Auction Sell the Currency to Balance Supply and Demand and to Preserve the Stability of the Market
|August 25, 2014||Filled under Iraqi Dinar News|
Iraqi Dinar News –
The auction sale of the currency held by the central bank daily important tool of monetary policy to keep inflation and the exchange rate of the Iraqi dinar against the dollar since warned Mokhtassan that any interruption or delay in the convening would raise prices as a result of vibration of the balance of supply and demand for the dollar. Financial expert, the appearance of Dr. Mohammed Saleh stressed the importance of holding an auction of foreign currency on a regular basis, so as to maintain the level of exchange rate stability, and absorption strength of demand for imported goods and services. According to the morning newspaper.
Saleh added that “the demand for foreign currency means the demand for goods and services and the benefits of foreign,” explaining the case in the lack of sales, will lead to a shortage of supply, with the presence and power demand is high, especially given that the country’s economy is flexible and energies productivity Off, as well as a greater percentage of supply is imported commodity (goods and foreign goods and services imported).
So between the central bank limits the inflation situation and preserve the value of the Iraqi currency, and otherwise, the prices are rising and the value of the currency goes down, thus increasing the desire of people to demand goods and services, and this concept is working against monetary policy in place in the country.
As for the treasury transfers that fall in the currency auction, noted the benefit to it are two types namely remittances treasury (government) long-term, and remittances Central (Central Bank) short-term, saying that he generally monetary policy and lowly intervention in open market operations through the purchase or sale of remittances long or short term.
And believes that in general, the central banks intervene vouchers short-term, so as to affect it in maintaining levels of liquidity, and the demand in general, in addition to reducing inflationary pressures.
In turn, the researcher said that the economic state of just daily auctions organized by the central bank to sell foreign currency differ significantly from the Treasury auctions Transfer (EBT) of the Ministry of Finance and the Central Bank.
She said in a statement (morning) that the auction sale of the currency is a daily auction dedicated to the sale of foreign currency to banks and money transfer companies for the purpose of sustaining the economic life of ordinary citizens, noting that any emergency may prevent the establishment of this auction would have a negative impact on the market as a natural result of the lack of supply and increase demand for the dollar.
And stressed the importance of holding this auction to achieve a balance in the market, which has a big impact on the stability of the exchange rate of the dinar against the dollar in addition to providing support for the purchasing power of the local currency.
They indicated that the central bank sells daily at an auction sale of the currency on average about $200 million, up sometimes and go down that figure by the market situation, distributed between selling in cash or bank transfers of Foreign Affairs for the purpose of import of services and goods for the private sector and for commercial purposes.
And Auctions central bank and treasury transfers private finance ministry said economic researcher said both sides issued a special plan to sell Hawwalath this year for the purpose of controlling the liquidity and funding of temporary disability, indicating that remittances Central is scheduled to be funded deficit of $5 trillion and 200 billion dinars, while the Plan auctions of treasury transfers include funding temporary deficit in the budget of $5 trillion Iraqi dinars in Iraq, the fact that the budget projections are based on oil revenues to expose what might this deficit.
According to the clarification of the Central Bank on auctions of treasury transfers that based on the public debt law, which authorized the Ministry of Finance issued remittances Treasury guaranteed by the government, the central bank as an agent financially to the ministry manages Auctions remittances Treasury on behalf of the ministry, which will, according to the determinants of the annual budget law by issuing money orders treasury for the purposes of government funding, where the Ministry of Finance has identified a system and mechanism for Auctions remittances government coffers, a uniform price auction with a nominal value of $500 billion Iraqi dinars.
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