An economic expert told Al-Jarida Platform: The exchange rate is hostage to the political mood and regional shifts.

 An economic expert told Al-Jarida Platform: The exchange rate is hostage to the political mood and regional shifts.

Economist Ahmed Hadhal spoke about the sensitivity of the dollar issue in Iraq and its direct impact on geopolitical and geoeconomic changes, emphasizing that the issue has become extremely complex internally and externally.

In an interview with Jarida Platform, Hathal stated that “since the end of 2022, and with the launch of the platform, the Central Bank has exhausted all monetary policy tools to address the gap between the parallel rate and the official rate. However, the problem is complex and does not only relate to the bank but also to the domestic market.” He explained that “60% of traders are still outside the platform, in addition to the lack of borders, which further complicates the crisis.”

He added that "the decline in the dollar's value coincided with the failure to approve the general budget and the instability of some foreign negotiations. The exchange rate is linked to economic, political, and media factors, and is a highly sensitive indicator of any crisis, statement, or event." He noted that "exchange rate fluctuations directly impact the purchasing power of citizens, merchants, companies, industrialists, importers, and even foreign investors."

Hedhal explained that "the loss of trust between society and the government is one of the most significant factors driving demand for the dollar as a more stable and valuable currency, especially given the lack of real production within Iraq.

 Oil production constitutes more than 70% of the GDP, and the general budget constitutes 190% of this GDP. These indicators raise concerns among citizens and investors about the possibility of a decline in the value of the dinar."

He concluded by saying, "The exchange rate issue is linked to the psychological factors of citizens and investors, and there is a close relationship between behavioral economics and traditional economics, which makes currency stability necessitating addressing confidence in monetary and fiscal policies, ensuring their stability, and preventing sudden changes."  link