Dollar’s Rising Value: A New Economic Dynamic in Iraq
The US dollar has experienced a significant upswing in the Al-Kifah and Al-Harithiya stock exchanges, with the exchange rate reaching a peak of 156,200 Iraqi dinars for every 100 dollars. This is a stark contrast to the previous day’s rate, which was 154,600 dinars for every 100 dollars. The value surge was also mirrored in local markets across the capital, Baghdad, where exchange shops raised their selling prices. The current selling rate is 157,250 Iraqi dinars for every 100 dollars, while the purchasing price is 155,250 dinars.
Value Surge: Not Just in Baghdad
Beyond Baghdad, Erbil, the capital of the Kurdistan Region, also saw a rise in the value of the dollar. The selling price in Erbil shops was recorded at 155,300 dinars per dollar, while the purchase price was 155,200 dinars for every 100 dollars. This suggests that the shift in the dollar’s value is a nationwide trend within Iraq.
The sudden increase in the value of the dollar in relation to the Iraqi dinar, as reflected in stock exchange rates and local markets throughout the country, is a noteworthy economic event. This shift affects the cost of transactions and could potentially impact the overall economy. The rise in the dollar’s value observed in Baghdad and Erbil points to a widespread increase, which is significant considering the economic challenges that Iraq has faced in recent years.
Central Bank’s Plan to Strengthen Iraqi Dinar
It’s important to note that the Central Bank of Iraq has a new plan to bolster the value of the Iraqi dinar against the US dollar. The measures include reducing the US dollar to Iraqi dinar exchange rate for travel or internet purchases from 1,470 dinars to 1,465 and helping private banks strengthen their foreign currency reserves that are not the US dollar. The Central Bank specifically named the Chinese yuan, the euro, the Emirati dirham, and the Jordanian dinar. There’s also a provision for selling foreign currencies in government banks for the purpose of travel, for the Hajj pilgrimage, medical treatment, and study.
Devaluing a currency has significant downsides as it can lead to a liquidity crisis, as seen in Argentina. But for Iraqis who are paid in dollars, the devaluation potentially gives them more purchasing power. However, people paid in dinars may lose purchasing power since imports and exports are paid for in dollars. A devaluation also means imported goods become more expensive in the local currency. Given the economic hardships Iraq has experienced, these are critical factors to consider.
As the value of the dollar continues to rise against the Iraqi dinar, the impact on the economy and the lives of ordinary Iraqis will become more apparent. While there are potential benefits for those paid in dollars, the overall implications of this shift are complex and far-reaching. As Iraq navigates these economic changes, the Central Bank’s strategies to strengthen the dinar and mitigate the impacts of currency devaluation will be critical.
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