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The central bank plans to unify the exchange rate of the dollar sold in the auction and the market


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The central bank plans to unify the exchange rate of the dollar sold in the auction and the market

01/14/2016
iraq-90854305144_118107700-300x178d.jpg
 
 
BAGHDAD / JD / .. revealed to the economic and investment commission in Parliament about the government's determination obliging the Central Bank of the consolidation of the dollar exchange rate in the auction sold the domestic market, likely raising the value of the dollar against the dinar in the shadow of the financial crisis in the country.
He said committee member Rep. Najiba Najib told / JD / that there is an urgent need for the government to reconsider the monetary policy of the country, the fact that there is a real rate of the dinar against the US dollar because of the current dinar price of 1,166 is the same as when it was sold for a barrel of oil for $ 111. She added that the financial crisis facing the country as a result of the drop in oil prices to unprecedented levels require the lifting of the dollar exchange rate against the dinar and will resort to it the government requiring the central bank in addition to the unification of the exchange rate at the central bank auction and in the local commercial market, where the dollar exchange rate at auction Central dinars in 1190, while the market in 1240 dinars. / end / 8 /

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It should be noted hear that the word unification means to unite or to make whole or equal.

 

Bad translation but it sounds as if they are going to make it pre-war value.. Just my interpretation bu twe will see!!!!

Edited by hammer911
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Bad translation but it sounds as if they are going to make it pre-war value.. Just my interpretation bu twe will see!!!!

against the US dollar because of the current dinar price of 1,166 is the same as when it was sold for a barrel of oil for $ 111.

That is what I see also hammer

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http://www.jstor.org/stable/2231315?seq=1#page_scan_tab_contents  This is a article on echange rate unification it may be old but gives us something to study ..Anyways it will not let me copy and paste!...Its from the economic journal ..http://www.jstor.org/stable/3867426?seq=1#page_scan_tab_contents


Exchange rate unification vs. currency unification  The dual exchange rate system in Cuba overlaps with a dual currency system  Two official exchange rates for the Cuban peso, CUP • 1 CUP per 1 USD for the state enterprise sector and public institutions • 24 CUP per 1 USD for the rest  Two currencies: CUP and CUC, where 1 CUC = 1 USD  However, the two systems respond to different motives…  The dual exchange rate was introduced to protect basic imports and the BOP  The CUC currency was created to mitigate dollarization  …and their unification can be conceptually and practically de-linked  The two exchange rates could be unified while keeping the two currencies  A single currency could be mandated but two exchange rates could be kept  Three policy decisions: e-rate unification, monetary unification, postunification exchange rate regime; the focus here is mainly on the first...https://www.piie.com/publications/papers/delaTorre20150129ppt.pdfWhat is special about the unification challenge in Cuba?  The dual exchange rate originated in an exogenous shock (TOT deterioration and dry-up of foreign aid) rather than in endogenous capital flight  This mitigates concerns about speculative financial turbulence during unification  Pre-unification inflation is low but the e-rate spread is unusually large  This highlights the importance of tight monetary control during & after unification  The dual rate system is a fiscal scheme of large but implicit taxes & subsidies  Net sellers of dollars (or CUCs) at 1:1 (foreign hotel operators) are heavily taxed  Net buyers of dollars (or CUCs) at 1:1 (state enterprises) are heavily subsidized  Workers in the CUC circuit do not receive payments directly in CUCs, but in CUPs via a government employment agency => the system acts as a huge tax on labor  Unification requires decoupling e-rate from fiscal policy (major fiscal reform)  The responsiveness of economic actors to price signals is weaker  This can delay efficiency gains, which are the raison d’être of unification

Edited by Zcountess
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against the US dollar because of the current dinar price of 1,166 is the same as when it was sold for a barrel of oil for $ 111.

That is what I see also hammer

When the price of oil was high, it is my thinking that the dinar could revalue at .10 because they had plenty in reserve with the high price of oil.  Now that oil is bottoming out, it seems to me they need to revalue higher to make up the difference in lost revenue

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When the price of oil was high, it is my thinking that the dinar could revalue at .10 because they had plenty in reserve with the high price of oil.  Now that oil is bottoming out, it seems to me they need to revalue higher to make up the difference in lost revenue

That does seem to be the plan.

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Am I the only one that reads this as unpegging from the US dollar and allowing a float starting at the market rate?

I sorta saw unpeg as well, but as you can see by everyone's response, this article can be interpreted a hundred different ways.

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DV, All of this talk about exchange rates the past few weeks. Yup the CBI is definitely up to something and it is about to be revealed very soon IMHO.

Remember, We are still awaiting the 2016 Budget to be published in the Gazette.

Hmmmmm, Why is it being delayed?

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Okay, I'll be the debbie downer here. What I see in this article is the CBI getting ready to move the 1166 official peg rate up to around 1240, which is more realistic to what the dollar and dinar exchange rate is in the marketplace. I do not see any good news in this article, people.

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186980Image1.jpg
The price of 100 US dollars rose to 128 500 dinars in the middle of last week

Roudao - Arbil

assured the Central Bank of Iraq as "We will not allow any form high value of the dollar against the Iraqi dinar more," adding that the depreciation of the dinar in the last week had ordered an emergency. In the middle of last week, the price of 100 US dollars rose to 128 500 dinars, due to lack of foreign currency in the currency markets, but the central bank by asking more than the dollar currencies, was able to reduce the price of $ 100 to 124 500 dinars during the 3 days. The governor of the Central Bank, on the Keywords, that "Iraq has the hard currency enough to cover imports for six months, but the central bank is trying to provide a value of $ 2 billion of foreign bonds, and $ 5 billion of domestic bonds in 2016 ". He stressed relationships, because no policy to raise the value of the dollar against the Iraqi dinar, describing the high value of the dollar in last week about it emergency, saying that "the central bank has foreign currency is the weakness of the local currency in the market." In the past 15 days, was one of the criticisms leveled continuously to the Central Bank of Iraq, is the low value of the Iraqi cash reserves in the bank. On this Thread Keywords explained that "the financial reserves of the Central Bank is changing constantly, but today worth $ 68 billion, the size of the money supply of the dinar 40 trillion dinars."

Read more: http://dinarvets.com/forums/index.php?/topic/214469-central-bank-of-iraq-we-will-not-allow-the-dollar-to-raise-prices/#ixzz3xPvvrLb5

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