Iraq Central Bank is planning to reduce inflation

Within last year's budget, the government anticipated the inflation would not exceed 20-25%; however, the consumer price index rose to 70% due to the rise in the prices of oil products and electricity rose it to 80%. If energy is excluded, the index would range between 30 and 35% only.

Stopping the government subsidy was one of the recommendations of the IMF which requests the application of an economic reforms program by 2008 before approving to write off 80% of Iraq's debt to the creditor nations that are not members of the Paris Club.

Due to this escalation in prices, the Central Bank was compelled to increase the interest rate to 20 % after being 8% at the beginning of 2006, and the last intervention by the Central Bank was recorded in December of that year.(Source)AlSabah

Stable exchange iraqi dinar rate propels dollar sales high in Iraqi auction

Sixteen banks participated in Tuesday’s auction and offered to sell two million dollars, which the bank bought all at 1286 iraqi dinars per dollar.

Economist Abdul-Razzaq Sadeq al-Abaiji told the independent news agency Voices of Iraq (VOI) "the exchange rate was stable for more than a week now leading traders to offer selling dollars in today's auction."

Abaiji added "the offers to sell dollar encouraged the Central Bank to covers all bids for dollar in Tuesday's session."

On Monday, the Central Bank failed to cover bids made in its daily auction for dollar resulting in a decline in the demand ceiling to less than $34 million.(Source)Azaman