CBI Currency Auction 10/26/2010

[Doc31]

Currency Auctions

Announcement No. (1763)

The latest daily currency auction was held in the Central Bank of Iraq on the 26-OCT-2010.

The results were as follows:

DetailsNotesNumber of banks17

Auction price selling dinar / US$1170

Auction price buying dinar / US$-----

Amount sold at auction price (US$)172,404,000

Amount purchased at Auction price (US$)-----

Total offers for buying (US$)172,404,000

Total offers for selling (US$)-----

Exchange rates

Dollar's exchange rates / in Baghdad markets

Spot Oil ~$82.20 up

Spot Gold $1333.80 off $7

Zero Cash ... Well the 13 day "0" cash streak ended today at the CBI ... yesterday wasn't reported and was indeed a "0" day.

However, the cash amount for today 150,000,000 is HUGE and represents somewhere between 5X (uncommon) and 75X (more common but still infrequent) TIMES the normal day to day numbers (average LATELY is probably 12,000,000 to 30,000,000).

Ok, I'll try to be brief. The cbi is a bank for banks. If the local bank in Iraq has extra liquidity it deposits that extra in the cbi. Therefore the cbi gets in large deposits every day from local banks in cash. What the zero cash sales from the cbi means, is that the banks do not need cash ( liquidity).the cbi will not disclose the amount of cash deposits It takes in daily but it will disclose how much is sold. You see knowing only half of the equation keeps speculators at bay. As for the wire tranfer sales, these are for loans that will never be turned into cash.

While Pilgrim does a nice job here ... he(she) doesn't speak to the rarity of this event, the improbability of it happening in a sequence, and it's only sequential occurences being at apparent RI/RV dates ... nor does it account for the unprecedented positions by the banks of "not needing cash (liquidity)" ... as it turns out 13 days in a row (in this case).

It's as though they were holding their breath underwater expecting some event that they could/would/should benefit from. The 14th day's numbers more than bear this out by it's shear magnitude (an unprecedented number itself 5X to 13X normal AND 50% LARGER THAN ANY TIME IN HISTORY) ... which appears to be akin to resurfacing and needing a huge gulp of air!

JMO ... after a 13 day sequence of "0" cash ... it APPEARS that Iraqi banks are either recovering from unilateral positioning, unilateral collection/hoarding, or were all suffering from the same malady simultaneously! ...

Although the streak is broken ... I will continue to monitor this phenomenon. I still believe that while it doesn't tell us what Shabibi is thinking it does tell us WHEN he is thinking it!

Peace

Doc31

[lechesuerte]

Thanks Doc. I checked this out the cash sales this morning as was somewhat disappointed, but on the other hand the $150MM is such a large number it makes me stop and think. I wonder what the sales will be tomorrow. It would be interesting if they go to zero again. Does this signify a change in policy in which the sell alot for cash only every once in a while to keep the government going, then the could RV during any of these long 0 cash streaks? Only time will tell. Hopefully we don't have to watch the auction for too much longer and it will happen "soon". GO RV in 2010!!!

[Pilgrim]

I conccur, I am supprised at the break, and a little disheartened. However the bright side is that I was watching another thread and they were stating the forex fluctuated a little out of the ordinary. This could have been the direct correlation of the tightening of monetary policy causing the rate to fluctuate. If this is the case then we have a rare veiw in the amount of "carrying capacity" if you will, it takes to move the market. If it only takes a QE of 175mil to affect the rate then that tells us the cbi is opperating on some razor thin margins. I'm too busy today to adequately study this but it would be interesting to look at the charts.

[ivyj04]

Sorry folks I am new here and must be missing something. I am on the CBI site currently and it shows this

Announcement No. (1763)

The latest daily currency auction was held in the Central Bank of Iraq on the 26-OCT-2010. The results were as follows:

Details Notes

Number of banks 17

Auction price selling dinar / US$ 1170

Auction price buying dinar / US$ -----

Amount sold at auction price (US$) 172,404,000

Amount purchased at Auction price (US$) -----

Total offers for buying (US$) 172,404,000

Total offers for selling (US$) -----

Exchange rates

Dollar's exchange rates / in Baghdad markets

Are you saying that there ahs been a cash auction today or is from yesterday? It clearly show no cash auction on 10/26/10

ty

[adontik]

Thanks for keeping us up to date Doc...much appreciated!

Peace

[Doc31]

Sorry folks I am new here and must be missing something ... Are you saying that there has been a cash auction today or is from yesterday? It clearly show no cash auction on 10/26/10

Go to my original post ... click on "exchange rate" ... it will open another tab on your browser and show a pdf file. Go to page 49 and go to the bottom ... check the date.

Page 39 will give you the column headings.

Peace

Doc31

[Doc31]

OMG they faked me out ... that's what I get for only drinking 1/2 cup of coffee and then posting.

They did NOT have a 150,000,000 cash day. They've entered the number in error!

The 7th column is Volume ... the 8th is Cash ... the 9th is wire transfers ... ALL ARE ABBREVIATED AND MUST BE MULTIPLIED BY 1000.

Thus today's volume 172,404 is actually 172,404,000 and Wire transfers of 172,254 is actually 172,254,000

Column 8(cash) is the difference of these two which is 150,000 ... it should be listed as 150 (remember times 1000) ... it has been entered by the CBI in error.

THIS IS NOTHING ... EFFECTIVELY TODAY IS A "ZERO" cash day (see Nov 2009) ... in other words ... for all practical purposes the streak continues.

My apologies ... but you know to ask me if I've had my coffee ... lol, I could do that McDonald's commercial!

I was disappointed as was Lechesuerte was ... BUT THIS CHANGES EVERYTHING!

Sorry for the error on my part ... we will see if this statistical anomaly is meaningful or not ... however, I gave you some insight as to why this may be occurring.

Peace

Doc31

[Inicio]

Thanks for the clarification Doc. Looked like zero but defer to you as our expert.

[ivyj04]

Hey I am 110% appreciative of all your hard work and research. Thanks Doc31 for clearing that up! GO RV...

[lechesuerte]

Nice catch Doc. I didn't see that originally either. $150,000 is virtually nothing, so much so that it's almost like why would you even bother? Interesting ...provides another view into the CBI and today's monetary moves. I wonder which number actually are correct? I think it probably is just $150,000 in cash, but it would be nice to have it verified. GO RV in 2010!!!

[Snowlover]

Thanks so much for all your hard work.

Hope this posts.

Snowlover

[eyeownu]

thanks Doc for catching yourself

[Pilgrim]

Shall I say.......sweet, I took you for your word that there was a cash sale, however dissappointed I was, so no harm no foul. This is great news, I love a "no cash sales" streak.

[zantac]

Hi Doc31

The Link below should clear this matter up for all.

http://en.aswataliraq.info/?p=138345

CBI sells $172 million on Tuesday

October 26, 2010 - 05:54:12

BAGHDAD / Aswat al-Iraq: The Central Bank of Iraq’s (CBI) dollar sales went up to reach $172.404 million in its daily auction on Tuesday, compared to $165.186 million in the previous session.

“The demand hit $150,000 in cash, covered at an exchange rate of 1,183 Iraqi dinars per dollar, and $172.254 million in foreign transfers outside the country, covered at an exchange rate of 1,179 Iraqi dinars per dollar,” according to a CBI news bulletin received by Aswat al-Iraq news agency.

None of the 17 banks that participated in today’s session offered to sell dollars.

The Central Bank of Iraq runs a daily auction from Sunday to Thursday.

Ok there was a cash sale today but only peanuts compared to what we are used to, as so far to say were still on the no cash sale run

Just a thought but may be wrong

Most Auction houses sale things for others

Most of the time there are 19 banks reported to have taken part in the Auctions

Yesterday 19 banks didn’t offer any dollars for sale

Today only 17 banks didn’t offer dollars for sale SOOOOO

What if the CBI auctioned off $150,000 of the other 2 banks?

It’s a possibility is it not?

This may just sound crazy but can it be that the CBI sale dollars on behalf of other banks at a central location?

Every Auction details posted for the last 13-14 days have the same statement

None of the 17 banks that participated in today’s session offered to sell dollars.

See if other banks dont offer to sale dollars then there can be no cash auctions

[Doc31]

Looking for a mod to fix the title here from the 16th to the 26th ... thanks

Apparently you really can't trust me on 1/2 cup of coffee ... sorry

Doc31

Zantac ... Agreed

and $150,000 compared to a minimum $2M previous low ... is IMO peanuts as you said or a near "zero" cash

[milo825]

This is my first reply to a post and it is probably a question that has been answered several times. if the new dinar is 1/1000 then does that mean that 1,000,000.00 is now 1,000.00? And since I assume the change in the dinar will occur during the rv if the dinar/usd amount goes up we now have 1/1000 of what we had. so where we would have expected anywhere from 1.4 to 3.5 million we now at best get 1400.00 to 3500.00 although it is a gain its not quite the gain I was literally banking on. I asked earlier and got a wait and see and watch it unfold. Doc you seem very informed and well researched so hopefully you know or can break it down to me a little better.

[milo825]

I think I found my answer thanks though and thanks for the research you do.

[Doc31]

I think I found my answer thanks though and thanks for the research you do.

A pleasure

Peace

Doc31