gankans] Good day everyone!
[gankans] Good to see everyone
[gankans] Did you all like the call last night?
[gankans] I have some insightful info if you are up to the conversation?
[gankans] I'm going to post an article that came out just an hour ago.
[gankans] After you read it, I want you to follow me on few points about the article.
[gankans] I promise it will make sense.
[gankans] http://www.rferl.org/con ••• 401.html September 07, 2011 BAGHDAD -- The Iraqi Central Bank has announced a large increase in the country's foreign-currency reserves, RFE/RL's Radio Free Iraq reports. Mudher Muhammad Salih, an adviser to Central Bank Governor Sinan al-Shabibi, told RFE/RL on September 6 that the bank's reserves "are now at about $58 billion." He said that was an increase from the $50 billion in foreign currency reserves it had at the end of 2010. Salih added that the bank had recently succeeded in controlling the inflation rate, which he said in recent years had increased at a high rate and was 7.1 percent in July. He said the Central Bank would continue to obtain different foreign currencies and increase its overall amount of foreign-currency reserves in order to protect the value of the Iraqi dinar, which he said was a "main goal" of the bank. Iraq's foreign-currency reserves are 45 percent in dollars, 45 percent in Euros, and 10 percent in British pounds. Iraq depends on oil revenues for about 95 percent of its budget and the increase in foreign-currency reserves thus far this year is due to higher world prices for oil. Iraq has earned some 34 percent more from oil through the first five months than it had budgeted. Economic experts welcomed the announcement about the country's currency reserves but warned that the total was still not high enough. Iraqi economist Hilal al-Tahhan said the currency reserves should be roughly equivalent to Iraq's annual budget, which is about $79.6 billion. Iraq's Baghdad-based Central Bank, which is an independent institution, has branches in Basra, Sulaymaniah, Irbil, and Mosul.
[gankans] Take your time and read this thoroughly....
[gankans] The question that should be popping up in your head is...
[gankans] Why would they increase foreign currencies?
[gankans] Here goes....
Read More button on right
[gankans] Foreign exchange reserves (also called Forex reserves or FX reserves) in a strict sense are only the foreign currency deposits and bonds held by central banks and monetary authorities. However, the term in popular usage commonly includes foreign exchange and gold, SDRs and IMF reserve positions. This broader figure is more readily available, but it is more accurately termed official international reserves or international reserves. These are assets of the central bank held in different reserve currencies, mostly the US dollar
[gankans] What is the purpose?
[gankans] In a flexible exchange rate system, official international reserve assets allow a central bank to purchase the domestic currency, which is considered a liability for the central bank (since it prints the money or fiat currency as IOUs). This action can stabilize the value of the domestic currency.
[gankans] Central banks throughout the world have sometimes cooperated in buying and selling official international reserves to attempt to influence exchange rates.
[gankans] The quantity of foreign exchange reserves can change as a central bank implements monetary policy.
[gankans] A central bank that implements a fixed exchange rate policy may face a situation where supply and demand would tend to push the value of the currency lower or higher (increases in demand for the currency would tend to push its value higher and a decrease lower).
[gankans] In a flexible exchange rate regime, these operations occur automatically, with the central bank clearing any excess demand or supply by purchasing or selling the foreign currency.
[gankans] Keep following....
[gankans] Foreign exchange operations that are unsterilized will cause an expansion or contraction in the amount of domestic currency in circulation, and hence directly affect monetary policy and inflation: An exchange rate target cannot be independent of an inflation target. Countries that do not target a specific exchange rate are said to have a floating exchange rate, and allow the market to set the exchange rate; for countries with floating exchange rates, other instruments of monetary policy are generally preferred and they may limit the type and amount of foreign exchange interventions.
[gankans] To maintain the same exchange rate if there is increased demand, the central bank can issue more of the domestic currency and purchase the foreign currency, which will increase the sum of foreign reserves. In this case, the currency's value is being held down; since (if there is no sterilization) the domestic money supply is increasing (money is being 'printed'), this may provoke domestic inflation (the value of the domestic currency falls relative to the value of goods and services).
[gankans] "Increased demand"
[gankans] Sterilization in macroeconomics refers to the actions taken by a country's central bank (CB) to counter the effects on the money supply caused by a balance of payments surplus or deficit.
[gankans] Since the amount of foreign reserves available to defend a weak currency (a currency in low demand) is limited, a foreign exchange crisis or devaluation could be the end result. For a currency in very high and rising demand, foreign exchange reserves can theoretically be continuously accumulated, although eventually the increased domestic money supply will result in inflation and reduce the demand for the domestic currency (as its value relative to goods and services falls). In practice, some central banks, through open market operations aimed at preventing their currency from appreciating, can at the same time build substantial reserves.
[gankans] Here is the kicker...
[gankans] Large reserves of foreign currency allow a government to manipulate exchange rates - usually to stabilize the foreign exchange rates to provide a more favorable economic environment.
[gankans] Who holds more reserves in IQD than anyone?
[gankans] The article just showed you!
[gankans] US and Europe
[gankans] They are buying up more international or foreign reserves for what?
[gankans] Stabilize their inflation because their currency is becoming too valuable!
[gankans] The IQD is becoming and has become more valuable than its competition!
[gankans] Why is that?
[gankans] Go back to the article and notice that they said their oil output and profits were above expectation.
[Ks_dad] gankans are you saying that their currency is becoming too valuable, so an RV is not necessary?
[gankans] Ks_dad The exact opposite my friend
[gankans] They continue to try to hold back the RV and they are using these economic tactics to do so.
[gankans] They eventually will have to release the water!
[cravin4rv] gankans - so should that statement of "become more valuable than its competition" debunk the $1 = IQD rate. If so, would it be in the mid $3's at initial RV?
[gankans] cravin4rv that or higher from what the intel is saying
[gankans] If you were on the call last night, you heard me telling you to analyze this info that comes out, and try to get a true and more detailed picture-right?
[gankans] All the info I provided is on wikipedia.com
[gankans] There is much more than that, but I know I was probably losing some of my audience.
[Ks_dad] gankans Not asking for a date and rate, but do you feel we are really close to an rv?
[gankans] Ks_dad You are asking, and we are as close as we were yesterday and 6 months ago.
[gankans] Please go and read up and learn about your investment.
[mikep] gankans I cannot make heads or tails of this even with your explanations.
[gankans] mikep Good news my friend
[gankans] mikep More factual support that you made a good decision with this investment
[zoomzoom] gankans then, who is in charge of releasing the rv?
[gankans] zoomzoom Long answer to a complicated question that I don't want to try and answer right now. Ask me in the next call
[Ks_dad] gankans do you see anything else that needs to happen for the rv to be released?
[gankans] Ks_dad I don't
[gankans] Ks_dad They seem to find anything they can though to stop it from occurring
[kayla110] gankans sounds like this is a done deal
[gankans] kayla110 The RV of the IQD is inevitable IMO, but when will come hopefully soon.
[elaine schembre] gankans ... they must not be in a hurry to rebuild Babylon
[gankans] elaine schembre It is complicated....
[elaine schembre] gankans .... is Allawi now sharing power with Maliki?
[gankans] elaine schembre Yes
[gankans] I have to go....
[gankans] See you all soon....