Abstract

Selling the Currency Window in the Central Bank of Iraq and Exchange Rate Risks: An Analytical Study for the Period from 2016 to 2019

Hussein Zaboon Oleiwi

Volume: 13 Issue: 3 2023

Abstract:

The foreign currency window ensures demand for foreign currency, and in order for banks to carry out their task on the demand side, they open accounts for this purpose at the central bank, which they use for monetary policy purposes in general and foreign currency auctions in particular. Although auctions are primarily used for the purpose of imports through private banks, the mechanism by which the currency auction operates is that offers are made by officially authorized banks and exchange companies from the central bank in a sealed envelope. These offers represent the quantities requested by the banks and the central bank does not intervene alone in determining them, while prices are determined by the central bank. The window is also one of the largest open market operations in controlling and managing liquidity, containing public expenditures generated by the general budget and, in particular, current expenditures. However, criticisms of the foreign currency window have increased with this mechanism, as it costs millions of dollars daily and is therefore a waste of the central bank's reserves

DOI: http://doi.org/10.37648/ijrssh.v13i03.028

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