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Federal Reserve and Oil Export are the biggest factor for Iraqi dinar exchange rate

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Federal Reserve and Oil Export are the biggest factor for Iraqi dinar exchange rate

Unread postby admin » Fri Aug 30, 2013 9:04 am

Federal Reserve and Oil Export are the biggest factor for Iraqi dinar exchange rate

30 Aug 2013

Iraqi financial expert stated that the value of Iraq’s Federal Reserve currently amounts to about $80 billion, following the recent increase in the country’s oil exports. Nevertheless, no information was made available by the Central Bank of Iraq (CBI) to this effect.
Speaking to media, financial expert Hussein al-Asadi remarked, “According to my information, the value of Iraq’s federal reserve currently amounts to about $80 billion. This includes funds, precious metals and other items.”
Regarding the financial issues concerned with Federal Reserve, CBI or Central Bank or Iraq’s governor Abdul Basit Turki has chosen to stay mum. The bank has issued only a statement for indicating the developments that it has been carried out of late.
The last comment made by the CBI regarding the country’s federal reserve dates back to Jan. 31, 2012, when the bank denied the ‘decline of gold reserves’. CBI further stated, “They have been stable throughout the past months and amount to 29,730 tons.”
Asadi added, “The US dollar is the main currency in the Iraqi reserves. There are also some reserves in other currencies, in addition to gold. Due to the troubled military and political conditions of the country, Iraq’s reserves cannot be invested to a large extent, as is the case in China or the United Arab Emirates, for instance.”
He further stated, “Iraq is distributing its reserves to a number of banks just to protect [these funds, although it does generate some interest on the deposits.”
Economic expert also remarked the crisis between the government and CBI by remarking, “Article 26 of the CBI law explicitly states that it is inadmissible to lend to the government.”
On how the reserves are formed, Asadi said, “Iraq’s annual budget is in Iraqi dinars, which the CBI owns. The state’s revenues are from oil exports, and they are mostly in US dollars. The government buys dinars from the bank, which results in profits for the bank. The total CBI profits from selling dinars to the state constitute the country’s Federal Reserve, whose growth is associated with state spending. State spending increases in proportion with its oil exports.”
Member of parliamentary economic committee, Mr. Abdul Hussein Abtan, the Iraqi MP, stated, “The total value of funds and precious metals that make up Iraq’s Federal Reserve amounts to about $76 billion.” He added, “This reserve was only invested in projects to support the stability of the Iraqi dinar's exchange rate.”
On the other hand, Ahmed Hassan Faizullah, a member of the parliamentary finance committee, denied the fact that “the government is able to use Iraq’s Federal Reserve, despite its need for funds on more than one occasion.”
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