PM's advisor clarifies the impact of the US Federal Reserve raising interest rates on the Iraqi economy

Baghdad-INA 

The financial advisor to the Prime Minister, Mazhar Muhammad Salih, explained, today, Friday, the implications and impact of raising interest rates by the US Central Bank on the Iraqi economy, while identifying two matters for managing currency risks, foreign reserves, exchange rates and interest.

Salih said, to the Iraqi News Agency (INA), that "the implications and impact of raising the interest by the American bank on the Iraqi economy are twofold, the first is that the country is the debtor party, as the increase in interest on the US dollar will lead to an increase in the cost of loans withdrawn in dollars, especially those whose benefits are determined." The annual basis is based on the market or (moving) interest in dollars, which is indicated by the financial markets on the rise, such as the (Libor) interest, 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 (prudent risk margin around the fixed interest itself) and called (spread), in order to avoid market fluctuations,” noting that “the latter, that is, (the spread) will rise automatically, taking into account the high interest risks.”.

The statement added, "As for the second part, and with the country being the creditor, investing in dollar deposits or US bonds for Iraq will be expected to raise returns in the future, with US interest rates mostly rising, and it depends on the nature of the contractual interest, is it fixed or variable?" If the interest on dollar bonds are It has a fixed contractual character until the date of maturity, and it is required to liquidate it in the secondary market and transfer it to liquid cash for various purposes.He pointed out that "