An article…came out from economic adviser Saleh stating Iraq cannot float the dinar because is using the daily currency auctions. He mentions several reason. This is true. They cannot float while they continue to use the currency auctions. Iraq is only one of a few if even that left in the world using a currency auction. Central banks manage their currency by freedom of movement of capital and supply and demand selling blocks of currency to balance the exchange rate on the global financial system.
Remember, the currency auction was created to not only maintain stability but to provide a source of dollars to merchants in Iraq because the dinar had not been recognized internationally for trading and exchange. Not only the dinar but the financial system in Iraq was completely rebuilt from the ground up. That is why they went into IMF Article XIV. Giving them several years to build confidence and stability prior to accepting Article VIII engaging with the world financial system. We expect the currency auctions to end when they accept IMF Article VIII. They will end the auctions, and begin to float the currency which will contribute to the success/growth of the private sector market economy.Tags: kaperoni /