Why does Iraq need the rate to change?
That’s the most important question. It goes back to who benefits from cheap currency…American dollars going into Iraq benefits American companies. They’re using dollars to buy cheaper assets. It’s to most of the companies’ benefit that the dinar stay low and weak.
The problem for Iraq is that if it’s trying to diversify its economy…it has to be able to produce things. If it has a weak currency then it can never really become a manufacturing sector. They will be using dinars to buy foreign inputs. They will never be able to diversify that way…What Iraq needs to do before they start trying to diversify the economy, they need their exchange rate to change…Before all that money starts pouring in and they start really expanding their economy they need something to happen.
