An Economist Identifies 3 Repercussions Of Raising The US Interest Rate On Iraq

An Economist Identifies 3 Repercussions Of Raising The US Interest Rate On Iraq

06/16/2022 | 5:59 PM

An Economist Identifies 3 Repercussions Of Raising The US Interest Rate On IraqInformation / Baghdad..

On Thursday, economist Nabil Al-Marsoumi identified the repercussions of the US Federal Reserve’s decision to raise interest rates, warning that Iraq could be affected by the decision regarding the prices of imported goods.

Al-Marsoumi said in a Facebook post that was seen by / the information / that “the US Federal Reserve raised interest rates, by 75 basis points, to a range between 1.50% and 1.75%, in order to return inflation to its target of 2% after it reached last May. to 8.6%, which is the highest in 40 years.

He warned that “the harshest impact will be on Iraq and other developing countries, because the rise in US interests raises the exchange rate of the dollar against most of its currencies, and thus contributes to inflation and the cost of debt financing as much as it is borrowed in dollars. The annual basis is based on the market or (moving) interest in dollars, which the financial markets indicate to rise, such as the interest (Libor), which is the interest of lending and borrowing between banks in dollars in the London market, and even if some loans carry a fixed interest on the loan itself, but they carry a hedging risk margin around the fixed interest. .

He added, “All Iraqi exports are denominated in dollars, and most imports are either in dollars or with a country that manages its currencies fixed against the dollar, or close to stabilization, and therefore the rise of the dollar may benefit the parties that deal with it, including Iraq.”

He cautioned that “Iraq’s investment in dollar-denominated deposits or US bonds will lead to higher returns in the future, with higher US interest rates.” finished/25h

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