WELCOME TO BONDLADYS CORNER...WE CARRY ON HER CUSTOM OF MAKING THIS SITE YOUR 24 HOUR A DAY IRAQ NEWS ARTICLE SOURCE

THANK YOU FOR YOUR CONTINUED SUPPORT OF OUR LADY.


You are not connected. Please login or register

The collapse of some Arab currencies .. What are the causes and repercussions?

Go down  Message [Page 1 of 1]

ikea


MEMBER
MEMBER
https://www.aljazeera.net/ebusiness/2021/4/13/انهيار-بعض-العملات-العربية-ما-الأسباب

The collapse of some Arab currencies .. What are the causes and repercussions?

The instability of the political situation is one of the main reasons for the collapse of some Arab currencies

Abdul Hafiz Al-Sawy
4/13/2021


The second decade of the 21st century was a decade of political and economic fluctuations in the Arab region,

as it witnessed the revolutions of the Arab Spring, as well as the counter-revolutions of the Arab Spring,

and also witnessed the deterioration of the economic conditions of many Arab countries,

whether due to the negative repercussions of the crisis of the collapse of oil prices in mid-2014, Or the double crisis of the oil price collapse and the Corona pandemic.

One of the most prominent manifestations of the deteriorating economic conditions in the region was the collapse of the currencies of some Arab countries, especially those that witnessed a popular movement, whether in the first or second wave, and the currencies of Egypt, Iraq, Algeria, Lebanon, Yemen, Sudan and Syria collapsed.



With regard to the rest of the countries - chiefly the Gulf countries - the stability of their currency is due to two factors:

The first is that these currencies are not subject to the mechanisms of supply and demand, but their prices are determined by administrative decisions by the central banks of those countries, and the

second thing is that the Gulf countries provide them with a large balance of reserves Foreign exchange enabled it to protect its exchange rates
.

Causes of the breakdown



In both Algeria and Iraq, the collapse of oil prices, as well as the Corona pandemic, were an important reason for the shortage of foreign exchange resources, at a time when the two countries depend on importing a large part of their basic needs, and the two countries’ economies continue to depend on diminishing oil revenues.



In Iraq, foreign exchange reserves decreased from $77.7 billion in 2013 to $68 billion in 2019.

At the end of February 2021, the Central Bank of Iraq announced that the balance of foreign exchange reserves rose to $55 billion, in light of the improvement in oil prices in the international market..

Corruption tends to collapse




Syria, Yemen and Sudan ranked among the 10 most corrupt countries in the world in the 2020 index, then Iraq ranked 11th after the 10 most corrupt countries.



Both Algeria and Iraq have suffered from clear corruption in the field of smuggling foreign currencies abroad over the past years, through the mechanism of falsifying import bills, or charging commissions in tenders for importing government needs.

Among the negative phenomena experienced by Arab countries that have witnessed a collapse in their currency recently is the phenomenon of money smuggling abroad, especially by influential government officials or big businessmen, which led to a decline in the supply of foreign exchange in the local markets
.

It is important to point out that these countries that have collapsed currencies in front of foreign currencies have deep-rooted problems related to defects in their economic structures, between dependence on oil as a major source on which the economy is based, as is the case in Iraq, Algeria and Yemen, or the production of primary commodities.



future prospects




As for oil-producing countries, such as Iraq and Algeria, the position of their currency will be determined by an improvement in oil prices on the international market and an increase in their foreign exchange resources.

And if the optimism scenario occurs and oil prices increase, the currencies of these countries may maintain what they are and not witness further decline,

but they will not regain their better position against the dollar again, due to the persistence of corruption in these countries at high rates
.

On the other hand, these countries announced the adoption of economic programs that would follow austerity measures, and could end with a kind of qualification to enter negotiations with the International Monetary Fund.

Most importantly of all, these countries rebuild their economies, to be productive economies,

and their currencies are protected by an economic performance that depends on production requirements and local products, as well as helps their contribution to increase exports and increase the added value of their economies
.



The project to create a unified Arab currency was one of the most important Arab economic integration projects, and if it had been realized, the Arab countries would have had a different affair, on both the monetary and economic levels.

Source : Al Jazeera

Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum