The Central Bank Auctikns are not currency being added or removed from the streets of Iraq. They are revenues received from the sales of oil. The CBI auctions are oil auctions. Do not be fooled by the gurus.
On how the reserves are formed, Asadi said, “Iraq’s annual budget is in Iraqi dinars, which the CBI owns. The state’s revenues are from oil exports, and they are mostly in US dollars. The government buys dinars from the bank, which results in profits for the bank. ... The total CBI profits from selling dinars to the state constitute the country’s federal reserve, whose growth is associated with state spending. State spending increases in proportion with its oil exports.”
Moreover, Asadi said, “With the expected increase in Iraq’s oil exports in the near future, the country’s reserves are likely to grow to a large extent in the coming years.”
Read more: http://www.al-monito...l#ixzz2dkPdj7Pv
From your Guy....DBG..CBI Foreign Exchange Auction
The other contributory factor relates to the CBI’s daily foreign exchange auction. Due to the fact that auction sales of US dollars are intended for the private sector through participating banks, it has been mistakenly perceived, somehow, that the CBI meets the demand of the private sector only. The continuation of UN Security Council Chapter VII Sanctions may have contributed to this view. According to the sanctions, oil revenues are not deposited directly in the CBI, but in the Development Fund of Iraq (DFI) at the Federal Reserve Bank of New York. Iraq’s Ministry of Finance (MOF) is the authority which makes decisions concerning oil revenues. Annually, it sells part of the revenues to the CBI in return for dinars. When it requires foreign exchange, however, the MOF usually uses its account at the DFI rather than requesting it from the CBI. It has appeared, therefore, as if the MOF provides rather than demands foreign exchange from the CBI. The perception, however, is at variance with the fact that government accounts in Iraqi dinars (in the CBI and other banks) are one of the main obligations against international reserves. (Other obligations include private sector accounts in dinars and issued currency.) Therefore, if the government (say, the MOF) requests dollars in return for its accounts in dinars the CBI needs to accept. Thanks RON
Read more: http://dinarvets.com.../#ixzz2dkRcYjv0
Edited by yota691, 02 September 2013 - 09:06 AM.