CBI Currency Auction 12 5 2010

[Doc31]

Currency Auctions

Announcement No. (1788)

The latest daily currency auction was held in the Central Bank of Iraq on the 5-DEC-2010.

The results were as follows:

DetailsNotesNumber of banks19

Auction price selling dinar / US$1170

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

Amount sold at auction price (US$)221,634,000

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

Total offers for buying (US$)221,634,000

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

Exchange rates

Dollar's exchange rates / in Baghdad markets

Spot Oil

NYMEX CRUDE FUTURE $89.19

DATED BRENT SPOT $91.12

WTI CUSHING SPOT $89.12

these are 12/3 closes and if you average them you get $89.83 which is a horrible number at the pump but a glorious number for our "cause"!

Spot Gold

gold ran sideways at about $1390 for ... oh, let's say 72 hours ... then on the NY open it skyrocketed to ~$1408 and then ran sideways for a few hours and then ran up to $1416 ... settling sideways and finishing at $1414.50 ... this is bad for the USD and glorious for our "cause" (I'm told)

Zero Cash Days Not updated on the CBI website but 38 as of last Thursday (Friday/Sat are NO AUCTION days)

Now, I've been getting a lot of questions about assorted topics ... let's recap. I'm no guru and I don't have high level contacts in key positions ... if you'll remember ... my "boots on the ground" ( a firefighter like Chief V ... actually knows him) is home safe with my God-daughters ... praise God! I am a math and patterns guy.

Some of the questions that have been asked of me I'm pretty sure Nuri al-Maliki doesn't know the answer to ... lol ... Governor Sinan al-Shabibi ... yes, him and a choice few ... but not me. I guess what I'm getting at is that I haven't ignored anyone ... the question is either misplaced (me not being a diety), or it's out of my field and I don't know the answer (world finance/economics/currency regulations), or it's over my pay-grade (Shabs/UN/select few) and I don't know the answer, or it's what I'm about to explain ...

Mohammed Saleh/Salih is an advisor to the CBI ... we THINK ... because that is what he says ... the CBI doesn't say that. However, in one article last week it was intimated that he was the "Chancellor" ... although the next day he was demoted to advisor again ... lol ... of course not!

Let's ask ourselves a few questions:

1) why is their nothing on the CBI website or anywhere else regarding his supposed position with the CBI if he is so highly valued ... that's right, there isn't and he isn't.

2) why does he say one thing one day and the opposite the next ... that's right a true spokesman for the CBI is a govt official who should carry himself with some comportment

3) he was the original LOPSTER (I believe) to which Shabibi had to come out 1-24hrs later and say, "no, of course not" ... exactly, if he were your employee wouldn't you gag him or fire him since he continues to spew crap while holding himself out to be an advisor? Of course you would ... that is nonsense

4) is he an advisor or is he a consultant? If he actually consulted for/with the CBI at any time since 2003 ... can he say that he IS a consultant/advisor or should he be saying "I WAS and advisor/consultant" for the CBI in 2003 or 04 or 05 ... ONCE ... or whatever ... does he or has he ever spoken for the CBI?

Okay ... Mohammed Salih came out and said that beginning early this week ... dflake posted "CBI: Cash sales procedures will ease the beginning of next week" ... while the article doesn't say that (really poor translation) I believe that dflakes topic name was correct and that this is what was meant by the translation.

Now, back to the questions that I've been asked ... this article is the most prevelent currently ... I haven't been ignoring anyone ... I think that 38 maybe 39 days of zero cash days says something all on it's own ... however, why answer a question that none of us can but guess at the answer? Let's just sit back and watch. We can gauge Mohammed Salih's rhetoric by the results ... remember, I believe that he was the original LOPSTER even with Shabibi coming out and saying "Nah" ...

Is the best question why hasn't Shabibi fired him? or the best unasked question ... you mean Shabibi can't fire him? (doesn't work for them implied) or is he the Minister of Disinformation/Propaganda?

Personally, I'm going to go with a guy who hasn't lied to us Shabibi. Salih says one thing one day and the opposite a day or two later ... one of them is a lie ... you choose which guy that you will listen to. Could I be wrong? Sure! ... but from what we've witnessed over the last nine months ... I'm not backing a "dark horse".

Oh, and the 118 thousand per hundred to 119 thousand per hundred in the article that many of you were concerned about ... you do realize that this is 1180 to 1190 that he is speaking about? He says that it happened in two days. I've included a websnap of the CBI currency auctions since late October. You'll see that what he says isn't true. It started up Nov 3rd and clearly took 3 weeks ... although it did go from 1187 to 1190 and then to 1195 over a 3 day period ... it's change was, as said, a three week period. THE POINT IS THAT IT DID IT INSIDE THE ZERO CASH DAYS! and it's only a .83% change that he's touting as big news.

If you go back into my stuff you'll see that I noted this change last Thursday and said the same thing ... let's keep an eye on it.

Regardless, keep your chin up and Peace

Doc31

[tampa1000]

Good post Doc keep them coming!!!

[bobby_cahill]

Thanks Doc. Much appreciated with what your doing for us

I'll take your analysis over a rumor anyday!

Have a great Sunday

Semper Fi

[kingfish]

Thanks for the info Doc

[Goldminer]

Good Post Doc31.... Mucha Gracias....... GM

[xxxgator]

good post

[Doc31]

good post

whoa ... that is some gator (your avatar)!

[finderladi]

Great post. Thanks

[carlablum]

Does the 5 week long zero's have anything to do with the Reserve calculation period mentioned below. Just been doing some reading and I may be way out there but just curious.

Thanks in advance.

Pursuant to provision of article (4) Para (3) of CBI Law attached

with order No. (56) 2004.

CBI issues the following regulations:

Executive Regulations

Reserve requirements

Article -1- first: A bank included in the banking law (94) 2004,

shall maintain reserves in an amount determined

by multiplying the amount of its reservable

deposits in the period prior to the maintenance

period by the reserve ratio. The result of this

calculation is the reserve requirement for that

bank for that period.

Second: a) the CBI shall determine the reserve ratio and

may adjust it from time to time.

The reserve ratio set forth in paragraph (a) of

this section, in effect of the last day of the reserve

calculation period, shall be used to calculate the

reserve requirement for the related reserve

maintenance period.

c) Reserve calculation period means the four or

five weeks period ended at the second Thursday

before the end of a calendar month.

d) Reserve maintenance period means the

calendar month period during which a bank is

required to maintain reserves against the

reservable deposits in the related reserve

calculation period.

e) Reserve ratio means percentage of reservable

deposits in Iraqi Dinars and foreign currencies

that should be maintained as reserves that may be

adjusted as CBI deems appropriate.

f) “The Bank” means Central Bank of Iraq (CBI)

Third: a) banks must maintain reserves so that the

average balances during the maintenance period

equal or exceed the Reserve Requirement

limitations to the balances allowed under the

regulation apply to :

1. FX current account shall not be accounted to

meet the Reserve Requirement in an amount

greater than 25% of foreign currency

deposits ;

2. Iraqi Dinar vault cash shall not be accounted

to meet the Reserve Requirement in an

amount greater than 20% of the Reserve

Requirement;

3. Iraqi Dinar current account deposited in to

CBI may be used to satisfy the entire

Reserve Requirement.

Deposit means a debit liability of a bank either

in a form of current account or saving account or

evidenced by an instrument issued by the bank.

Deposits include borrowed funds and conditional

liabilities. Deposits do not include liability that

qualifies as capital.

c) reservable deposits means balances of the

depositors held by any bank in Iraqi Dinar and

foreign currency including current deposits,

deposits of current nature, fixed deposits accounts

and other deposits accounts excluding deposits of

the banks or any amount of cash items in the

process of collection, which is the amount of

uncollected checks and quasi checks.

Fourth: A bank shall calculate its reserve requirement in

accordance with this regulation and submit the

result and the data on which it is based to the

Credit & Banking Supervision Department and

Loans & Agreement Department or any other

Department specified by CBI, on or before the last

banking day prior to the reserve maintenance

period.

Article -2- first: deposits used to calculate a bank's reserve are the

reservable deposits the bank holds for its

customers.

Second: the total amount of such deposits at the end of the

banking day for each Thursday in a reserve

calculation period is averaged to determine

reservable deposits for that period. If a Thursday

is a holiday, the amount of the deposits of the

nearest preceding banking day is used.

Third: the amount of foreign currency deposits is

converted to Iraqi Dinars at the exchange rate

specified by CBI. The auction rate of each

Thursday is adopted for that Thursday's reserve

calculation period.

Article -3- first: a) A bank shall maintain reserves in the form of

current accounts with the CBI in Dinar and

foreign currencies during the reserve maintenance

period so that the average of the amount of

eligible current account balances at the end of

each banking day over the month and the average

of the Thursdays Iraqi Dinar vault cash balances

collected by the commercial bank during the

maintenance period month equals the reserve

requirement for that period.

Reserve Requirement means the amount a bank

is required to maintain on average during a

Reserve maintenance period as deposits in

Current accounts at CBI in Iraqi Dinar and the

Iraqi Dinar equivalent of eligible foreign currency

current accounts and the vault cash in Iraqi Dinar.

Second: A bank may hold any positive amount in its Iraqi

Dinar and foreign currency current accounts with

CBI and any amount of Iraqi Dinar and foreign

currency in its vault cash as long as the average

balances prescribed in Article 3 first a) over the

month equal or exceed the Reserve Requirement.

Third: A bank may not permit the balance in its Current

account to fall below Zero at any time during the

banking day or at the end of the banking day.

Current Account balance means the balance in

any bank's current account at CBI at the end of the

banking day excluding amounts of deposits

invested at CBI.

Fourth: CBI is not obliged to pay interest on the balances

in the bank's current account unless it has been

agreed to otherwise.

Article -4- first: A bank that fails to maintain reserves equal to its

Reserve Requirement shall pay CBI a penalty

equal to the interest at the primary credit rate plus

5 percent on the amount that average reserves

actually maintained is less than the Reserve

Requirement. The effective primary credit rate is

used on the last day of the reserve maintenance

period. CBI shall charge this penalty to the bank's

current account at any time during the month

following the maintenance period.

Second: If a bank incurs penalties for reserve deficiencies

for two months respectively, CBI initiates a

supervisory intervention with the aim to resolve

the bank's liquidity problem in a structured and

timely manner.

Article -5- CBI shall issue the forms of deposit reports and

the related tables.

Article -6- this regulation is to be published in the Gazette

and enter into effect on the date of CBI law

effective date on 1/3/2004 that attached order (56)

- 2004

Announcement

No: 6/287

Data: 13/8/2007

TO: All authorized Banks

The CBI decided the following:-

1. The Reserve Requirement of the Governmental

deposits at your banks will be at 75% pct instead

of 25% pct and to be kept totally at CBI.

2. The other conditions and instructions concerning

the Reserve Requirements will be kept valid.

3. This instructions will be effective from 1/9/2007

on deposits report of August 2007.

HASSAN H. AL-HAIDARY

D.G. of Agreements & Loans