CBI Currency Auction - Monday, 8 April 2013

[ronscarpa]

Currency Auctions - Announcement No. (2351)

 

The latest daily currency auction was held in the Central Bank of Iraq on Monday, the 8-Apr-2013. The results were as follows:

 

DETAILS ---------- & ---------- NOTES

 

Number of banks 24

Auction price selling dinar / US$ 1166

Auction price buying dinar / US$ -----

Amount sold at auction price (US$) 209,124,000

Amount purchased at Auction price (US$) -----

Total offers for buying (US$) 209,124,000

Total offers for selling (US$) -----

 

Exchange rates

Dollar's exchange rates / in Baghdad markets

[Bunk]

holy cow ...

[Belecosity]

Well they are really getting people to get rid of that Dinar. Good Stuff. Pump some news stories of counterfiet dinars, and the inability to raise the value of the IQD to the dollar and this is what you'll get. Man these guys are sneaky.

[ReVbo]

This is not unexpected. Remember the articles from a week or so ago saying they were going to open branches of Rasheed Bank to sell dollars at a subsidized rate? It seems to be working, and this should help to get the street rate more in line with the CBI rate.

 

Here's one of them from late March...

 

Baghdad (news) .. According to economist Ismail Radi, that further opening outlets for the sale of hard currency by the banks will decrease the U.S. dollar exchange rate against the Iraqi dinar, it would meet the market needs of the dollar.

Radi said (of the Agency news): The reason for increasing the exchange rate of the U.S. dollar against the Iraqi dinar during the current period in the domestic market, due to strict central bank measures to sell hard currency and to the lack of the dollar in the market.

He added: be directed Rasheed Bank government to open ten outlets in hard currency at subsidized prices from the central bank will contribute significantly to enhancing the value of the national currency, calling to encourage private banks to open more than one port for the sale of hard currency with control transfers external financial.

It was announced in the Rasheed Bank Kadhum Mohammed fistula, for processing citizens across ten dollars of bank branches in Baghdad from this week.

The Iraqi market has witnessed a major upheaval for weeks in the price of the U.S. dollar against the Iraqi dinar as the sale price of one dollar to 1280 dinars.

[link to translate.google.com] 

Edited April 8, 2013 by ReVbo

[sandstorm]

Well they are really getting people to get rid of that Dinar. Good Stuff. Pump some news stories of counterfiet dinars, and the inability to raise the value of the IQD to the dollar and this is what you'll get. Man these guys are sneaky.

have you noticed the currencyauctions have run for years.....and the currency in circulation along with m2 have continually increased. If the auctions removed dinar....by now there wouldnt be any

[Belecosity]

have you noticed the currencyauctions have run for years.....and the currency in circulation along with m2 have continually increased. If the auctions removed dinar....by now there wouldnt be any

Okay then how do the auctions not remove dinar? or do they "launder" it all back out...

[TQueezy]

It gets recirculated. Exactly how, I don't know. Someone posted about the exact mechanism of the auctions and how the money flows awhile back.

[Belecosity]

It gets recirculated. Exactly how, I don't know. Someone posted about the exact mechanism of the auctions and how the money flows awhile back.

I would be interested to hear the answer

[TQueezy]

I think either Keep'em, Darin, or maybe Scooter (who no longer posts here) went into detail and researched this once. Something about the CBI takes the physical dinar it receives in auction (typically less than 20% of the total auction) and decides which bills get destroyed/reprinted and the rest get recirculated through distributions to lower banks. Remember, citizens still use the dinar there about 25-40% of the time. There are varying reports on how often the large bills are used.

[Belecosity]

Appreciate it, I will try to do some digging on it. Thanks ofr the info

[gainesm]

So am I understanding this correctly to think that they are making more IQD available while making the USD less available?

 

If that is the case, then (as the article said) that would definitely decrease the value of the USD at a street-value level.  I suppose it accomplishes a few things - but I am unsure how whether that makes redenomination or RV a more likely scenario.

 

Also makes me want to go research the amount they are putting into circulation to see if there's been a trend for more or less over the last 2 years...I remember hearing something about a 2 year plan to reduce Dinar on the street before they wanted to do a redenomination, but I don't remember if that was a legit statement by Iraq or someone's assessment of a rumor. 

[Slappytats]

Well they are really getting people to get rid of that Dinar. Good Stuff. Pump some news stories of counterfiet dinars, and the inability to raise the value of the IQD to the dollar and this is what you'll get. Man these guys are sneaky.

[Belecosity]

So am I understanding this correctly to think that they are making more IQD available while making the USD less available?

 

If that is the case, then (as the article said) that would definitely decrease the value of the USD at a street-value level.  I suppose it accomplishes a few things - but I am unsure how whether that makes redenomination or RV a more likely scenario.

 

Also makes me want to go research the amount they are putting into circulation to see if there's been a trend for more or less over the last 2 years...I remember hearing something about a 2 year plan to reduce Dinar on the street before they wanted to do a redenomination, but I don't remember if that was a legit statement by Iraq or someone's assessment of a rumor. 

Other way around... it better be or were screwed

[lucia]

As I understand it, they are decreasing the amount of USD on the street. Because the Iraqi people are used to dealing in dollars and do not yet trust their dinars, they are paying a premium. It will die down as people get used to using their dinars and their dinars will gain value.

[SocalDinar]

85 million cash today!

Cash numbers up and up and up

[RVPleaseToday]

Right. They sell dollars for dinar, and they sell dinar and for dollars. By getting better control of the price they are selling dollars for, they make it easier to stabilize the exchange rate.

[Belecosity]

so basically what that says is that the CBI took in $209,124,000 dollars and gave out dinar equivelant to that at the 1166 rate?

 

I thought it was always the other way around..... man im confused.

 

What confuses me is if that is right... and they've been doing these auctions for a while now.... they have pumped tons of dinar back on the street...

 

how are they going to RV? sorry for sounding confused, but i was always under the impression that they were taking dinar off the street and handing out usd at a 1166 rate?

[sandstorm]

And if the cbi was telling people the iqd is increasing in value....they wouldnt be flocking to buy dollars.

[Belecosity]

So am I understanding this correctly to think that they are making more IQD available while making the USD less available?

 

If that is the case, then (as the article said) that would definitely decrease the value of the USD at a street-value level.  I suppose it accomplishes a few things - but I am unsure how whether that makes redenomination or RV a more likely scenario.

 

Also makes me want to go research the amount they are putting into circulation to see if there's been a trend for more or less over the last 2 years...I remember hearing something about a 2 year plan to reduce Dinar on the street before they wanted to do a redenomination, but I don't remember if that was a legit statement by Iraq or someone's assessment of a rumor. 

I always thought they were pulling it off the streets as well....

[dontlop]

i read an article yesterday that says they are releasing the new generation of smart cards . it fits with  removing dinars for  that reason which is the goal of the cbi ..   to increase liquidity in the banks ...

 

 heres something from cbi web site ...

 

 The CBI aims to reduce the use of cash in the country despite the challenges of geography and the remaining security issues which make the transfer of money across the country difficult and risky. Hence the objective is to automate the settlement of checks, salaries and the activation of automation systems for electronic cards, in order to keep more liquidity in bank accounts

 

 the smart cards will most likely be using  dinars .. not dollars .. so they bring in  the dinars and send them back out on smart cards .

 

 if they ever do rv .. it wil make   exchange alot easier ..

i think it said april 10 .. they are releasing new smart cards .. thats wednesday

[stealthwarrior]

We need a financial expert to explain this to us.how do currency auctions work?

[Belecosity]

Iraq Has Cash Reserves to Fight Dinar Depreciation

Posted on 11 April 2012. Tags

The finance committee in the Iraqi Council of Representatives warned on Wednesday about the deterioration of the Iraqi economy due to the low exchange rate of the dinar to the US dollar, assuring that proposals are underway to get the country back on its feet, reports AKnews.

According to AKnews, the Iraqi dinar hit its lowest exchange rate in three years against the US dollar, at a selling rate of 1290 dinars per dollar on Tuesday. On the othe hand, some online sources still show it trading in the range 1160 to 1165.

Committee member Shawrash Mustafa said the committee began to study the deterioration of the Iraqi dinar exchange rate and put in place several proposals to halt the crisis. He did not say what these proposals were, but that they will be delivered to the Ministry of Finance and Iraqi Central Bank (ICB).

The ICB has issues strict regulations on it sales of dollars, due to restrictions on trade with both Iran and Syria.

Azzaman reports that the dinar’s depreciation has prompted the Central Bank to intervene by increasing supply of dollars and withdrawing dinars from the market. The operation is supported by estimated foreign currency reserves of $62 billion, which Central Bank Deputy Governor Mudher Saleh said is sufficient to cover 120% of the value of local currency in circulation at current exchange rate.

 

http://www.iraq-businessnews.com/2012/04/11/iraq-has-cash-reserves-to-fight-dinar-depreciation/

 

 

April last year they said they started pulling dinar of the street with their cash reserves.......So I am right?

[sandstorm]

so basically what that says is that the CBI took in $209,124,000 dollars and gave out dinar equivelant to that at the 1166 rate?

 

I thought it was always the other way around..... man im confused.

 

What confuses me is if that is right... and they've been doing these auctions for a while now.... they have pumped tons of dinar back on the street...

 

how are they going to RV? sorry for sounding confused, but i was always under the impression that they were taking dinar off the street and handing out usd at a 1166 rate?

the currency auction is to stabilize the market rate..

Basically....the mof sells its usd from oil sales to the cbi for dinar. the cbi then has dollars to sell at auction. Lets say iraq has a purchase import for $100million for a day. since its an import its paid in usd...since the iqd isnt accepted. so the cbi converts or sells 100 million dollars in exchange for approx. 100 billion dinar at auction.

remember that in the beginning the cbi gave dinar to the mof to pay the goi salaries etc. so even though the cbi is selling dollars, the cbi is selling dinar to ever have usd

[Belecosity]

Okay so my understanding has always been theyare pulling dinar off the street to stabilize the exchange rate to the dollar. what good would pumping more dinar into the marketplace due for the exchange rate. -- make it worse

 

My thought is that if you guys are right and their pumping dinar in the street, there is no way we will ever see an RV. Just wont happen.

 

I think the CBI auctions(if they are pulling dinar off the street) is the best sign for an RV-- not pumping more worthless paper back to the public.

 

think about it, if the CBI was handing out dollars for dinars in their auctions at a 1166 rate, why wouldn't people just go to street vendors who will give you a rate above 1200? more dinar in your pocket

 

but if the cbi is taking in dinar and handing out dollar the exchange rate of 1166 is appealing and is a better rate than you can get on the street, so everyone will turn their dinar into them.... thus getting as much dinar off the street so they could raise the rate.

the currency auction is to stabilize the market rate..
Basically....the mof sells its usd from oil sales to the cbi for dinar. the cbi then has dollars to sell at auction. Lets say iraq has a purchase import for $100million for a day. since its an import its paid in usd...since the iqd isnt accepted. so the cbi converts or sells 100 million dollars in exchange for approx. 100 billion dinar at auction.

remember that in the beginning the cbi gave dinar to the mof to pay the goi salaries etc. so even though the cbi is selling dollars, the cbi is selling dinar to ever have usd

so basically it is just a cycle of cash and dinar flow stabilizing the exchange rate of both currencies through the CBI

[sandstorm]

The citizens are paid in dinar. they keep putting dinar back into the economy through projects and the goi. but iraqis have huge demand for the dollar...so they exchange it out for usd. again...and again....and again.

its a cycle. and gives the cbi the chance to rein in the market rate. thats all.