The stability of the exchange rate of the Iraqi dinar against the US dollar through foreign currency auctions for the period (2003 – 2014)

Abstract

The main aim of the central bank is to achieve prices stability with maintaining the value of local currency both internally and externally. At the level of the local economy, the aim represents in staying and maintaining on lower averages of inflation at the level of the external economy represents with aiming at nominal exchange rate. The aim setting is clear for inflation as a final end for the monetary policy desirable in increasingly form in recent years. The purpose of this study is to identify the ability of Iraqi central bank in maintaining the stability of the Iraqi dinar exchange rate trends the American dollar and handling the negative accumulations that caused by the wars which Iraq lived in the Nineties century and American threats with invading Iraq in the beginning of the twenty-first century, which event actually in the year (2003), with the occupation of Iraq and the overthrow of the political system and the consequent of destruction of its infrastructure in all sectors, including the banking sector represented of the central bank. The importance of the research comes from the role that central bank doing represented with monetary power in its management of monetary liquidity through its adoption for group of providence and procedures presenting in direct tools (raising foreign currency) to achieve the stability in Iraqi dinar exchange rate to the American dollar, then raise the value of local currency, which reflects with policies of entirely economic policies of the country in general and the monetary policy in particular. This study summary a set of conclusions and recommendations which were the most notably the presence of a duality moral causal relationship with two directions (reciprocity) between Iraqi dinar exchange rate and the sales and purchases of the Iraqi central bank of the American dollar. This means the both affect on the other, the recommendation was necessity of continuing the central bank in its purchasing of foreign currency from Ministry of Finance in the long term in order to maintain on the stability of exchange rate of local currency