By Khayoun Saleh
Azzaman, April 10, 2012
The Central Bank has the ability to stave off speculation on the Iraqi dinar which saw its value vis-à-vis the dollar declining in the past two weeks.
The dinar’s depreciation has prompted the Central to intervene by increasing supply of the greenback and withdrawing dinars from the market.
It has forced the bank’s senior officials to give statements to assure markets that the country has massive reserves of hard cash, more than enough to cover the dinars in circulation. “The dinar is strong and we have tremendous ability to confront bubbles in prices. Our reserves are estimated at $62 billion,” said Central Bank Deputy Governor Mudher Saleh.
Saleh said the Iraqi economy, due to high oil prices and the increase in oil export, was robust.
“Our hard cash reserves are sufficient to cover 120% of the value of local currency in circulation at current exchange rate,” Saleh said.
Demand for the dollar has surged in the past few months. Analysts say the demand has been fueled by sanctions imposed on neighboring Iran and Syria.
Saleh acknowledged that there has been a rise in demand for the dollar in Iraq and that the Central Bank is trying to work out a new mechanism for its sale of hard cash.
He said Iraq’s hard cash comes solely from oil exports and it was important that the authorities took extra care when spending it.
Iraq hard cash reserves exceed $60 billion
