Why Iraq have big potential to RV

normala rashid · June 21, 2018

This only from my research and opinion about Iraq economic. It’s hard for me to explain because English is not my native language. I found an article in French about economic and dinar is so interesting but it’s so bad I’m not fluent in the French language but I'm good analytical thinking.

.My opinions

1) Iraq will focus crude oil as main of export in their country to give positive for them GDP because Iraq has much debt in the country, not external debt( financial report 2017). Because debt/GDP is the best measure of an economy’s capacity to handle debt, as long as the economy is growing faster than debt, the debt will fall relative to GDP. exporters become more competitive in a global market. Exports are encouraged while imports are discouraged. There should be some caution, however, for two reasons. First, as the demand for a country's exported goods increases worldwide, the price will begin to rise, normalizing the initial effect of the devaluation. The second is that as other countries see this effect at work, they will be incentivized to devalue their own currencies in kind in a so-called "race to the bottom." This can lead to *** for tat currency wars and lead to unchecked inflation. ( We will through revalue and peg with dollar and devaluation when inflation is less.

2) The value of money depends on confidence in the future of the economy and politics, of production and productivity, as the analyzes of the classics of economics on "value" have shown. That'S why we cannot see revalue if Iraq doesn’t solve politic issues.( Sadr is the point to get revalue dinar)

3) IRAQ having been forced to sell a fraction of its foreign exchange reserves in dollars to support its currency. (auction)

4) Iraq needs to revalue their currency to support foreign exchange reserves the function is to maintain liquidity in case of an economic crisis. For example, a flood or volcano might temporarily suspend local exporters' ability to produce goods. That cuts off their supply of foreign currency to pay for imports. In that case, the central bank can exchange its foreign currency for their local currency, allowing them to pay for and receive the imports.

Edited June 21, 2018 by normala rashid