Tlar's Breakdown & Opinion - Post From D. Alert - 03/13/2013

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Tlar's Breakdown & Opinion - Post From D. Alert - 03/13/2013

 

The time on Wednesday, 13 March / March 2013 07:39 | | Baghdad / Orr News

Despite nearly three months Alabaster exclusion d. Shabibi Governor of the Central Bank of Iraq, but the currency auction conducted by the bank, is still a matter of debate among politicians and economists. 

With detection parliamentary source early for the outbreak of major Central Bank and Agency Abdul Basit Turki, demanded Baghdad Chamber of Commerce, the central bank and the government to reveal the fate of the $ 250 million sold daily for banks and "organized gangs" led to the disruption of Iraqi dinar exchange rate . ARTICLE & LINK BELOW

"According to a member of the room that the central bank has become a non-magnet for Arab banks and also became an environment repulsive to invest domestic economic not to grant any guarantees to these banks in the sale of Iraqi funds, noting that most of the banks of the Arab countries in Iraq has become disabled because delayed proceedings money transfer center operations would be conducted without fixed substrates including delayed transfer of $ 36 trillion dinars to a bank for a period of 6 months due to difficulties converting currency outside causing it not to make a profit for these banks and distancing itself from Iraq"

Tlar:  The last paragraph about says it all.  The banks representing arab countries operating within the borders of Iraq,  are having trouble selling dinar because the people won't buy it, causing the bank to lose money.  
 

  TLAR CONTINUES: The banks are delaying earlier orders for dinar because there is no market.  The people of Iraq prefer to use the dollar because it is in better condition and it has value.  

Whereas before these banks sold dinar and traded in dinar, they appear to be mainly trading in USD now.  Dinar no longer makes sense to them because they can't make any money selling it.  

This most likely  supports all the articles we've been seeing about how the dinar is desintigrating because of use and because of this, and the fact that less and less vendors will accept it  It is one of the two reasons Iraq is dollarizing. 

The other is of course the banks policy of keeping the exchange rate low is a major incentive to make Iraqi's dollarize in an attempt to preserve their wealth and buying power.  Gosh darn how I love these kinds of articles.  .

"Iraqi funds, noting that most of the banks of the Arab countries in Iraq has become disabled because delayed proceedings money transfer center operations would be conducted without fixed substrates including delayed transfer of $ 36 trillion dinars to a bank for a period of 6 months due to difficulties converting currency outside causing it not to make a profit for these banks and distancing itself from Iraq"

TLAR: By the way, the solution to Iraq's problem here is easy and it is becoming more clear all the time.  Raise the value of the dinar to a dollar, introduce the smalls, buy back all the USD over the next six months.  The CBI's reserves would go through the roof as they repatriate all the US dollars they have been selling over the years as they buy them all back at a one to one basis.

Punisher:  Tlar, i wish they would look at this as simple as you do...

Tlar:  Punisher I think they do but obviously are holding for this period of time for some reason we don't know.  Maybe a green light from the IMF/UN making sure Iran is all but devoid of real dinar. 

 Maybe its because of some other reason you and I haven't even thought of and will never know.  Assume this though, in a perfect world, if the CBI collected every dinar in Syria, Iran and Iraq, the only countries that actually use the dinar, it would be extremely easy to change the exchange rate to anything they want and collect all the dollars that they have put out buying over the years buying up all those dinars. 

 If Kap is right and I know that he is, the dinar outside of Iraq will continue to stay where it is or it will be traded amongst countries as it will be an international currency.  Buying all the dinars up in Iraq, Syria and Iran would mean that Iraq receives basically a clean slate with no dinar left to cover that was circulating.   

They could then put the exchange rate at any amount they want and use it to buy back all the dollars they used setting this up.  I always wondered why Iraq needed 3 times their outstanding currency (dinars) in hard currency just sitting in currency reserves.  

Some of this money might have been used fixing infrastructure.  What was the purpose of such a vast reserve when most countries have only 10 - 15% in reserves to back their currency.  

Maybe this was their plan all along to buy up almost all circulating dinar and then change value.  Whether or not it is their plan, it looks to me like the CBI is doing just that.

Punisher:   Thanks Tlar...now all we need is that time period or window of opportunity.

Tobyboy:   Tlar So what do you think meaning of 36 Trillion dinar to a Bank for 6 months due to difficultty converting currency outside. Are they saying they have 36 Trillion more to convert to dollars or have already converter 36 trillion. I was thinking last month they had around 6-7 trillion left in Iraq & within 2 months be completely out of dinar ?

Tlar:  Toyboy, I think what they are saying is these banks are not accepting orders for dinar that they had placed earlier in the year and what would be considered normal in purchases by these banks is no longer the case.  

The buying trend has changed. Few banks are buying very little dinar.  Remember it was only about 7 months ago that they started to dollarize Iraq through the auctions.  Prior to that it was an ebb and flow kind of thing with the banks.  If they were low on dollars, they would buy dollars.  If they were low on dinars, they would buy dinars.  

These two currencies were circulated on a daily basis throughout Iraq.  Remember a $1.00 US dollar in the United States  is used over and over and returns time and time again to the bank.  Same with Iraq.  

Since the bank started buying up all the dinars, it has pretty much been a one way street.  There is little if any demand for the dinar in Iraq and elsewhere in the middle east.  So the banks are mainly buying dollars from the CBI because that is what the market demands.  

No business wants to be in possession of a product that there is no demand for.   All currency markets in Iraq are being drained of dinar for the reason I listed in my post above.  Sooner or later there should not be much dinar left in Iraq, as well as Iran and Syria.  

We see through the auctions a trend that is substantiating this claim as the auctions are reporting fewer dollars being sold daily.  This is a stair step down process, not upswing process on selling USD.  

Eventually the banks will have purchased most of the dinar and the market will be satuated with USD.  It is at this point the CBI could easily change the value of the dinar.  If these policies remain in place as I hope they do, we might see a change by as early as July.  

Its been an upside battle for the CBI IMHO because of all the quassi Iraqi economic experts and politically motivated agendas that  have continually try to interfere with the process.   The bank has stayed the course lending me to believe that they know what their doing.  

They are not selling all of this USD and buying this much dinar as an accident.  To me April is out of the question even though it is the beginning of an accounting period because the auctions are still selling USD in the very low 100 millions per day running from a high of 125 to a low of 85 million.  

This is down from where they started this process 7-8 months ago substantially.   It  was in the mid 300 million range per day back then.  If the CBI is able to stay the course inspite of all the crap being thrown at it, we should shortly see that these same auctions will be fluctuating below the 100 million mark and the swing will look more like 50 to 95 million per day continuing the downward trend. 

 I'm hopeful that whoever makes the decisions at the CBI concerning this process stays the course.   

FULL ARTICLE & LINK: 

The time on Wednesday, 13 March / March 2013 07:39 | | Baghdad / Orr News

Despite nearly three months Alabaster exclusion d. Shabibi Governor of the Central Bank of Iraq, but the currency auction conducted by the bank, is still a matter of debate among politicians and economists. 

With detection parliamentary source early for the outbreak of major Central Bank and Agency Abdul Basit Turki, demanded Baghdad Chamber of Commerce, the central bank and the government to reveal the fate of the $ 250 million sold daily for banks and "organized gangs" led to the disruption of Iraqi dinar exchange rate .

Source Parliamentary said that differences cropped up as a result of the approach followed by the central bank governor and agency, which differs sharply from approach former governor Sinan al-Shabibi, where did road that was Shabibi has pursued and mechanism of action of differences between the political parties and the Governor of the Turkish Central influenced the interests of a number of politicians and their parties at a critical time were very dire when the proceeds mediation through a central bank auction of dollars. 

The source indicated that the auction was used by some parties and figures source of funding large activities partisan and political and funding bases and now picture is different and the reason is the difference between state law and the rest of the blocks on the arms deal, Russian and reaction Maliki destroy the spring, which was feed the remaining money is the auction, and now everyone is looking for a way to return to normal.

But a member of the Board Room Salah al-Waeli said the central bank auction sells daily enormous sums of money estimated at $ 250 million for banks operating against the country and controlled by organized gangs. Waili said he should government and the central bank to disclose the fate of these funds sold daily and that no map to know what to go this money and the goal of the bank sales these huge sums of money.

Waeli said that central bank sales led to osteoporosis in the dinar exchange rate and foreign currency between the rise and fall in the local markets of a single sentence, and shares of a volatile exchange rate compared to currency exchange rates in the Arab countries.

According to a member of the room that the central bank has become a non-magnet for Arab banks and also became an environment repulsive to invest domestic economic not to grant any guarantees to these banks in the sale of Iraqi funds, noting that most of the banks of the Arab countries in Iraq has become disabled because delayed proceedings money transfer center operations would be conducted without fixed substrates including delayed transfer of $ 36 trillion dinars to a bank for a period of 6 months due to difficulties converting currency outside causing it not to make a profit for these banks and distancing itself from Iraq.

LINK