Float currency

[newbieDA]

Just now, Artitech said:

Iraq has not only maintained the 2% for 90 days , Im not the best person for this, I believe Iraq has maintained the 2% spread for like 14 or 15 months, I could be wrong but that is what im thinking. 

 

He said it at the Conference if I remember right, he said they maintained the 2% spread and it was completed and I talked to someone else about it but I can not find it.

 

Must be in my other alternate universe that this happen.

[TexasMike1958]

so if the government applies a fixed rate, does that mean a better chance of coming out at say.... $1-$1.50?????

[KristiD]

What do people think about this?  I thought it was pretty well accepted that when Iraq RVs, they will start with a float and gradually increase the rate.  This article from yesterday says no float.  But it seems like Iraq is getting ready for the RV, coming out with lower denoms anoung other things, so maybe they'll come out at a fixed rate????

Iraq’s central bank governor Ali al-Alaq said on Tuesday that the bank’s reserves of foreign currency amounted to 48 billion dollars, pointing out that Iraq will not resort to floating the currency.
“The central bank reserves of foreign currency currently amount to 48 billion dollars,” al-Alak said in a statement to the African-Arab newspaper.
“Iraq, which is one of the oil countries depends on a fixed exchange rate, or fixed with flexibility, and does not resort to the method of flotation, unless their reserves are controlled to a level without enough, which did not happen either in Iraq or other oil countries.”
“The flotation is difficult to apply in Iraq, considering that the government, de facto, monopoly the offer of the dollar and foreign currencies.”
The floating currency is to make the exchange rate of this currency fully liberalized, so that the government or central bank does not interfere in determining it directly, but is automatically discharged in the currency market through the mechanism of supply and demand, which allows to determine the exchange rate of the national currency against foreign currencies.
Floating exchange rates fluctuate constantly with every change in supply and demand for foreign currencies, so they can change several times per day.

http://en.economiciraq.com/2017/12/26/the-central-bank-of-iraq-reserves-of-foreign-currency-amounting-to-48-billion-dollars/

 

[Jaygo]

I add it as it saying revalue or reinstatement

[ChuckFinley]

Oh  Boy, we are now talking about how the exchange will be adhered to. 

[jeepguy]

if this article is correct , from the oil minister ,   there is the balance in the reserves at central bank  seems to say they have at least  2018 covered in oil funds , enough to help support the dinar   " if  the value  really hits  "   !!!!!

[bostonangler]

Or does it mean they are happy the way it is? Let's hope not!!!

 

B/A

[ChuckFinley]

And I am looking for some real value here  

[newbieDA]

2 minutes ago, ChuckFinley said:

And I am looking for some real value here  

 

I am looking for the IQD to go International, that is all.

[newbieDA]

Just now, Botzwana said:

Then Kap and co say....It will float.  Yeah, maybe the ice cream in his root beer will but that is about it.

 

says the guy who believes in evolution

[newbieDA]

1 minute ago, Botzwana said:

Was that to me?  I don´t believe in evolution.

 

I got ya, I bookmarked this and screenshot it haha

Edited December 27, 2017 by newbieDA
https://prnt.sc/ht4jco

[steveh12]

I believe I will have another Beer! 

[jcfrag]

3 hours ago, KristiD said:

What do people think about this?  I thought it was pretty well accepted that when Iraq RVs, they will start with a float and gradually increase the rate.  This article from yesterday says no float.  But it seems like Iraq is getting ready for the RV, coming out with lower denoms anoung other things, so maybe they'll come out at a fixed rate????

Iraq’s central bank governor Ali al-Alaq said on Tuesday that the bank’s reserves of foreign currency amounted to 48 billion dollars, pointing out that Iraq will not resort to floating the currency.
“The central bank reserves of foreign currency currently amount to 48 billion dollars,” al-Alak said in a statement to the African-Arab newspaper.
“Iraq, which is one of the oil countries depends on a fixed exchange rate, or fixed with flexibility, and does not resort to the method of flotation, unless their reserves are controlled to a level without enough, which did not happen either in Iraq or other oil countries.”
“The flotation is difficult to apply in Iraq, considering that the government, de facto, monopoly the offer of the dollar and foreign currencies.”
The floating currency is to make the exchange rate of this currency fully liberalized, so that the government or central bank does not interfere in determining it directly, but is automatically discharged in the currency market through the mechanism of supply and demand, which allows to determine the exchange rate of the national currency against foreign currencies.
Floating exchange rates fluctuate constantly with every change in supply and demand for foreign currencies, so they can change several times per day.

http://en.economiciraq.com/2017/12/26/the-central-bank-of-iraq-reserves-of-foreign-currency-amounting-to-48-billion-dollars/

 

It has all been speculation, and will continue to be till they start making moves. But I'm definitely reading that to say RV, as in no float.  Though I do believe it would be way beyond my expectations if the RV was to be more then a dollar. I know top of their list is to move away from USD and start using their own currency. And the fact that they have the ATM's up and running is pretty compelling news to support the RV being just around the corner! Those are supposed to be loaded with lower denoms to support the new value!                   

             

Edited December 28, 2017 by jcfrag

[mylilpony]

When you do a floating exchange regime it is by supply and demand but the government does have to intervene with their reserves if need be because supply and demand is volatile, and if there is a rush on their currency then they have to have enough in reserves for any economic shocks that come along. That is why shabbs always said that they could with stand the shocks because he stated on multiple occasions that the currency would be fixed, as in a basket of currencies etc.

[Wiljor]

1 hour ago, mylilpony said:

When you do a floating exchange regime it is by supply and demand but the government does have to intervene with their reserves if need be because supply and demand is volatile, and if there is a rush on their currency then they have to have enough in reserves for any economic shocks that come along. That is why shabbs always said that they could with stand the shocks because he stated on multiple occasions that the currency would be fixed, as in a basket of currencies etc.

 

Thanks mylilpony for the clarification 

[drj]

On 12/26/2017 at 5:03 PM, Carrello said:

 

Financial expert: The sale of currency is one of the doors of theft of state funds December 26 2017 10:32 p Advisor to the Prime Minister for Investment Thaer al-Fili, A financial expert confirmed that the sale of the dollar in the Central Bank of Iraq is one of the doors of theft of state funds and economic depletion. "The fictitious profits that banks earn from this auction have exceeded hundreds of billions of dollars, at a time when more than 90 percent of its work depends on false invoices, companies and individuals with fake names," said Thayer Al Faily, a financial expert and consultant. The financial adviser added that "this auction disrupted the contribution of banks to development, and disrupted the work of the Iraqi private sector, and therefore the Iraqi state is headed to close the dollar sale window in the first quarter of 2018. "The US Coalition Provisional Authority has created a foreign currency sale window and has continued to date," he said. "The timing of the financing of the Iraqi state's purchases of dollars was due to the fact that oil sales were - and still are - stored in the US Special Oil Sales Fund, Noting that "the currency auction does not exist in any country in the world, and Iraq is now the only country that has a currency auction, in this way that contribute to the loss and full depletion of the Iraqi economy."   http://www.thebaghdadpost.com/ar/story/73589/%D8%AE%D8%A8%D9%8A%D8%B1-%D9%85%D8%A7%D9%84%D9%8A-%D9%85%D8%B2%D8%A7%D8%AF-%D8%A8%D9%8A%D8%B9-%D8%A7%D9%84%D8%B9%D9%85%D9%84%D8%A9-%D8%A3%D8%AD%D8%AF-%D8%A3%D8%A8%D9%88%D8%A7%D8%A8-%D8%B3%D8%B1%D9%82%D8%A9-%D8%A3%D9%85%D9%88%D8%A7%D9%84-%D8%A7%D9%84%D8%AF%D9%88%D9%84%D8%A9

--

 

Thanks Carrello!   Hopefully, we will FINALLY be meeting in Napa!  

 

Happy New Year!

Dr J

[ChuckFinley]

On 12/26/2017 at 8:34 PM, tigergorzow said:

Carello Thanks,  DV,  The time has come for the GOI & CBI to execute the final plan.  Fixed rate of 1:1 or higher is required to re enter the international stage IMHO....😁😊

 

GO RV / RI

 

 

I agree, 1 to 1 or higher. Anything less and the USD is still the defacto currency. 

 

[Butifldrm]

On 12/26/2017 at 5:03 PM, Carrello said:

 

Financial expert: The sale of currency is one of the doors of theft of state funds December 26 2017 10:32 p Advisor to the Prime Minister for Investment Thaer al-Fili, A financial expert confirmed that the sale of the dollar in the Central Bank of Iraq is one of the doors of theft of state funds and economic depletion. "The fictitious profits that banks earn from this auction have exceeded hundreds of billions of dollars, at a time when more than 90 percent of its work depends on false invoices, companies and individuals with fake names," said Thayer Al Faily, a financial expert and consultant. The financial adviser added that "this auction disrupted the contribution of banks to development, and disrupted the work of the Iraqi private sector, and therefore the Iraqi state is headed to close the dollar sale window in the first quarter of 2018. "The US Coalition Provisional Authority has created a foreign currency sale window and has continued to date," he said. "The timing of the financing of the Iraqi state's purchases of dollars was due to the fact that oil sales were - and still are - stored in the US Special Oil Sales Fund, Noting that "the currency auction does not exist in any country in the world, and Iraq is now the only country that has a currency auction, in this way that contribute to the loss and full depletion of the Iraqi economy."   http://www.thebaghdadpost.com/ar/story/73589/%D8%AE%D8%A8%D9%8A%D8%B1-%D9%85%D8%A7%D9%84%D9%8A-%D9%85%D8%B2%D8%A7%D8%AF-%D8%A8%D9%8A%D8%B9-%D8%A7%D9%84%D8%B9%D9%85%D9%84%D8%A9-%D8%A3%D8%AD%D8%AF-%D8%A3%D8%A8%D9%88%D8%A7%D8%A8-%D8%B3%D8%B1%D9%82%D8%A9-%D8%A3%D9%85%D9%88%D8%A7%D9%84-%D8%A7%D9%84%D8%AF%D9%88%D9%84%D8%A9

--

 

What this economist/expert  is not saying, is that Iraq still does not have an internationally traded currency because they/Iraq chose to stay under the protection of article XIV from the IMF.  While under article XIV Iraq is not subject to external debt like the Paris club or IMF!  Iraq must move into article VIII to have an internationally traded currency, which would put them at a greater risk for external debt. The resent release of Chapter VII articles by the IMF was a huge move to help Iraq move to article VIII, but it is Iraq that must make that decision.  This would alleviate the need for the dollar other than oil trade and make them responsible for external debt.  IMHO,  Iraq's monetary strategy is to stay pegged to the dollar, some call it a quasi-peg.  The IMF appears to be good with that.  Alak appears to be good with an inclusive monetary policy.  I believe that the CBI thinks until they can get the citizen's to put their money in the banks, get corruption under control and elect non corrupt technocrats, we may see a change in monetary policy.  Right now the CBI has little control over capital outflow and that's why they are mandating electronic payment of salaries.  The greater the the citizens employ the banks the better control the CBI has and the liquidity problem in Iraq will improve.  These thing will all give way to an internationally traded currency 

 

[Tuck]

On 12/26/2017 at 9:16 PM, mylilpony said:

If iraq's reserves fell to around 30 billion or so they would have been forced to float the currency, but in this article alak states that they would only do this if the reserves were not enough. He clearly states that they would have a fixed exchange rate or a fixed with flexibility which means an erm (exchange rate mechanism) where the currency can go up or down no more than 2% every 90 days.

I am interested in the definition of 'no more than 2% every 90 days' - insofar as I can see it meaning a one time fixed + - 2% / 90 day adjustment - or - can this mean + - 2% movement throughout the 90 day fixed period. When I lived overseas, I would  check rates at the bank throughout the day and take the best rate available at that time.  

 

This site has well versed minds regarding al -Alaq's statement / announcement, and I sure would appreciate hearing y'all's interpretation, please.  

[unirod]

17 hours ago, Tuck said:

I am interested in the definition of 'no more than 2% every 90 days' - insofar as I can see it meaning a one time fixed + - 2% / 90 day adjustment - or - can this mean + - 2% movement throughout the 90 day fixed period. When I lived overseas, I would  check rates at the bank throughout the day and take the best rate available at that time.  

 

This site has well versed minds regarding al -Alaq's statement / announcement, and I sure would appreciate hearing y'all's interpretation, please.  

They still would have to open up at their real rate and not the current program rate that they would have us believe they are worth. Otherwise there would be a run on the Dinar beyond the 2% + or -

[mylilpony]

I am not totally versed on this either, but here is a bit of an explanation.

 

Actively managed exchange rate mechanisms work by setting a reasonable trading range for a currency's exchange rate and then enforcing the range via interventions.

For example, Japan may set an upper and lower bound on the Japanese yen relative to the U.S. dollar. If the Japanese yen appreciates above this level, the Bank of Japan can intervene by buying large quantities of U.S. dollars and selling Japanese yen into the market to lower the price.

• ERMs are tools used to control the value of a country's currency relative to other currencies in the global markets.
• Most developed countries have flexible ERMs, while emerging market economies tend to have fixed ERM policies to help provide stability.
• There are many different ways to influence exchange rates, including open market transactions, tariffs, quotas, interest rates, and monetary policy.

[Tuck]

1 hour ago, unirod said:

They still would have to open up at their real rate and not the current program rate that they would have us believe they are worth. Otherwise there would be a run on the Dinar beyond the 2% + or -

Agreed, Unirod - thank you.

[Tuck]

11 minutes ago, mylilpony said:

Most developed countries have flexible ERMs, while emerging market economies tend to have fixed ERM policies to help provide stability.

Good information, mylilpony - thank you. This makes sense, relative to my overseas exchange experience. And with the other information you supplied, maybe Iraq will be coupling both mechanisms up to + - 2% of a set ER, at least for a while. 

 

 

[mylilpony]

12 minutes ago, Tuck said:

Good information, mylilpony - thank you. This makes sense, relative to my overseas exchange experience. And with the other information you supplied, maybe Iraq will be coupling both mechanisms up to + - 2% of a set ER, at least for a while. 

 

 

 

 

You are welcome. I am kind of thinking the same thing too.

[ChuckFinley]

15 minutes ago, mylilpony said:

 

 

You are welcome. I am kind of thinking the same thing too.