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What does it mean to decrease the Price of Currency?

Sarko Ynuis
Economist

Sometimes the world countries attempt to decrease the value of their national currency, to return the balance of trade.

Reducing the price of the currency is exchanging the formal price opposite another. in a way increasing some points of the national currency opposite the foreign currency, for instance, already in the Iraqi central bank the price of (100) $ was (119,000) Iraqi Dinar (IQD), now (100) sells to (147,000) (IQD). So, the (IQD) lost its values roughly (25%).

Decreasing the value of a national currency due to
the return of the trade balance and reducing the deficit of budget is a proper pace. This policy helps to reduce the pressures on the foreign currency in the central bank; it is one of the Iraqi government and central bank justification, presently, the foreign currency in the central bank about (70) billion dollars.

Declining the value of national currency causes to raise the price of imported goods and raise the desire for local productions, however, (90%) of the Iraqi commodities import from outside.

If the step got successful, the importing productions will be decreased; the sums that went out previously reduce and circulate locally. If the government couldn’t do the economic situation got worst. Few countries do that for the sake of encouraging national production, growing economy and make a hindrance to jobless through job vacancy.

A two-sided weapon, sometimes decreasing the worth of national currency has negative impacts. It may destroy the economy of the country or inflation hits the top such as flying the price of electricity and the imported instruments and requirements. At that time Iraq cannot develop its economy because it sends nearly (48) billion dollars outside to purchase goods yearly.

The influences on the employees

In reality, around (6) million people live on the salary, if any Iraqi family consists of five people, it demonstrates that (70%) of the Iraqi populations live on salary. Thus, this decision harms their livelihoods. If the monthly food will not provide by the government the poverty will increase which is (23.5%) at that time.

Finally, due to the political, economic, security and street anger instability. It depicts that this step has made to increase the amount of (IQD) and nothing else. Moreover, the Iraqi financial policy changes in (2021), the employee’s salary will decrease, this pace will not unify with the deflation in the market, once again the salary takers and poor classes pay the price.

The content of this article explores the view of author 




PM:07:00:21/12/2020



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