Part 3: A look at the #Iraqi Dinar (IQD) vs the #Turkish Lira (TRY) & #Iranian Rial (IRR). Effects on #Iraq’s competitiveness

Between 2012 & Dec 2020 the Real Effective Exchange Rate (REER - see end for explanation) of the IQD increased roughly by 30%, ...

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... mostly due the the devaluations of the currencies of #Iraq’s major trading partners, TRY & IRR-see Pt 1 & 2

This means imports to Iraq, esp. agricultural & food related, basic industries from #Iran & #Turkey have become 30% more competitive than Iraq’s own production.

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This partly explains the loss of market share of Iraqi products in #Iraq to those from #Iran & #Turkey, & the weakness of its private sector … other significant reasons are structural faultiness in the #Iraqi economy as discussed in the White Paper

https://gds.gov.iq/ar/wp-content/uploads/2020/10/Iraq-white-paper-in-arabic-october-2020.pdf

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The 23% devaluation of the IQD vs the USD in Dec 2020 reverses almost all of this loss of competitiveness. But fixing other structural faultiness is much harder requiring real reforms of #Iraq’s economy along the lines of those in the White Paper

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The IQD’s REER basically compares the IQD value against the weighted average of the currencies of its major trading partners, & is adjusted for inflation.

Source for charts in thread (1-6): IMF #Iraq country reports, CBI, https://www.xe.com/currencycharts/ 

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The Nominal Effective Rate (NEER) is essentially REER without adjusting for inflation. This is why the IQD’s REER was roughly up 30% while its NEER was up roughly 60% (mostly a result of the 70-80% devaluation of the IRR & TYR against the IQD)

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