Central Bank: “Limited Risk of Devaluation”

By John Lee.

Bloomberg quotes Iraqi Central Bank Governor Ali Mohsen Ismail (pictured) as saying that Iraq has enough foreign reserves to maintain its currency peg, but didn’t rule out a minor devaluation to shore up government revenue hurt by the slump in oil prices and the war on Islamic State militants.

He said reserves are sufficient to cover more than six months of imports, higher than what is typically needed to maintain the exchange-rate.

There is no fear for the dinar,” he said, but added “[if] the pressure remains, we could marginally change the exchange rate to increase revenues of the finance ministry … This is just an option that needs to be carefully studied because we don’t want to give away what we have achieved in terms of the inflation rate, which is perfect now.

Consumer prices rose 2.6 percent in July.

(Source: Bloomberg)

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