Economy / Iraq
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Gradual Appreciation Expected As Anti-Inflationary Tool
May 2008 | Economic AnalysisSorry, you must be a subscriber to view this article in full. If you are a subscriber please login.
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We expect the Central Bank of Iraq (CBI) to maintain its strategy of allowing gradual appreciation of the dinar, while keeping interest rates generally stable, in order to ensure inflation remains well below the double-digit levels seen during 2007. Indeed this policy has already proved extremely effective at curbing inflation, which came in around 5.6% y-o-y in March down from 36.6% y-o-y in March 2007 although continued fiscal restraint and a swift hike in interest rates also contributed to slowing inflation. However, currency appreciation remains the CBI's principal anti-inflationary policy instrument and we therefore expect the dinar to appreciate around