Iraqi dinar surges despite violence, economic hardships

• Baghdad University economists said they did not share the government’s optimism.
• The surge in the dinar’s value is bound to make life more difficult for low-income categories such as pensioners and a large portion of civil servants, they said.
• The Iraqi currency is appreciating vis-à-vis the U.S. dollar but economists warn the surge in value may further increase economic hardships.
• They said the government’s economic polices had nothing to do with the recent rise in the dinar’s value.
• The surge of currencies against the dollar is a global phenomenon due to the decline in the value of the U.S. currency.
• Civil servants, security personnel and other government employees now get meaningful salaries compared to those under former leader Saddam Hussein.
• Minimum a civil servant now gets is $250. Under Saddam maximum average salary was equivalent to $5.
• The proposed budget for 2007 which the parliament is still deliberating is estimated at $47 billion which the economists say is reasonable in the light of the country’s current conditions.
• The budget figures might have helped the dinar a bit, they said, but they warned drastic surges in the value of the currency could be as detrimental as drastic declines.
• Traders in Baghdad did not hide their worries about the hike in the currency’s value which has forced some of them to slash prices.
• Mohammed Salman said he was now selling at a loss since the dinar’s he collects at current reduced prices will not help him recoup the cost in dollars.
• However, other traders said they were less concerned about currency gyrations than security.
• Subhi Ashour, another Baghdad trader, attributed the current economic hardships mainly to the lack of security.
• “The prices of almost all goods in the country are mostly now determined by security conditions, particularly transport fees,” he said.
• The country’s economic instability is blamed on the mounting violence. The country’s roads are very dangerous, preventing free movement of people and goods. Source (Azzaman)