Government Advisor discusses feasibility of using Dinar instead of Dollar for oil sales

 
Baghdad - INA
 
Government financial advisor Midhar Mohammed Saleh examined on Sunday, the feasibility of replacing the dollar with the dinar for oil transactions. He noted that implementing the "petro-dinar" concept is complex, requiring significant foreign reserves or gold, similar to Russia's approach with the ruble.
 
In an interview with the Iraqi News Agency (INA), Saleh emphasized that "adequate foreign reserves are crucial to stabilize the dinar’s exchange rate against oil prices, aiming to mitigate fluctuations."
 He cautioned that directly linking oil sales to the dinar could introduce volatility, impacting its stability due to global oil price movements.
 
Saleh referenced Russia's challenges with pricing oil in rubles, a non-reserve currency, highlighting the difficulties posed by the dual influence of oil and gold asset cycles. He pointed out that adopting the petro-dinar would face similar obstacles, including the need for global market acceptance and robust financial infrastructure.
 
Additionally, Saleh discussed the "Law of One Price," which posits that identical goods should be priced uniformly in different markets when expressed in the same currency, assuming no trade barriers. For the petro-dinar to be viable, it must maintain a stable exchange rate aligned with global oil prices.
 
In summary, Saleh warned that relying solely on the petro-dinar amidst oil market volatility involves significant risks and uncertainties. The dinar’s stability would hinge on broader economic conditions and effective currency management, necessitating careful evaluation of these complexities.