exchange rate policy. Such flexibility could allow a predictable and gradual appreciation of the nominal exchange rate, triggered by strong oil revenues and the Balassa-Samuelson effect, to accommodate a possible real exchange rate appreciation while keeping domestic inflation low.” In other words, create the condition to move from a peg to a float and counter inflation as a result of significant investment by allowing the currency to appreciate countering the inflation created from that investment. This is how you do it.  It is not an option, it is how central banks operate. There is no RV.