MilitiaMan: Evening to everyone of KTFA. I hope you are all doing fine and dandy! A few thoughts to think about. Nothing in stone be sure, so don't shoot the messenger.. lol ~ MM
Last week we witnessed a convergence of many things. The week prior there was the symposium with Banks and financial institutions in regard to the Iraqi Currency. WS's (Walkingstick's) firm was in the meeting.
The following week we see the AMF (Arab Monetary Fund) in a series of meetings with Iraq helping with the MR (Monetary Reform) along, in conjunction with the likes of the WB, IMF, UST and BIS. Basra Boyz also confirmed the BIS was there..
WS tells us they tried and tested the rate and they were successful.
The success was the Real Effective Exchange Rate. So not only the AMF met, there were high level training of the trainers while they had the fabulous 4 in country. They did all that and seated the GOI on time too.
The amount of logistics to get all that done, all the people, hotels, gifts, training, etc, and with all those big players will go down as darn near nothing but, miraculous, imo. imo ~ MM
With that said, why PP and I, others, believe this is such a very bullish time frame is because the REER ( Real Effective Exchange Rate) is time sensitive, ioo.(in our opinion)
The REER was done Thursday last real close and for them to get the rate done, it cant be much longer for us to wait, as the margin of error in the rate becomes ioo an issue, as the rate could change and that would effect a lot of countries..
Therefore, the window we are in now this week thru Monday-ish next week is serious to us.. ~ imo ~ MM
What to expect and why? Well, with what we have learned from WS the rate is going to be effectively in a range that is based on a mixture of the AMF / AAD and the IMF / SDR 3x.
The latest loan issued by the AMF in summer of 2017 was around $4.25 - $4.35 / 1 AAD and the AMF / SDR $1.42 3x = $4.26 on the daily rate they use, if I am accurate.
If they use the monthly rate of the SDR of approx. $1.95 3x = $5.85..
All those numbers or ranges are easily supported by Iraq's wealth. ioo.. ~ MM
That is in brief where I/we/others think we are and nothing shows us that they are going out to next year.. Nor much into November for that matter.. - imo ~ MM
Imo they will not ever be 1:1 with the dollar where we in the USA could sell the IQD back for.
I/we/others have strong feelings about the rate being back to or well above the glory days. They have told us they wanted to do it at that level many times..
WS brought us the formula relatively recent time past. I trust his opinion on the matter somewhat knowing where and what his connection is and to whom.
So the AMF / AAD - IMF / SDR 3x relationship meets that criteria and is competitive to surrounding nations in the AMF. ~ imo MM
WS also told us there would be a hard peg. That means to me/us/others they will come out strong and keep it there!! That will represent stability and security.. Just what a new currency needs to have!!
Therefore, coming out low could be rife with shorting, market manipulations as the lower the rate the easier it is to do so.
Think of the valuations of the companies that are publicly traded could be bought and sold quite easily by the very wealthy..
The stronger they come out, the less risk the country has not to mention they’ll get imo a credit rating boost to go along with it..
So, to me and others in my line of thinking support the view of WS, and my long standing point, “the longer it takes the more money we make.” Lol We shall see... imo ~ MM
Walkingstick: Well stated MM ...ftti ...Yep, keeping in mind... Iraq's (NEER) & (REER) of past... (Both, having appreciated greatly over of the course of 4 years) was weighed, against.... the USD, only... Today, effectively weighed... against, a basket. Regards....
Real Effective Exchange Rate - REER
What is the 'Real Effective Exchange Rate - REER'
The real effective exchange rate (REER) is the weighted average of a country's currency in relation to an index or basket of other major currencies, adjusted for the effects of inflation. The weights are determined by comparing the relative trade balance of a country's currency against each country within the index. This exchange rate is used to determine an individual country's currency value relative to the other major currencies in the index, such as the U.S. dollar, Japanese yen and the euro.
BREAKING DOWN 'Real Effective Exchange Rate - REER'
The real effective exchange rate (REER) is used to measure the value of a specific currency in relation to an average group of major currencies. The REER takes into account any changes in relative prices and shows what can actually be purchased with a currency. This means that the REER is normally trade-weighted.
How the REER Is Measured
The REER is derived by taking a country's nominal effective exchange rate (NEER) and adjusting it to include price indices and other trends. The REER, then, is essentially a country's NEER after removing price inflation or labor cost inflation. The REER represents the value that an individual consumer pays for an imported good at the consumer level. This rate includes any tariffs and transaction costs associated with importing the good.
A country's REER can also be derived by taking the average of the bilateral real exchange rates (RER) between itself and its trading partners and then weighing it using the trade allocation of each partner. Regardless of the way in which REER is calculated, it is an average and considered in equilibrium when it is overvalued in relation to one trading partner and undervalued in relation to a second partner.
Benefits of Analyzing and Using the REER
A country's REER is an important measure when assessing its trade capabilities and current import/export situation. The REER can be used to measure the equilibrium value of a country's currency, identify the underlying factors of a country's trade flow, look at any changes in international price or cost competition and allocate incentives between tradable and nontradable sectors.
A country can positively affect its REER through rapid productivity growth. When this happens, the country realizes lower costs and can reduce prices, thus making the REER more advantageous for the country.
Understanding a country's REER is extremely important when conducting economic analysis and policymaking. Therefore, the World Bank, the Eurostat, the Bank for International Settlements (BIS) and others all publish various REER indicators. These world institutions combine to provide the public with REER analysis on 113 countries around the globe.