May 25, 2012Iraqi dinar firms on reports of rise in oil exports
The Iraqi dinar has regained the ground it lost to the U.S. dollar following a surge in demand for the greenback driven mainly by international sanctions on both Iran and Syria.
The dinar is now trading at 1200 to the dollar, the rate the Central Bank had set for it when the new currency was launched shortly after the 2003-U.S. invasion.
Central Bank officials are upbeat about the rise in the dinar’s value which they say it shows the strength of the country’s economy and its rising reserves of hard cash
Central Bank Deputy Governor Mudher Saleh said state-run banks and their branches across the country were awash with dollars and ready to exchange at the official rate.
“We are also ready to meet needs of private banks for hard cash if they agree to sell dollars at a just rate to the citizens,” Saleh said.
The dinar’s appreciation comes amid reports that the country’s oil sales last month hit an average of 2.5 million barrels per day, a level not reached in the past 23 years.
Iraq’s oil output and exports are set to rise substantially in 2013 as new oil fields and oil wells come on stream.
A few months ago, the bank estimated Iraqi hard cash reserves at $60 billion, but Saleh said the figure was on the rise.
“The markets have to take Iraq’s financial capabilities into account. We have a surplus in the current account of the balance of payments that is not less than 10 percent and even more.
“This is a high percentage by international standards and it reflects positively on the bank’s and the government’s reserves of hard cash,” he said.
Iraqi economy is closely linked to that of Iran, which is currently reeling under punitive sanctions for its nuclear program.
The country’s economic ties with Syria were of less importance but increased significantly in the past year when sanctions were imposed on Damascus in response to its handling of an armed rebellion against the government.
But Saleh said the Iraqi economy, buttressed by higher oil exports and prices, will weather any adverse impact from its sanctions-hit neighbors.
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