Measuring the Relationship Between Foreign Reserves and Indicators of Monetary Stability in Iraq for the period (2004-2021)

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Fadhil Abbas Kadhim, Iyad Muhammad Mubarim

Abstract

The primary tasks of the Central Bank of Iraq is to build a foreign cash reserve with the aim of strengthening and covering the exchange rate of the Iraqi dinar and creating monetary stability, which is one of the indicators of the success of monetary policy applications. Here we can indicate that the Central Bank of Iraq succeeded in collecting reserves at a high level of foreign exchange, which contributed to stabilizing the exchange rate of the Iraqi dinar against the US dollar, and is considered appropriate and required at the current stage, as foreign cash reserves exceeded the barrier of 92 billion dollars, and it must be noted To the role played by the private banking sector in achieving this stability as a result of its implementation of the central policy, and this enhances the monetary transition to influence the balance of the money market and then the stability of real activity that requires raising the external value of the Iraqi dinar in a manner commensurate with the real exchange rate to contain inflationary expectations, and adjusting interest rates The Central Bank of Iraq in a way that gives the financial market strong signals for commensurate and desirable changes with the evolution of the temporal structure of interest rates.                                                       

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