By Shaymaa Adel
Azzaman, December 16, 2014
The sharp fall in oil prices is not likely to adversely impact the exchange rate of the Iraqi dinar, experts said.
They said Iraq’s hard cash reserves are estimated at $70 billion, enough to pay for imports for at least a year.
“Iraqi law does not allow the government to withdraw reserves from the Central Bank,” said Majid al-Souri, an Iraqi financial consultant.
The central bank holds almost daily auctions in which it offers for sale at the official price up to $200 million. However, daily sales at the official rate have mostly been below the volume of dollars the bank makes available for the public.
To offset the fall in prices, the Oil Ministry has said it would increase exports from the current level of 2.5 million barrels a day to nearly 3.5 million by the end of 2016.
Souri said the hike in oil exports would at least partially compensate for the loss of income due to sharp fall in prices.
But analysts say if oil exporting countries follow Iraq’s example, oil prices are likely to fall further amid reports of weak demand by major oil importers.
Oil prices have fallen below $60 a barrel from $115 for the first time in nearly following a period of almost stable prices for nearly five years.
Furat al-Tamimi of the parliamentary finance commission said the government should not under any circumstances “touch Central Bank reserves.”
“Despite the fall in oil prices the reserves will help keep the currency’s exchange rate stable,” Tamimi said.
