Arab Monetary: 3 currency exchange systems

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News Search News Archive«Arab Monetary: 3 currency exchange systems and countries'cooperation' dependent mechanism 'peg'

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September 15, 2012 11:22 PM Last Updated: 15 Sep 2012 11:22

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Confirmed the Arab Monetary Fund, the drainage systems prevailing in the global economies and Arab currencies, including 3 types first "floating fully" and that left to market forces by identifying currency exchange rate, as countries rely other system "peg a single currency or a basket of currencies" including states "cooperation", Jordan and Lebanon, as well as drainage systems combine the two systems ex. said Dr. Ibrahim Alkrasna head of training in the Fund during the "financial stability", which concluded yesterday at the Fund in Abu Dhabi "are diverse exchange in the Arab countries to 3 types ", pointing out that both of Jordan, Lebanon and the GCC countries peg its currency to fixed exchange rates against the dollar." he added, linking Libya and Syria their currencies unit SDRs, while Morocco linking exchange rate DRAM basket undeclared currency, where the Euro weight largest in the basket and determined central bank exchange rate Moroccan dirham daily, and selecting the minimum and maximum exchange rate of the dirham. explained that linking to a basket of currencies are choosing linkage system to a basket of currencies available, such as special drawing rights and baskets of other currencies, which is based usually currencies most important trading partners of the state. added Alkrasna adopt all of Iraq, Tunisia, Algeria, Mauritania and Sudan system "floating orbit of exchange", where value is determined currency in the market, according to the forces of supply and demand, and the government to intervene when necessary to re-route the exchange rate, in line with a group of standards including the status of the current account and foreign currency reserves, while dependent both Egypt and Yemen system floating exchange.pointed out that "free-floating" leaves the exchange rate freedom change continuously over time, consistent with market forces, and limited interference by the authorities in this case to influence The pace of change in the exchange rate only, and not to limit that change. said Alkrasna "refers literature on systems exchange rate that there impact of exchange rates on economic growth and have that influence either directly through the affected exchange rate or indirect impact of the exchange rate on each of the investment and trade and financial sector development. " indicate the economic theory that the effectiveness of countries to deal with the trade shocks depends primarily on the drainage system adopted in these countries, which in turn is reflected in the country's economic growth. "In case prices fall exports State, the reflection that economic growth depends on the exchange rate regime, whether fixed or floating, pointing out that the low price of exports will reduce state revenues, which will lead to a decline in economic activity, as well as in employment. " and "In the case of the adoption of the state rate system fixed exchange it requires the state to intervene to keep the exchange rate of the local currency by starting to buy the local currency, will reduce the availability of these currency, to grant facilities and investments, which will negatively impact on economic growth. " and stated that in the event of the adoption of the state to a flexible exchange rate or floating, The State is committed to intervene to raise the exchange rate results in a lack of foreign currency and lead to a further decline in the price of the local currency which will reflect positively on exports and thus an increase in economic growth. explained that the impact of the exchange rate regime based on the level of sophistication in financial markets, Since the flexible exchange rate is usually coupled with fluctuations high and that could have a negative impact on the economy unless the financial system is able to absorb shock and provide dealers with tools hedge occasion, so thought it must be a system developed financial if take advantage of the price flexible exchange.

[jeepguy]

o.kayyyyyy ! if they are going buy economic out-look and the float of baskets against the dollar, the saudi riyal is -- 1 dollar = 3.749 swap the numbers gets us this 1 riyal =`s .26 cents----- egyptian pound is ---- 1 dollar =`s 6.584 swap numbers gets us 1 pound=`s .15 cents ----irianian rial ---- 1 dollar =`s 12,084---swap is 1 rial =`s .oooo8 dollars whatttttttt :blink:/> ... with these numbers in the area of iraq why not give a number like dollar 1 too dinar 2 swap ---2dinars =`s 1 dollar ,,, looks like the numbers are lined up for just this move, just my opionion on the baskets in the region anyway !! just do it already :)/>

Edited January 19, 2013 by jeepguy

[hame55]

o.kayyyyyy ! if they are going buy economic out-look and the float of baskets against the dollar, the saudi riyal is -- 1 dollar = 3.749 swap the numbers gets us this 1 riyal =`s .26 cents----- egyptian pound is ---- 1 dollar =`s 6.584 swap numbers gets us 1 pound=`s .15 cents ----irianian rial ---- 1 dollar =`s 12,084---swap is 1 rial =`s .oooo8 dollars whatttttttt :blink:/>/> ... with these numbers in the area of iraq why not give a number like dollar 1 too dinar 2 swap ---2dinars =`s 1 dollar ,,, looks like the numbers are lined up for just this move, just my opionion on the baskets in the region anyway !! just do it already :)/>/>

Even if it goes to .25 on par with Saudis we will do very well, even if it doesn't float. I see this as a likely scenario - perhaps another RV several years down the road, meanwhile build up economy. That way they have less inflation shock, less adverse economic impact while the positive impact would be good enough -

Sure it might attract investors, but they won't be sure another RV is coming - could keep same rate as Saudis for years, decades...and Iraqis would have much better buying power than they do now. Dollarizing is a problem with this scenario however, but they could use both, and get rid of their massive zero problem.

[rightsonword]

Even if it goes to .25 on par with Saudis we will do very well, even if it doesn't float. I see this as a likely scenario - perhaps another RV several years down the road, meanwhile build up economy. That way they have less inflation shock, less adverse economic impact while the positive impact would be good enough -

Sure it might attract investors, but they won't be sure another RV is coming - could keep same rate as Saudis for years, decades...and Iraqis would have much better buying power than they do now. Dollarizing is a problem with this scenario however, but they could use both, and get rid of their massive zero problem.

I never really understood the de-dollarization aspect. Couldn't the government at some point simply make it illegal tender regardless of what value the IQD may have in the future?

[BETTYBOOP]

Ok i suppose any of these are possible and i don't profess that kniw ir fully understand this side of the investment.....but what i do know is tunisian dinar is a "soft" currency and all their buisness is conducted in frebch francs/ euros. Egypt is the same and their buisness is done in USD if i remember correctly.

[fastarnie]

I never really understood the de-dollarization aspect. Couldn't the government at some point simply make it illegal tender regardless of what value the IQD may have in the future?

Yes, and that's part of the reason why i don't believe pumper bologna. I won't name names, but he does a daily show on youtube.

[makecents]

I never really understood the de-dollarization aspect. Couldn't the government at some point simply make it illegal tender regardless of what value the IQD may have in the future?

I'm not sure about that. Its the Fed that makes the dollar legal tender as the CBI does for the IQD. Would the Iraqi constitution allow the GOI to make it illegal for Iraqi's to own foreign currency or a particular foreign currency? I don't know, but it would be very odd as that would effectively shut down all legal import/export since oil is paid for in dollars and imports are as well (or dollars turned into Euros etc). So if its illegal to own dollars, how would an importer be able to buy anything from a foreign supplier? No one outside of Iraq will want dinars until there is something you can buy in dinars, which may eventually happen but not soon and not for a long time at the scale of oil exports.