Assessing the devaluation of the Iraqi dinar in Light of the White Paper Reforms
Executive Summary:
After reducing the exchange rate of the Iraqi dinner against the U.S. dollar by (22.7%) in (2022), it is time to undertake a policy evaluation to ensure that the change’s intended goals are met, and its repercussions are addressed.
In the post-2003 era, the monetary authorities represented by the Central Bank of Iraq pursued a policy of fixing the exchange rate, aiming to achieve price stability, which is the main goal of the Central Bank of Iraq, as defined by Law No. (56) of (2004). However, this policy has resulted in many undesirable effects that have emerged in recent years.
The time has come to use the exchange rate tool to revitalize the Iraqi economy and support the economic development process by providing a highly flexible productive device and supporting local products’ competitiveness by adopting the exchange rate’s real value.
The paper is divided into two parts, the first deals with the study of the justifications for reducing the exchange rate in light of what came in the White Paper. The second part deals with analyzing the economic effects of the devaluation of the Iraqi dinar.
The paper concludes with a list of recommendations that may be employed to maximize the benefits of the policy of decreasing the exchange rate and mitigate the negative consequences of that policy.
