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Disorders of the Iraqi exchange market after the decline of the dinar

Proven
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Disorders of the Iraqi exchange market after the decline of the dinar - Page 2 Empty Disorders of the Iraqi exchange market after the decline of the dinar

Post by Proven on Sun 07 Jun 2015, 6:08 pm

First topic message reminder :

Disorders of the Iraqi exchange market after the decline of the dinar

Jun 7, 2015


BAGHDAD - Ali Jawad- Alonadol-
Economists and Financial Iraqi officials that the decline in the Iraqi dinar exchange rate against foreign currencies recently, was a result of increased demand for the dollar, and led to fluctuations in market transactions, reflected directly on public life, said.

As a result, prices of imported goods rose (food, construction, and electrical) compared with the prices that prevailed two months ago, by up to 10%, while the central bank plans a new currency category of 50 thousand dinars ask, as one of containing the crisis procedures.

And the decline of the Iraqi dinar exchange rate against the dollar since the beginning of last month to record about 1230 dinars to the dollar, while the exchange rate was stable over the past years at 1223 dinars to the dollar.

Said Abdul-Razzaq al-Saadi, an economist and former head of the Securities Commission of Anatolia "The decline in the dinar exchange rate against the dollar and exchange rate instability cause volatility in commercial transactions, and to pay the high prices of goods in the domestic market."

"The lack of clarity in the Iraqi Central Bank's policy on exchange rate stability mechanisms adopted by the Bank led to fluctuations in the market," pointing out that "the central bank needs to inter procedures that explain monetary policy in the country."

For his part, the Iraqi Central Bank announced that "the main reasons that led to the decline in the dinar exchange rate against the dollar is escaped hard currency (foreign) out of the country, and breadth of speculative activity in the foreign exchange market (banking) offices."

Said Majid picture member of the governing body of the central bank in a statement of Anatolia, said that "there are a number of reasons, which leads to lower exchange rates and increased demand for hard currency, despite the increase in supply by the Central Bank of Iraq, including foreign travel requests, and capital flight ".

He continued that "it is very difficult to control the exchange rate by only central bank actions, should interfere with the rest of the government institutions concerned to limit capital flight operations."
As solutions and real-time decided the Central Bank of Iraq, according to my photos "B1193 dollar dinars per dollar in the sale of 18 banks, the banks granting three points per dollar, in order to stabilize the exchange rate."

The Finance Committee in the Iraqi Parliament held that "quantifying the amounts sold by the central bank a day led to a decline in the exchange rates," noting that during the next month, "a new currency may contribute to the decline in demand for the dollar will go."

Said Abdul Jabbar, a member of the Committee for the Creator Anatolia correspondent that "the Central Bank of Iraq was already sells a daily average of $ 400 million, it was sold amounts of dollar recently reduced to $ 75 million a day, and this has led to increased demand for the dollar."

He added that "the new paper currency which is scheduled to put on the market next month will have an important role in reducing the demand for the dollar, and the high price of the Iraqi dinar to average."

It is scheduled that the Central Bank of Iraq poses a new currency category of 50 thousand dinars, to be added to other paper categories, namely 25 thousand, 10 thousand, 5 thousand dinars, and thousand dinars and 250 dinars.

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Post by duck2000 on Sun 07 Jun 2015, 9:06 pm

seeing as we have an adversion too wiki saying they can change the facts... i thought some proper night time reading was required>>>>> [url=http://www.unc.edu/~lmosley/APSA 2005.pdf][You must be registered and logged in to see this link.]



Dropping Zeros, Gaining Credibility?






Currency Redenomination in Developing Nations





Layna Mosley



Dept. of Political Science



University of North Carolina



Chapel Hill, NC
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Post by duck2000 on Sun 07 Jun 2015, 9:08 pm

[url=http://www.unc.edu/~lmosley/APSA 2005.pdf][You must be registered and logged in to see this link.]
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Post by duck2000 on Sun 07 Jun 2015, 9:17 pm

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Post by wciappetta on Mon 08 Jun 2015, 6:13 am

He added that "the new paper currency which is scheduled to put on the market next month will have an important role in reducing the demand for the dollar, and the high price of the Iraqi dinar to average."

I just  want to be clear, this timing is what I like, the idea more zeros on notes is not going to be a reality IMO. The idea is contrary to the desired outcome.


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Disorders of the Iraqi exchange market after the decline of the dinar - Page 2 Empty Re: Disorders of the Iraqi exchange market after the decline of the dinar

Post by Proven on Tue 09 Jun 2015, 3:55 am

Baghdad resort to printing money and pay the dinar to decline

Monday, June 8, 2015 21:50

The scarcity of the dollar leads to a widening gap between the official rate and the black market rate

The latest decline in the exchange rate of the Iraqi dinar state of confusion in the local exchange market, which also reflected negatively on the lives of Iraqis living, while the Iraqi Central Bank is considering a range of measures in an attempt to contain the crisis, including the issuance of a new currency from the category of 50 thousand dinars.

Arabs / Baghdad - Economists officials Financial Iraqis said that the decline of the Iraqi dinar exchange rate against foreign currencies resulting from the government's inability to meet the high demand for the dollar, which led to fluctuations in market transactions.

The decline in the dinar exchange rate on the black market price since the beginning of last month to record about 1230 dinars to the dollar, while the exchange rate was stable over the past years at 1223 dinars to the dollar.

The increased prices of imported goods, especially Algmaiahmgarnh with prices that prevailed two months ago, by up to about 10 percent, as an inevitable result of the deterioration of the dinar exchange rate.

said Abdul Razzaq al-Saadi, an economist and former head of the Securities Commission, that the decline in the dinar exchange rate against the dollar and exchange rate instability cause volatility in commercial transactions, and pay the high prices of goods in the domestic market.

The carry-Saadi, the Iraqi Central Bank is part of the responsibility of continuing deterioration of the value of the dinar Iraqi. "The lack of clarity of the central bank's policy on the stability of the exchange rates approved mechanisms led to fluctuations in the market."

He added that "the central bank needs to inter procedures that explain monetary policy in the country."

But the Iraqi Central, attributed the decline in the dinar exchange rate to the breadth of activity of speculators in the foreign currency market, and to capital flight abroad which reduced hard currency size (foreign) of the Iraqi market.

said Majid picture member of the administrative board of the Central Bank, "there are a number of reasons, which leads to lower exchange rates and increased demand for hard currency, despite the increase Display by the Central Bank of Iraq, including foreign travel requests, and capital flight. "

He stressed that the central bank actions only, are not enough to control the exchange rate, and must not interfere other government institutions concerned to limit capital flight operations.

He explained that The central bank decided to sell the dollar at about 1193 dinars to the dollar in 18 banks, to grant a three-point banks in the dollar, in order to stabilize the exchange rate, but said that measures real-time solutions.

Finance Committee in the Iraqi parliament and considered to determine the amounts the amounts sold by the Central Bank daily led to lower exchange rates.

CBI and betting on a new currency from the category of 50 thousand dinars put up over the next month, hoping to relieve the measure in the decline in demand for the dollar, which is what you think also of the Finance Committee of Parliament.

He said Jabbar Abdul Khaliq member of the committee, "the central bank was sells in the previous rate of $ 400 million a day, it has been the amounts sold the dollar recently reduced to $ 75 million a day, and this has led to increased demand for the dollar. "

"The new paper currency which is scheduled to put on the market next month, will have an important role in reducing the demand for the dollar, and the high price of the Iraqi dinar former average.

raised the continuation of the Iraqi currency deterioration, fears among the finance and economy in Iraq, which made ​​no secret of its concern that affect the fragile economic situation.

Observers believe that the decline of the Iraqi dinar exchange rate, began Since that former Prime Minister Nuri al-Maliki decided in September last year and suddenly exemption Central Bank Governor Sinan al-Shabibi, and request the President of Supreme Audit Abdul Basit Turki duties.

They said, that the action taken by al-Maliki then, befuddled central bank, which faced his administration sharply criticized the work and accusations of mismanagement and governance, has the effect that the central reputation in particular, the Iraqi Finance reputation in global financial markets.

It also pointed out that there are other factors contributed to the deterioration of the Iraqi dinar exchange rate and of them, especially in Syria, regional tensions, and insecurity in Iraq and paid capital money to flee abroad, in addition to consumer orientation clear to the Iraqi government.



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Post by wciappetta on Tue 09 Jun 2015, 6:11 am

CBI and betting on a new currency from the category of 50 thousand dinars put up over the next month, hoping to relieve the measure in the decline in demand for the dollar, which is what you think also of the Finance Committee of Parliament.

He said Jabbar Abdul Khaliq member of the committee, "the central bank was sells in the previous rate of $ 400 million a day, it has been the amounts sold the dollar recently reduced to $ 75 million a day, and this has led to increased demand for the dollar. "

"The new paper currency which is scheduled to put on the market next month, will have an important role in reducing the demand for the dollar, and the high price of the Iraqi dinar former average.




Just because this man repeats the story doesn't make it so... His expertise is dubious at best; if they actually introduced large 50 and 100K notes on top of the existing supply like I said before, fixed assets remain constant thus the introduction of the new notes dilutes the asset. 

There are two very good and very familiar examples of this; Stock Splits for example when introduced are done to swell the available supply resulting in a reduction of the share price.

Secondly the Vietnamese Dong because the the nature of their export economy [common products made in many countries] desire to keep their  currency cheap and they constantly swell their banknote supply adding currency to the total thus diluting the value.

If Iraq introduces such notes as this man thinks the results will be the same. 

Considering that large notes are 90% of the notes in circulation, introducing notes that are two and three times larger than the largest available banknote will result in an exchange rate in excess of 3000:1 [I'm being extremely conservative] which completely works against all the  years of preparation of readying the transition to a market economy. Consider what happens with a 3000:1 exchange rate with the influx foreign investment, how many dinar will they need to carry for common transactions? Talk about dollarization, such action only exacerbates the situation not solve it, it's not even a path leading to a solution. 

So I agree they could introduce new notes next month provided the Ramadi issue is behind them, but this man will be surprised as most when they discover 50 and 100 dinar notes carrying the value of at least 50 and 100K currently.


Last edited by wciappetta on Tue 09 Jun 2015, 7:34 am; edited 2 times in total


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Disorders of the Iraqi exchange market after the decline of the dinar - Page 2 Empty Re: Disorders of the Iraqi exchange market after the decline of the dinar

Post by wciappetta on Tue 09 Jun 2015, 6:53 am

Let explain this  exchange rate outcome scenario in terms admitted by the GOI. We know by the GOI public confession that there are 4 billion banknotes of which 90% are large notes. 

That means 3.6 billion are a combination 5K, 10K, and 25K.  Now they are suggesting here the idea of 50K and 100K notes so that Iraqis will choose dinar over dollars [less notes to carry so the story goes, but on top of the existing supply] ok for this example lets make two assumptions for the entire economy, 50K notes so Iraqis can carry one note instead of two [25K] and 100k instead of four 25K notes.

Under this scenario you're talking about an introduction of 1.8 billion bank notes of 50K and 900 million banknotes of 100K  or approximately an additional 180 trillion dinar backed by a fixed asset of no more than 70 billion dollars. You're looking at an exchange rate of over 3100:1 minimum. The amount of additional banknotes supply has to be that big to service the population's requirements and achieve the supposed and ill conceived outcome [dedollarization]

It won't work, it cannot as it is inflationary and follows the path of Zimbabwe and the Weimar republic.


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Post by weslin3 on Tue 09 Jun 2015, 7:06 am

At that they won't be that nation that they talk about in the past wanting to "tower over the other Arab nations."
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Post by beverly508 on Tue 09 Jun 2015, 7:25 am

....and ,,deleting,, the zeros does not mean adding on zeros


                        thumbs
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Post by sassy on Tue 09 Jun 2015, 7:35 am

Thanks for the break down!  thumbs 

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