Central Bank intervenes in defense of Iraqi dinar

[Sara Johnson]

Central Bank intervenes in defense of Iraqi dinar

By Khayoun Saleh

Azzaman, January 2, 2012

The Central Bank says it will not allow the Iraqi dinar to depreciate and has been selling hundreds of millions of dollars to keep the currency stable.

The Iraqi dinar weakened in December last year, prompting the bank to sell dollars in a bid to withdraw cash from Iraqi markets.

The bank did not say what brought the dinar to plummet to lows it had not seen for years, but officials privately say the plunge might have been due to political uncertainty in the region.

Mudher Saleh, Central Bank’s deputy governor, has said there were no sound economic reasons for the currency’s weakening.

The bank coffers are said to be brimming with hard cash from oil sales.

Saleh said the bank would not let the dinar fall and in one day in December last year it sold $200 million on the open market to squeeze liquidity.

“We withdrew in one single day about one quarter of a trillion dinars, thereby brining stability to the currency,” Saleh said.

One reason for the dinar’s fall, according to Saleh, might be the economic difficulties Iraq’s neighbors are facing, particularly Syria and Iran.

He said Iraqi traders and industrialists have turned into middlemen for these countries, the thing which has led to a substantial growth in demand for hard currency.

http://www.azzaman.c...1-02%5Ckurd.htm

[dinarbeleiver]

This is amazing news and means they are definately trying to dry the supply of dinar this could mean we are extreamly close to a revaluation

[FarmersDaughter]

Wow! I agree. Could be good news. Why didn't this article sound like a translated article?

[steveflex7]

This confirms exactly what bond lady has been saying !

[GotSix]

“We withdrew in one single day about one quarter of a trillion dinars, thereby brining stability to the currency,” Saleh said.

So Saleh is saying that in just one lousy day....they were able to withdraw enough thereby bringing stability to the currency doesn't appear that there's a whole lot in circulation

[brbrlocke]

Wow! I agree. Could be good news. Why didn't this article sound like a translated article?

You're right....not the first bugs bunny or baby sitter anywhere

[unirod]

Thanks Sara!!

" Bank Coffer's Brimming with cash" The CBI can easily take all Dinar off the market in days. They have apparently been auditing their books over the weekend. Great post!!

[zigmeister]

We might be very surprised after their audit, I am not sure they ever have.

[lotsofdinar]

If they are truly drawing large amounts (in the trillions) of dinar steadily from circulation, shouldn't the exchange rate between the IQD and USD be getting closer together on a daily basis? That would be, I believe, the effect of significantly reducing IQD in circulation. It seems to me this article is saying they are simply buying and selling to maintain stability with the 1170 rate.

[yota691]

Central Bank intervenes in defense of Iraqi dinar

By Khayoun Saleh

Azzaman, January 2, 2012

The Central Bank says it will not allow the Iraqi dinar to depreciate and has been selling hundreds of millions of dollars to keep the currency stable.

The Iraqi dinar weakened in December last year, prompting the bank to sell dollars in a bid to withdraw cash from Iraqi markets.

The bank did not say what brought the dinar to plummet to lows it had not seen for years, but officials privately say the plunge might have been due to political uncertainty in the region.

Mudher Saleh, Central Bank’s deputy governor, has said there were no sound economic reasons for the currency’s weakening.

The bank coffers are said to be brimming with hard cash from oil sales.

Saleh said the bank would not let the dinar fall and in one day in December last year it sold $200 million on the open market to squeeze liquidity.

“We withdrew in one single day about one quarter of a trillion dinars, thereby brining stability to the currency,” Saleh said.

One reason for the dinar’s fall, according to Saleh, might be the economic difficulties Iraq’s neighbors are facing, particularly Syria and Iran.

He said Iraqi traders and industrialists have turned into middlemen for these countries, the thing which has led to a substantial growth in demand for hard currency.

Edited January 2, 2012 by yota691

[Bumper64]

yota691, this was just posted by Sara so i will merge the two articles together!

Thanks for the post!

[yota691]

yota691, this was just posted by Sara so i will merge the two articles together!

Thanks for the post!

sorry didn't see it

[JWJW11]

If they are truly drawing large amounts (in the trillions) of dinar steadily from circulation, shouldn't the exchange rate between the IQD and USD be getting closer together on a daily basis? That would be, I believe, the effect of significantly reducing IQD in circulation. It seems to me this article is saying they are simply buying and selling to maintain stability with the 1170 rate.

Yea I agree but the article has so many other holes in it it's hard to really see anything more than the fact they are sucking in the dinar in trillions......

They state they don't know why....yet the last few weeks it's been blamed on the sudden removal of the troops.....I love how they throw Syria and Iran in the mix....this stuff is awesome!

We are there!

[Bumper64]

sorry didn't see it

NP, keep up the good work on finding articles!!

[pluMmet]

“We withdrew in one single day about one quarter of a trillion dinars, thereby brining stability to the currency,” Saleh said.

Hmmmm that got me thinking....

100 million USD = 116,950,000,000 IQD

So lets say 200 days of buying 116,950,000,000 a year = 23,390,000,000,000 (that's weekdays minus holidays, or thereabouts)

So they have bought all the Dinar that was printed back?

Something strange?

[OregonHopeful]

Just because they buy it back doesn't mean it stays there... some of it circulates again.

[lotsofdinar]

pluMmet. Yep. If they had removed that much dinar, the exchange rate should be approaching 1:1, but it hasn't moved. Wouldn't need an overnight RV, it would have just steadily increased as Dinar disappeared from circulation. As you say, can't be right.

"Just because they buy it back doesn't mean it stays there... some of it circulates again."

Exactly right. If the exchange rate stays the same, it must mean that it is coming in and going right back out into circulation so the amount of currency stays pretty much the same.

[zigmeister]

Maybe something went over my head, but I really wonder why they want to hold their currency to what it is.

[pluMmet]

Hmmm this also suggests that we can tell (with little lag) the fluctuation of the dinar based on the CBI auctions....They sell the amount required to keep the Dinar at the 1170 level...

Or perhaps they have an RV scale that makes the IQD worth more over time lets say +x% a week and if it becomes worth more then that they sell that amount? That would allow them to hide the desired RV rate.

[GotSix]

Hmmm this also suggests that we can tell (with little lag) the fluctuation of the dinar based on the CBI auctions....They sell the amount required to keep the Dinar at the 1170 level...

And that's what I mentioned earlier......the "amount required to keep the Dinar at the 1170 level" doesn't appear to be that significant

[double_duce_duce]

CBI told the people that the dinar is falling hard and they shoud cash in for American dollars to stable there currency,Behind the scene (there doing what the USA did to the 500$ and 1000 bills) there recalling as much of the higher bills as they can,to take them out of circulation,make cents.very slick move from shabb's.

[pluMmet]

And that's what I mentioned earlier......the "amount required to keep the Dinar at the 1170 level" doesn't appear to be that significant

Yes and they can control the RV rate by how much they let back into circulation and not many people have that data.

[tcsace]

Leads me to believe that they have a similar plan in place for the dinar outside their borders also. Just a thought.

[TAV]

I think they are preparing their post closing trial balances. I definitely see that they are using Dec 31th as the end of their yearly accounting cycle. Sounds like they are zeroing out all their temporary expense and revenue accounts as well as credit and debit balances to an income summary. This also tells me they definitely have a budget they are adhering to which is good news. I believe it when they say the December drop was due to political uncertainty and difficulties from neighboring countries....it goes much farther than this. As the EU continues to spiral down out of control it will create a trickle down affect increasing the cost of goods that Iraq purchases!

Using "the rules of the game" I can just about see what direction they are headed!!!

[Bat of Darkness]

Leads me to believe that they have a similar plan in place for the dinar outside their borders also. Just a thought.

Good Point...particularly since their own Dinar are circulated and nasty, but those Dinar held by investors worldwide will finally arrive back at the CBI in near-mint condition.