Central Bank Defends Weak Iraqi Dinar

Iraq's Central Bank says it will not allow the Iraqi dinar to depreciate and has been selling hundreds of millions of dollars to keep the currency stable, according to a report from Azzaman.

The dinar weakened in December, prompting the bank to sell dollars in a bid to withdraw cash from Iraqi markets.

The bank did not say what caused the dinar to plummet to "lows it had not seen for years", but officials privately say the plunge might have been due to political uncertainty in the region.

Mudher Saleh, Central Bank’s deputy governor, said there were no sound economic reasons for the currency’s weakening, but speculated that it might be the economic difficulties Iraq’s neighbours are facing, particularly Syria and Iran.

The bank coffers are said to be brimming with hard cash from oil sales.

Saleh said the bank would not let the dinar fall and in one day in December last year it sold $200 million on the open market to squeeze liquidity.

“We withdrew in one single day about one quarter of a trillion dinars, thereby brining stability to the currency,” Saleh said.

He said Iraqi traders and industrialists have turned into middlemen for these countries, which has led to a substantial growth in demand for hard currency.

(Source: Azzaman)

6 Responses to Central Bank Defends Weak Iraqi Dinar

  1. Stew 3rd January 2012 at 22:45 #

    So while dinar pumpers and scammers claim the dinar will soon RV 100,000 to 300,000 percent overnight... in the real world we see the dinar is struggling to maintain it's value of 1170 to 1.
    I'm sure the scammers have some reasoning that explains this as a good thing.

  2. chris 4th January 2012 at 15:50 #

    It's funny how all the Dinar pumpers have "factual" articles and information that they say has been published but you can never find anything on the internet. Truth...Iraqi Dinar is weak. Truth...they are resource rich. Truth...they need to stabilize the country and government before they do anything else. Revaluing the Dinar makes sense, but realistically how soon could they do it and would they really value it the same or better than the USD?!?! I guess we'll see...

  3. John Arthur 7th January 2012 at 14:31 #

    Certainly Iraq is not poor if we are to look at the natural resources it has, like Oil, Silver, Gold, water just to name a few, but then they are spending more than they are earning daily in a very political,Social and economic hostile environment so here is my question, What are the prerequisites for a strong currency in any Country?

  4. LZ 12th January 2012 at 19:08 #

    They dont even have a working electrical grid....

  5. Ge'Mone 12th January 2012 at 21:16 #

    I just hope the people of Iraq look at the bigger picture for the greater good for everyone's sake.

  6. Joe 9th June 2012 at 05:54 #

    Mark my words, the Dinar will grow and grow.