EXPLAINED BY SHREDD AT BLC
Shredd: Let me explain what this is saying.....
The context is coverage of dollars in reserve to dinars in circulation. Now, the circulation of dinars has been dramatically reduced over the past several months but we see the 33 trillion (inside and out) referenced!
The coverage of the dollars over the dinar by two and a half times is exciting!
Now, believe it or not, we had a similar article back in the fall of 2011 saying the coverage of the reserves for the dinar reached (or just surpassed) 100%. So, now we have 2.5x that!
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Warning: The gurus will have fun with this one saying the exchange rate will be or can be 2.50 but currency pricing also takes into consideration goods and services as well as supply and demand.
Granted, that is more the case for a free floating, market-driven currency but if the CBI continues a managed float, we can see here the artificial rate of 1166 is nowhere close to where it could be. Awesome news!!!!!!!!!!!!!!!!
they are doing the simple math of having 2.5x USD reserves over the amount of dinar.
Now, this is 33 trillion dinar cover by 80 billion dollars. So, if you take 33 trillion dinar times today's exchange rate and then divide by the 80 billion dollars in reserves, the coverage is actually 2.82 worth of coverage.
The point is the reserves can now cover over two and a half times the amount of dinar inside and outside the country. No exchange rate meaning here, but the article is pointing out the strength of the reserves
$2.50 is NOT the exchange rate (explained) Posted: 01 Jul 2013 06:55 AM PDT Economy: Central Bank reserve increase to more than 80 billion dollars will boost the stability of the Iraqi dinar
01-07-2013 11:38 AM
Baghdad (newsletter). Confirmed the decision of the Commission on economy and investment Deputy of the Kurdistan blocs Coalition//mehma Khalil, to increase the Central Bank's reserves of hard currency will enhance the stability of the Iraqi dinar and develop national economy.
He said Khalil (News Agency): to increase the Central Bank's cash reserves of more than 80 billion dollars, meaning that each Iraqi dinar is inside Iraq or abroad is covered by two and a half dollar, the volume of cash to Iraqi currency blocs (33) trillion dinars.
He added that this increase will enhance the stability of the exchange rate of the Iraqi dinar against the US dollar and international currency because it will be a safe haven, with the addition that will enhance the growth of the national economy.
The Iraqi Central Bank announced an increase of cash reserve of hard currency to more than 80 billion dollars.