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Cabinet agrees to convert the purchase amount of the dinar to the dollar at the Central Bank


Soeharto
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been looking at this today,  from another , they have thoughts it is in the managements hands to deal with the import exchange , buying and selling ,  their stuff brought in for dinars at the dollar value !  but if I were an Iraqi person and found out I had dinars worth 1160  and now someone is getting 1 too 1  all hell would bust out ,  when  you mentioned to help Syria , I don`t think so, not in that way,  if Iraq made dinar 1 to 1  or 3 to 1  , everyone said Iraq would never work ,  well if Syrians are pouring over the boarders , by the 1000`s everyday,  Iraq can re-value to the higher amounts  , and they have the Syrians to do the dirty work for Iraqi`s   and the circle of who does what and how is complete...   seems like a fix to me !  just thinking outside the box a little

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been looking at this today,  from another , they have thoughts it is in the managements hands to deal with the import exchange , buying and selling ,  their stuff brought in for dinars at the dollar value !  but if I were an Iraqi person and found out I had dinars worth 1160  and now someone is getting 1 too 1  all hell would bust out ,  when  you mentioned to help Syria , I don`t think so, not in that way,  if Iraq made dinar 1 to 1  or 3 to 1  , everyone said Iraq would never work ,  well if Syrians are pouring over the boarders , by the 1000`s everyday,  Iraq can re-value to the higher amounts  , and they have the Syrians to do the dirty work for Iraqi`s   and the circle of who does what and how is complete...   seems like a fix to me !  just thinking outside the box a little

I like your thinking out of the box.  We need to do more of it myself included.

You need to visit the watering hole for the latest answers, and they are good ones! Ole' amigo!

batta bing babeee, I will stop in and see.

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I have a diff take on this.

 

It looks like the transfer/conversion of dinar to dollar (at the official exchange rate) will only be restricted (when absolutely necessary) to "documentary of credit" (LOC) to pay for export. WHich means.....they are on the path towards using "dinar only" in their country.  :peace:

 

'....Approval of transfer of purchase of Iraqi dinar currency to USD at the official rate of Exchange by the Central Bank of Iraq, under a documentary credit is opened in a bank in the country of purchase in case of direct purchase from abroad when absolutely necessary.."
 

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been looking at this today,  from another , they have thoughts it is in the managements hands to deal with the import exchange , buying and selling ,  their stuff brought in for dinars at the dollar value !  but if I were an Iraqi person and found out I had dinars worth 1160  and now someone is getting 1 too 1  all hell would bust out ,  when  you mentioned to help Syria , I don`t think so, not in that way,  if Iraq made dinar 1 to 1  or 3 to 1  , everyone said Iraq would never work ,  well if Syrians are pouring over the boarders , by the 1000`s everyday,  Iraq can re-value to the higher amounts  , and they have the Syrians to do the dirty work for Iraqi`s   and the circle of who does what and how is complete...   seems like a fix to me !  just thinking outside the box a little

Very possible - and if the Syrians don't want to work there is always the Filipinos... they are what keeps Kuwait functioning.

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Good Evening - this was an interesting article and I enjoyed reading everyone's perspective - Thanks  for everyone that shares their knowledge so   others can benefit and be more informed  - I am in awe of the vast knowledge that is always on display  here -

 

I wish I could give a knowledgeable interpretation but I don't dare embarrass myself by talking economics and / or translations  (smile) - My expertise is in very different fields (smile) - 

 

I do however like to read other perspectives  and I found one to share from Enorrste: I decided to list the article as well so everyone could be on the same page as far as what Enorrste was using for his explanation --

 

Each of us has the privilege of accepting or rejecting any and all information that is brought before us -- Maybe with this perspective and more feedback all of us can come to a better understanding of what it really means - 

 

Finance parliamentary: convert 5 thousand dollars per passenger raises the value of the dinar

BAGHDAD / JD / .. Parliamentary Finance Committee confirmed that the conversion of $ 5,000 per passenger helps raise the value of the Iraqi dinar against the dollar, to be the advocate of the dollar before the government banks instead of exchange in illegal ways.

 

BAGHDAD / JD / .. Parliamentary Finance Committee confirmed that the conversion of $ 5,000 per passenger helps raise the value of the Iraqi dinar against the dollar, to be the advocate of the dollar before the government banks instead of exchange in illegal ways.

 

A member of the Finance Committee MP Najiba Najib told / JD / today: that the transfer of U.S. $ 5,000 per passenger and the official exchange rate by the Rafidain Bank in Baghdad airport will help raise the value of the dinar against the dollar.

 

And called Najeebeh to that does not limit the dollar third-specific and be in the state banks instead of exchange in illegal ways.

The Finance Minister Ali Shukri agency has instructed the Rafidain Bank in Baghdad airport transfer of $ 5 thousand dollars per passenger and the official exchange rate. / End / Mona Fatlawi / 

 

http://translate.google.com/translate?langpair=auto|en&u=http%3A%2F%2Fwww.dananernews.com%2F

 

Enorrste:  The final paragraph explains this clearly.  The CBI has authorized any foreigner to exchange up to $5000 for dinars at the official rate.  This means that any foreigners will have dinars to spend, instead of dollars, in Iraq. 

 

It will raise the value of the dinar because more people will trade in dinars, rather than dollars. 

 

The foreigners are being encouraged to trade their dollars for dinars rather than spending dollars within the country.  As the dinar becomes, once again, used for regular commerce due to the foreigner's use of it, the value will rise, because it will increase the number of foreigners using it within the country.

 

Since the number of foreigners using the dinar is small, this is not going to flood the economy with dinars.  But it will open the doors to more foreign commerce, which will increase demand for commerce generally within the country.  To that extent it will increase demand generally for trade in the country.

 

Since the amount of dinars within the country is limited by the CBI, this is simply a method to increase trade/commerce within the country. 

 

The longer term effect will be an increase in the  value of the dinar.  In short, this is an attempt, short of moving to Article 8 of the IMF charter, to increase use of the dinar WITHOUT opening it up to the world market.

 

I suspect that this is a test on the part of the CBI, to ensure that public acceptance of the dinar will not cause it to fall in value.  They are offering this at up to $5000 per foreigner in the hopes that some demand will be created.  Demand will raise the value of the dinar, as the article implies.

 

 But this test will ensure that there is sufficient demand to guarantee that the value will not fall.  After all, if foreigners won't buy the dinar at 1166 to 1, why would they buy it at a  higher value.  This is a test. 

 

Merely a test.  Once it succeeds, we will see a release to the world of the currency. Of course, I could be wrong. Enorrste

 

Enorrste  I do not see how this can be interpreted as exchanging dinars for dollars.  Since the transaction is taking place by "passengers" at the Baghdad Airport, it only makes sense that the exchange is from dollars into dinars. 

 

To think otherwise is to bend the simple meaning of the article out of shape, in my opinion.  No one goes to Baghdad Airport to exchange dinars for dollars.  Quite the opposite.

 

A "passenger" is a foreigner entering the country.  He comes in with dollars and is being encouraged to exchange the dollars for dinars at the official rate. 

 

Making this an easy transaction "at the airport" tends to eliminate the lower "market rate" that a passenger might get from another location once inside the country.

 

 Therefore the effect will be to support the value of the dinar, as the article says.

Once again, if the plain sense makes sense we should not look for any other sense.  I don't mean to ruffle feathers, but the plain sense is pretty easy to identify here.  Enorrste

 

 

 

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Tlar:

 

Don't get to excited.  It is the bank and the council of minister setting up a better system to buy goods ordered in from outside the country.  The selling company is funded the minute those goods are received in Iraq  and signed for.  It takes the worry out of being paid and will definitely make it easier for those companies to do business with Iraq. It also makes it easier for a company in Iraq to buy goods without having to pay for them before they are received.  A documentary letter of credit is a really good move at this time.

 

 

"exchange rate by the Central Bank of Iraq", indicating that the payment will be "under a documentary credit is opened in a bank in the country of purchase in case of direct purchase from abroad when absolutely necessary".

 

Kaperoni:

 

Ok, here is the scoop...and Tlar is correct...

 

 

This is the GOI approving a program to have Iraqi companies deposit dinar in their bank accounts.  From that a LOC (letter of credit) or documentary credit in USD is created and issued to banks around the world as needed.  The purpose of this is to create a more free flow of materials to Iraq and circumvent issues that may arise due to the conditions or circumstances.  These banks holding these LOC's then become the guarantor for the transaction.  And only if necessary, then then could pay any vendor or supplier.  The good news is this may help Iraqi companies obtain supplies and materials from outside Iraq.  The bad news is that one would ask..if they are doing this, then they must not be planning to make the dinar internationally recognized soon?  When I asked that question to someone I consider knowledgeable on this subject, they said..yes, one could think that, yet on the other hand, this move is beneficial with or without the dinar having value.

 

Tlar:

 

It does not effect the value or whether it is international either way.  It is a closed loop.  The companies pay the bank in dinars and the bank pays the current exchange rate in USD to the company through a local bank in that country.


The way they have set this up, it should have no material effect of whether or not the dinar has value or whether it is international.  It is a closed loop.  The dinar stays with the bank and the bank converts it to USD at the then exchange rate and forwards the USD to a bank in the country that the Iraqi company or institution is trying to by goods.  Remember that the credit rating for the government is B-.  Most companies trying to get goods are considered a risk because this is Iraq.  It's just removing most of the risk, allowing foreign companies and entities to know they will be paid.  Its the warm fuzzy that will be instrumental in advancing business.  It will be adjusted with the exchange rate.  When the currency goes international and becomes an IMF article VIII currency, if I'm right, it will be at the same time they adjust the value (delete the zeros), and now the bills will be eligible to be paid for with dinar or USD.  This measure is a temporary stop gap to cover a problem with "how does an Iraqi company import things it needs to operate in a closed monetary system"? .

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Frangipani --  +1 Thanks for bringing Tlar's perspective as well - I  wanted to but what I did bring was pretty lengthy and some get overwhelmed with so much to read and will not even start - (smile) -  I do enjoy reading Tlar - he goes to great lengths to explain and I think I still fall short of the understanding (smile)  - Some things just cannot  be explained in cliff notes (smile)  UNEEK

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What is going on here? One currency for another does not mean 1to1 . It means what it says one currency at an exchange rate for the other one not 1to1. I want an RV as much as the next guy but you can't just make stuff up out of thin air. That is for the rumor GURU guys.

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mmmmmm ,,,   a passenger trades his money in for dinars !   now , where are those crisp, new ,  dinars coming from?  the older post we have seen says the average Iraqi citizen is at the point now of " having to tear a dinar note into piece`s to make change, the notes are soooo worn and torn, "  someone in the banking area needs to get those lower notes off the drawning board and into the folks hands pretty darn fast ,  if they want passengers to come too Iraq !    just another thought --------> might even try to revalue those new notes just for giggles also :) 

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Why would any passenger trade in a US dollar for a worthless dinar that is worn, torn, and falling apart; especially when the US dollar is so widely used and excepted all over Iraq?  The only way this article makes any sense is if the CBI and Iraqi GOI are getting ready to restrict the use of dollars within Iraq, and we haven't seen any such article to even believe that is going to happen. 

 

Jeepguy, I agree with what you just wrote above about the small denoms. 

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Here's another take on this from BL and team:

 

[bondLady] lets have a look at a few things going on

[lightingcslt] Here is some information I believe may relate to this great thread. Thank you. Alsumaria News / Baghdad and the Council of Ministers approved, on Tuesday, to convert the purchase amount from the local currency to the U.S. dollar official exchange rate by the Central Bank of Iraq. said the General Secretariat of the Council of Ministers in a statement received "Alsumaria News", a copy of "The Council of Ministers held, Today, its thirty-eighth regular in Baghdad headed by Prime Minister Nuri al-Maliki. " The Secretariat explained that "the Council has agreed to transfer the purchase amount from one currency Iraqi dinar currency to the U.S. dollar official exchange rate by the Central Bank of Iraq," indicating that "the payment will be Under the letter of credit is opened in banks in the country of purchase in the case of direct purchase from the outside when absolutely necessary. "
http://www.alsumaria.tv/news/82058/%D9%85%D8%AC%D9%84%D8%B3-%D8%A7%D9%84%D9%88%D8%B2%D8%B1%D8%A7-%D9%8A%D9%88%D8%A7%D9%81%D9%82-%D8%B9%D9%84%D9%89-%D8%AA%D8%AD%D9%88%D9%8A%D9%84-%D9%85%D8%A8%D9%84%D8%BA-%D8%A7%D9%84%D8%B4%D8%B1%D8%A7-%D9%85/ar


[lightingcslt] Decisions of the Council of Ministers meeting No. 38 on 09/03/2013 -Approval of transfer of purchase of Iraqi dinar currency to USD at the official rate of Exchange by the Central Bank of Iraq, under a documentary credit is opened in a bank in the country of purchase in case of direct purchase from abroad when absolutely necessary.
  
http://www.cabinet.iq/ArticleShow.aspx?ID=3581
  
[bondLady]  I was told we need to check the CBI web site under monetary policy. Open market operations start either October or November per CBI.


[bondLady] anyone have a clue ? I don't know what all he was trying to say. Lets look at what we have
    
[Dogznova] I do

[tlm724] does it have to do with what lighters showed  ?

[bondLady] MAYBE

[Dogznova] Open market operations start either October or November per CBI. Not sure why he has OCT or NOV

[bondLady] I still always remember they brought out new currency Oct 15

[Dogznova] if it says on the CBI.. It would say directly I would think


[bondLady] its in the monetary policy, maybe they got a new policy

[Dogznova] I will have a look

[bondLady] ty

[tlm724] open market operations AND Approval of transfer of purchase of Iraqi dinar currency to USD at the official rate of Exchange by the Central Bank of Iraq, under a documentary credit is opened in a bank in the country of purchase
     
 
[tlm724] imo they are definitely related

[bondLady] international banking

[tlm724] yes Bondlady, this looks good !!  
 

[therealbubbie] at the official rate of Exchange


[lightingcslt] Dogznova thats definetly saying one for one under the letter of credit

[Dogznova] the CBI will be responsable for international transfers
  
[Dogznova] and it looks like the CBI is able to open a line of credit amongst the other world banks ..

[lightingcslt] Dogznova yes

[Dogznova] and the CBI will be required to do the transfers at the official exchange rate.. What ever that is at the time of transfer and Shredd been looking and saying this for quite some time.. He will probably like that report


[lightingcslt] Dogznova already emailed it to him  

[lightingcslt] Dogznova everyone looked right over that one

[Dogznova] not enought fireworks in the title? did you all post the Aug 15th press release on the english side of the CBI ? it's on the main page of the CBI English side

[lightingcslt] Dogznova don't think so
 
 
[Dogznova] yes it's in the news section towards the bottom of the page


[lightingcslt] ok

[Dogznova] Aug 15th 2013. first press release thats been in english in quite some time

Iraqi retail Payment System Infrastructure Project link:  http://www.cbi.iq/documents/Announcemen-en.%20%282013-d.5%29.pdf

[lightingcslt] what do you think timmy ?

[tlm724] lightingcslt I think its good news light and I think it is linked with what you showed !

[bondLady] light grab which ever art that came out of please

[lightingcslt] ok

[therealbubbie] lightingcslt it means there going to change the rate imo !!!!     
 

[Dogznova] this is what I wanted to show shredd a while ago :Various strategies for the use of OMO are possible. The CBI might, for example, choose to provide for desired long-term monetary growth through the accumulation of foreign exchange reserves. The monetary effect of higher or lower rates of foreign exchange reserve growth resulting from interventions to stabilize the exchange rate could be sterilized with OMO. Otherwise OMO would be limited to stabilizing bank liquidity and keeping short-term money market interest rates within the tunnel of the CBI’ Credit and Deposit facility rates. OMO will generally by undertaken on an auction bases with banks. Such auctions will look very much like the foreign exchange auctions now being conducted.

[Dogznova] OMO is Open Market Operations

[bondLady] ok

[tlm724] The monetary effect of higher or lower rates of foreign exchange reserve growth resulting from interventions to stabilize the exchange rate could be sterilized with OMO

[Dogznova] OMO will generally by undertaken on an auction bases with banks. Such auctions will look very much like the foreign exchange auctions now being conducted.


[shredd] An OMO is the buying and selling of government securities in the open market in order to expand or contract the amount of money in the banking system. Purchases inject money into the banking system and stimulate growth while sales of securities do the opposite. Open market operations are the principal tools of monetary policy. (The discount rate and reserve requirements are also used.) The U.S. Federal Reserve's goal in using this technique is to adjust the federal funds rate - the rate at which banks borrow reserves from each other.
  Now, I don't want to go too far out on a limb here but to me, this is defining what the cbi operations will be when the auctions cease and also when the dinar is on a market driven float. The reason I say this is first, we know the auctions will cease once the rate floats and is free from being managed. This is a source of revenue but is primarily a tool for the cbi to manage the price of the dinar.
  That said, an open market operation system allows the central bank to sell govt securities to do the same........to generate revenue while at the same time managing pricing. How? Well, the fed funds rate is the base for all securities pricing such as prime, libor, etc. For me, in my world, this is not new news but what is key, again, is the preparations for the cbi moving to this. Like I had in my last chat, securities trading is the foundational element that makes an economy strong and with the pending rating coming, preparations are being made for this. On August 11, Moody's Investor Services refers to Iraq as a "fast-growing, in particular the Kurdish region" (Credit Outlook publication, moodys.com).

[bondLady] free market right?

[shredd] Right Bondlady, this is the sop (standard operating procedure) for a free market central bank.

[tlm724] or would be limited !

[lightingcslt] http://www.cabinet.iq/Ar
 ··· ?ID=3581

[Dogznova] yes this is what's going to happen when the currency auctions stop

[tlm724] Dogznova is there a date of publication on that ?

[Dogznova] tlm724 no.. its been on the CBI for a while now.. I read it a few months ago.

[tlm724] Dogznova ok ty !

[Dogznova] I can't find anything about Oct or Nov though


[bondLady] قرارات مجلس الوزراء للجلسة رقم 38في 09/03/ 2013 -------------------------------------------------------------------------------- 09/03/2013 4:29 pm The Council of Ministers held its thirty-eighth regular in Baghdad Tuesday, September 3, 2013 under the chairmanship of Prime Minister Nuri al-Maliki issued by the Board the following decisions: 1 - To approve the following: - Approval of the consolidated draft pension law auditor by the State Council and forwarded to the House of Representatives based on the provisions of Articles (61 / item first and 8 / item II) of the Constitution. - Adoption of the recommendation of the Committee on Energy on the following: First / assignment of the implementation of the tender drilling 39 wells in Maysan fields / Maysan Oil Company and the Company cnooc Iraq on listed companies below and the total amount of 347,866,727,66 three hundred and forty-seven million, eight hundred and sixty-six thousand, seven hundred and twenty-seven dollars and sixty-six cents, on the the basis of the best technical bids and lower prices. - Chinese كوسل amount of 73824353 seventy-three million, eight hundred and twenty-four thousand, three hundred and fifty-three dollars. - China Bohai Corporation of $ 96.66624 million ninety-six million, six hundred and sixty-six thousand, two hundred and forty dollars. - Company Weatherford U.S. in the amount of 82,395,512,9 Eighty-two million, three hundred and ninety-five thousand, five hundred and twelve dollars and nine cents and the amount of $ 94,980,621,76 four and ninety million nine hundred and eighty thousand six hundred and twenty-one dollars and seventy six cents. II / extension of the Memorandum of Understanding processing of the Hashemite Kingdom of Jordan for the export of Kirkuk to the Kingdom by truck under a memorandum of understanding signed between the Republic of Iraq and the Hashemite Kingdom of Jordan and another year until 09.19.2014 and the same prices and conditions contained in the note

[bondLady] this one light?

[lightingcslt] yes


[bondLady] Pacific University College 2 - Gulf University 3 - University of Uruk 4 - University of statement - Increasing the powers of the direct purchase of medicines and emergency supplies to 500,000,000 five hundred million Iraqi dinars, or the equivalent to the U.S. dollar from inside and outside Iraq. - Approve the transfer of the purchase amount from the Iraqi dinar currency to the U.S. dollar currency at the official exchange rate by the Central Bank of Iraq and the payment under the letter of credit is opened in banks in the country of purchase in the case of direct purchase from the outside when absolutely necessary. - Adoption of the recommendations of the follow-up committee and the work of finding and producing electric power and the problem under the supervision of the Prime Minister under the Council of Ministers resolution No. 277 for the year 2013 and to approve the publication of the report with the assumption of the Committee on Energy follow up the implementation of the recommendations.
   http://www.cabinet.iq/ArticleShow.aspx?ID=3581


[lightingcslt] Approval of transfer of purchase of Iraqi dinar currency to USD at the official rate of Exchange by the Central Bank of Iraq, under a documentary credit is opened in a bank in the country of purchase in case of direct purchase from abroad when absolutely necessary


[shredd] I commented on the original post, but this is really speaking of administration of normal exchanges regarding LOC (letter of credit) cash movements. Now, I know I've talked about LOCs before but this is a credit enhancement tool where a bank guarantees the credit worthiness of the debt to which it is attached per se. In this context, the cbi is the guaranteeing or backing bank.
  To me, this is all about the very near, pending change to a free market economy where OMO is going to take the seat of the auctions and again, this will take place when the issuing country (iraq) moves from being a dual currency country and stands on their two feet upon their own dinar. We all know what that means for us!


[therealbubbie] official rate of Exchange !

[lightingcslt] now look at this


[lightingcslt]  the Council of Ministers approved, on Tuesday, to convert the purchase amount from the local currency to the U.S. dollar official exchange rate by the Central Bank of Iraq. "the Council has agreed to transfer the purchase amount from one currency Iraqi dinar currency to the U.S. dollar official exchange rate by the Central Bank of Iraq," indicating that "the payment will be Under the letter of credit is opened in banks in the country of purchase in the case of direct purchase from the outside when absolutely necessary. "


[lightingcslt] purchase amount from one currency Iraqi dinar currency to the U.S. dollar official exchange rate by the Central Bank of Iraq

[lightingcslt] the payment will be Under the letter of credit is opened in banks in the country of purchase in the case of direct purchase from the outside when absolutely necessary. "

[tlm724] so this is saying international (Banks) the dinar will be recognized and transferable

[bondLady] I think so

[tlm724] thats how I read it

[therealbubbie] tlm724 yep , may mean RV soon !

[tlm724] if they put value to it yes !

[lightingcslt] looks to me like Maliki already has   

[tlm724] it means that we can go to a bank here in the US and have our currency recognized and IF it has value we can exchange it for the posted CBI rate

[therealbubbie] to convert the purchase amount from the local currency to the U.S. dollar official exchange rate


[bondLady] minus the bank fee

[bondLady] thank you all !

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