Financial Expert Refutes Expectations of Dollar Decline Post-Budget Approval in Iraq

Shafaq News/ Financial expert Mohammad al-Hasani on Sunday downplayed forecasts of a decrease in the dollar exchange rate against the Iraqi Dinar following the highly-anticipated approval of Iraq's triennial budget.

Al-Hasani said that fluctuations in the forex market are linked to the Central Bank's measures rather than the budget implications on it.

"Exchange rates are not related to the budget's approval, but rather it's a part of monetary policy implemented by the Central Bank. Ideally, its actions should stabilize exchange rates," al-Hasani explained to the Shafaq News Agency.

He further stated that government's spending upon budget approval would not lead to a dollar decrease. On the contrary, it might increase the demand for dollars, given the new funds the government will disburse for new appointees.

These funds, according to the expert, include salaries for over six months in arrear. The injection of this large cash mass into the market, to be spent on various things, will inevitably get converted into dollars for the lack of domestic industry, leading to an increased dollar demand.

Al-Hasani pointed out that many traders still purchase dollars from the parallel market to finance their trades rather than relying on banks to fund these imports. "This pattern contributes to market pressure and a surge in dollar demand," he elaborated.

"With the budget's approval, government spending will no longer be restricted at 1 to 12 due to the previously unapproved budget. With its approval, spending will be unrestricted. A portion of this spending must be fulfilled in dollars," al-Hasani commented.

Notably, the dollar's price against the Iraqi Dinar has dropped by more than two dollars as the Iraqi parliament is about to complete budget approval. The exchange rate fell to 145,900 per 100 dollars on Sunday, down from 147,950 Dinars per 100 dollars last Thursday.