The dollar argument

[yota691]

The dollar argument

Sunday 20 June 2021 215

 

Yasser Al-Metwally 

 

The ongoing debate regarding the exchange rate and the devaluation of the national currency "the dinar" against the foreign currency "the dollar" reflects the observation that there is a real crisis and it is, however. For the purpose of comparing the risks of raising the value of the dollar against the dinar and its advantages, it is necessary to review the merits, reasons and causes of the decision or action, something called. 

you will.

Calls to raise the value of the dollar to address the issue of weak resistance of local production to raise its ability to compete with imported production were rejected, and that was before the issue of the scarcity of the national currency “liquidity” exacerbated to cover operating expenses “salaries” on top.

Hence, the liquidity crisis worsened after the collapse of oil prices that accompanied the Corona pandemic and the signs of the global financial crisis and its effects on the economies of the world.

Therefore, the state resorted to the decision to reduce the value of the dinar against the dollar through the reform paper of the Ministry of Finance that was passed in Parliament with the aim of stopping the bleeding of external borrowing and relying on part of the cash reserve. Here the picture seems clear to know the advantages of the reduction from their point of view.

But what risks and defects did the decision leave behind, and what are the reasons behind these results?

The paper was somewhat hasty, as it dealt with the liquidity crisis with the impact of the shock, i.e. an unprecedented devaluation of the national currency against the dollar. This decision led to dire and unimaginable adverse results, through high inflation rates that exceeded the currency printing procedure as an alternative “for comparison and not to support this measure.” . 

What happened from the rise in food and medicine prices, the most necessary and urgent needs, if we calculate the rates of poverty and unemployment and the volume of chronic diseases that raise controversy.

The reason is that this decision or measure, i.e. devaluation of the national currency, is taken in light of a stable economic situation and not in the same situation as the country's economy.

I cautioned here and on this page in particular, since discussing the issue of currency devaluation, that the devaluation should be thoughtful and gradual in order to mitigate the impact of the shock, but unfortunately the proposal was not taken seriously.

If the devaluation of the dinar against the dollar was gradual; When we reached these controversial results, and the fiscal and monetary policies were able to deal with the matter easily and easily, and without strong impacts affecting the standard of living of the citizen by gradually re-raising the value of the dinar and all problems were resolved.

Invitation to the Central Bank and the Ministry of Finance There is still time for a gradual adjustment of the exchange rate; Because the situation is intolerable, what is required is a satisfactory solution for all.

And the need for this measure to be accompanied by investing surplus oil revenues in activating the productive sectors to achieve the desired goal of economic stability.

[Donziman]

I think what he is saying is the devalue of dinar causes inflation. We ourselves 

know this as we print more and more dollars for the Presidents give away programs

and our prices keep going up..However he knows that a weak dinar helps the country

exports. Just like Vietnam. If they really want to not rely only on oil,they must keep the lid on the dinar increase in value.   imho