Sunday Late Night Opinion @ 11:44 PM CST - 12/01/2024

[ronscarpa]

REMEMBER, no one really  knows what will happen, or when. They're simply stating their opinions based on what they perceive to be happening in Iraq... So, take everything with a grain of salt ...  RON 

 

 

Militia Man  They need to have valuation for [their] assets.  I think that's going to be related to an exchange rate, a real effective exchange rate.

 

MarkZ  There are a whole lot of folks that say all these things coming together means a rate change. I believe them to be accurate.

 

Samson  Article: “Baghdad Governor: There is a positive impression regarding Baghdad’s nomination as the capital of tourism for 2025"

 

Frank26  Not every bank is going to be able to do this.  Not every Chase Bank has the ability because maybe they're a mom and pop bank.  Certain banks have been designated to do this. People don't realize there are places they can exchange. People are so scared, 'I don't know where to go.'  When this thing happens it's going to be so hot. There will be plenty of large banks dealing with international bank transfers when this happens.
 

Fnu Lnu  Redemption Centers are nothing more than remote bank locations. There will be no contract rates unless you have a contract with private buyers pre-October 2011. Everyone will get the same rate due to the Law of One Price.

 

 

[screwball]

In economics, the law of one price (LOOP) states that in the absence of trade frictions, and under conditions of free competition and price flexibility, identical goods sold at different locations should be sold for the same price when prices are expressed in a common currency. This law is derived from the assumption of the inevitable elimination of all arbitrage. Wikipedia

 

What Is the Law of One Price?

The law of one price is an economic concept that states that the price of an identical asset or commodity will have the same price globally, regardless of location, when certain factors are considered.

 

The law of one price takes into account a frictionless market, where there are no transaction costs, transportation costs, or legal restrictions, the currency exchange rates are the same, and that there is no price manipulation by buyers or sellers. The law of one price exists because differences between asset prices in different locations would eventually be eliminated due to the arbitrage opportunity.

 

The arbitrage opportunity would be achieved whereby a trader would purchase the asset in the market it is available at a lower price and then sell it in the market where it is available at a higher price. Over time, market equilibrium forces would align the prices of the asset.

 

Key Takeaways

• The law of one price states that in the absence of friction between global markets, the price for any asset will be the same in every market.
• The law of one price is achieved by eliminating price differences through arbitrage opportunities between markets.
• Market equilibrium forces would eventually converge the price of the asset.

Understanding the Law of One Price

The law of one price is the foundation of purchasing power parity. Purchasing power parity states that the value of two currencies is equal when a basket of identical goods is priced the same in both countries. It ensures that buyers have the same purchasing power across global markets.

 

In reality, purchasing power parity is difficult to achieve, due to various costs in trading and the inability to access markets for some individuals.

 

The formula for purchasing power parity is useful in that it can be applied to compare prices across markets that trade in different currencies. As exchange rates can shift frequently, the formula can be recalculated on a regular basis to identify mispricings across various international markets.

 

Example of the Law of One Price

If the price of any economic good or security is inconsistent in two different free markets after considering the effects of currency exchange rates, then to earn a profit, an arbitrageur will purchase the asset in the cheaper market and sell it in the market where prices are higher. When the law of one price holds, arbitrage profits such as these will persist until the price converges across markets.

[cjdavid]

Thanks for this explanation. I don’t know enough about this stuff. Just hoping to one day cash in and be comfortable financially. 

[jabez777]

Thank you

[Society]

I disagree!!!!1  Rates will be slightly different from bank to bank.......when I buy or sell foreign currency for travel, I call my different banks to  figure out who has the best rate at the time......they are usually not the same. This is similar to the various brokers selling IQD at different prices now........

 

Every penny difference is $10,000 difference on the bottom line per million ......for example, if Bank A is exchanging at $1.13 and Bank B is exchanging at $1.14, Bank A will give you $1,130,000 for a million IQD and Bank B will give you $1,140,000 for the same million IQD........or, if Bank A  is at $3.24 and Bank B is at $3.21, the difference is $3,240,000 vs $3,210,000.....

 

I will definitely shop around when the time comes

[Shedagal]

28 minutes ago, Society said:

I disagree!!!!1  Rates will be slightly different from bank to bank.......when I buy or sell foreign currency for travel, I call my different banks to  figure out who has the best rate at the time......they are usually not the same. This is similar to the various brokers selling IQD at different prices now........

 

Every penny difference is $10,000 difference on the bottom line per million ......for example, if Bank A is exchanging at $1.13 and Bank B is exchanging at $1.14, Bank A will give you $1,130,000 for a million IQD and Bank B will give you $1,140,000 for the same million IQD........or, if Bank A  is at $3.24 and Bank B is at $3.21, the difference is $3,240,000 vs $3,210,000.....

 

I will definitely shop around when the time comes

That and exchange fees also.  Can add up to a chunk of change.  

[BETTYBOOP]

Well @Society that certainly gives food for thought...thanks

[BETTYBOOP]

4 hours ago, screwball said:

In economics, the law of one price (LOOP) states that in the absence of trade frictions, and under conditions of free competition and price flexibility, identical goods sold at different locations should be sold for the same price when prices are expressed in a common currency. This law is derived from the assumption of the inevitable elimination of all arbitrage. Wikipedia

 

What Is the Law of One Price?

The law of one price is an economic concept that states that the price of an identical asset or commodity will have the same price globally, regardless of location, when certain factors are considered.

 

The law of one price takes into account a frictionless market, where there are no transaction costs, transportation costs, or legal restrictions, the currency exchange rates are the same, and that there is no price manipulation by buyers or sellers. The law of one price exists because differences between asset prices in different locations would eventually be eliminated due to the arbitrage opportunity.

 

The arbitrage opportunity would be achieved whereby a trader would purchase the asset in the market it is available at a lower price and then sell it in the market where it is available at a higher price. Over time, market equilibrium forces would align the prices of the asset.

 

Key Takeaways

• The law of one price states that in the absence of friction between global markets, the price for any asset will be the same in every market.
• The law of one price is achieved by eliminating price differences through arbitrage opportunities between markets.
• Market equilibrium forces would eventually converge the price of the asset.

Understanding the Law of One Price

The law of one price is the foundation of purchasing power parity. Purchasing power parity states that the value of two currencies is equal when a basket of identical goods is priced the same in both countries. It ensures that buyers have the same purchasing power across global markets.

 

In reality, purchasing power parity is difficult to achieve, due to various costs in trading and the inability to access markets for some individuals.

 

The formula for purchasing power parity is useful in that it can be applied to compare prices across markets that trade in different currencies. As exchange rates can shift frequently, the formula can be recalculated on a regular basis to identify mispricings across various international markets.

 

Example of the Law of One Price

If the price of any economic good or security is inconsistent in two different free markets after considering the effects of currency exchange rates, then to earn a profit, an arbitrageur will purchase the asset in the cheaper market and sell it in the market where prices are higher. When the law of one price holds, arbitrage profits such as these will persist until the price converges across markets.

 Thanks for the help in understanding

[gross0612]

I agree with Boop!

[cjdavid]

2 hours ago, Society said:

I disagree!!!!1  Rates will be slightly different from bank to bank.......when I buy or sell foreign currency for travel, I call my different banks to  figure out who has the best rate at the time......they are usually not the same. This is similar to the various brokers selling IQD at different prices now........

 

Every penny difference is $10,000 difference on the bottom line per million ......for example, if Bank A is exchanging at $1.13 and Bank B is exchanging at $1.14, Bank A will give you $1,130,000 for a million IQD and Bank B will give you $1,140,000 for the same million IQD........or, if Bank A  is at $3.24 and Bank B is at $3.21, the difference is $3,240,000 vs $3,210,000.....

 

I will definitely shop around when the time comes

Like I said, I have lots to learn. My son now is working for Chase, he is learning to be one of their financial people there. Hopefully he will get to connect to some of these people that know about international monies, and will be able to guide us. 

[screwball]

7 hours ago, Society said:

I disagree!!!!1  Rates will be slightly different from bank to bank.......when I buy or sell foreign currency for travel, I call my different banks to  figure out who has the best rate at the time......they are usually not the same. This is similar to the various brokers selling IQD at different prices now........

 

Every penny difference is $10,000 difference on the bottom line per million ......for example, if Bank A is exchanging at $1.13 and Bank B is exchanging at $1.14, Bank A will give you $1,130,000 for a million IQD and Bank B will give you $1,140,000 for the same million IQD........or, if Bank A  is at $3.24 and Bank B is at $3.21, the difference is $3,240,000 vs $3,210,000.....

 

I will definitely shop around when the time comes

You are correct and when your in a foreign country and you need to exchange your cash for local currency you can shop around and foreign exchange exchanges to also get best rate…

[BETTYBOOP]

You might get better rates by shopping around. Point is they will not be the huge differences in the rates that some of the gurus are implying