Pressure to weaken the national currency versus foreign
24/4/2016 12:00 am
Baghdad. Emad Principality
Economist Dr. Awad Fadel Ismail «morning» cannot be overlooked in official exchange rate desirable from the point of view of Government,
explained that the increase in value of the Iraqi dinar against the dollar could stimulate speculative market expectations for change in the opposite direction, meaning that traders who sell national currency and buying foreign currency at the official exchange rate with the hope of making profits in the near future based on expectations and information available to them that the official exchange rate will be real-time fast reaction on exchange rate In the free market, but to a reaction which then stabilized the exchange rate in the market.
Fadhil said, this means that the exchange rate in the free market, responds by moving towards keeping pace with change (rise), at the official exchange rate first and then surrendering that hinders any precedent low (which means the possibility of selling the dollar against a larger number of Iraqi dinars), as a result of the dominance element altokd economically and politically, and the adoption of an unstable macroeconomic welattnask while maintaining exchange rate stability with high expected shortages showing foreign currency domestic factors and regional and international.
Saying: this behavior to continue, speculators sold the currency and buying foreign currency and upward pressure on the value of foreign currency, which indicates the deviation of the nominal exchange rate official exchange rate of the dinar in the free market and the recent trend to decline.
This explains part of the increased demand and continued on the dollar (or growing) with improved foreign official value of the dinar Iraq.
Fadhil drew the important thing for speculators is the relationship between the future exchange rate in the market, that speculator differ from a trader or investor, I have students of foreign currency derived from his interest in profits resulting from changes in exchange rates, buying foreign currency is expected to rise and selling those that expected depreciation (JD).
Fadhil concluded the weak local currency and Monetary Authority trying to defend them, the strikers through the sale of local currency amounts and Exchange foreign currency put additional upward pressure on foreign currency and downward pressure on the national currency, and this may be the direction to speculators for a further decline in the exchange rate of the national currency for further decline in the exchange rate of foreign currency auction, benefiting from the price difference.