The U.S. dollar registered a rise against the Iraqi dinar. Parliament calls for reforms
Baghdad: a Published on the 7th day on 13-05-2013
Search the Iraqi Parliament Speaker Osama Al-nujaifi Sunday with the Iraqi Central Bank Governor Abdel Basset Turki agency reform actions to adjust the exchange rate of the dollar and reduce the phenomenon of money laundering in the dollar's rise was recorded 1127 Iraqi dinar for the first time in months. LINK
FULL ARTICLE & LINK BELOW
Punisher Currency reform...I like :) Too bad Parliament is gone for a month :(
Read More Link On Right
Kaperoni: Swift action to preserve the value of the Iraqi dinar"
10: 17: 13/05/2013
Smiling face-the CBI proceeded fast to reduce currency volatility, and the value of the dinar against the dollar.
And the parliamentary Finance Commission head Haider Al-Abbadi, a "procedure for citizens ' access to the currency of the civil government, banks that have to travel or conversion therapy, they can obtain the required currency conversion.
As the Chairman of the parliamentary Finance Committee told Iraqi media network, to the reassuring messages received from officials at the Central Bank to control the fluctuation in the exchange rate, as well as emphasizing the lack of seriousness on the dinar from a large monetary bloc.
He noted that World Bank officials "expressed great confidence in the power of the Central Bank, for its cash reserve of hard currency, estimated at $ 74 billion, pointing out that" the problem is limited to the difference between supply and demand in the Iraqi market for the dollar. "
He noted the proper action by the Central Bank to increase the Monetary allowance transfers or bank guarantees and promote the granting of remittances without restrictions or limitations to the banks, and because merchants often need to bank transfers and guarantees and don't need the cash, "he said, adding that" this procedure documents are safest currency ".
Meanwhile, the Governor of the Central Bank, members of the Committee at a meeting held today in Parliament attended by first Deputy Chairman of Parliament Qusay Al-Suhail, the actions undertaken by the World Bank and the instructions issued by the last period, and that everything is under control.
Central Bank Governor explained that he was not worried about the volatility at the moment, as "temporarily" as a result of some action taken by the Bank has a supervisory role to the Government and private banks. LINK
tlar: This article speaks to me of complete dollarization. If they were to deal in USD, payments, salaries, street vendors purchases, and budget expenditures, any difference in the rate will quickly disappear along with the dinar.
Every dinar removed from circulation and replaced with USD bring the rates closer together. The dinar is pegged to the dollar. If there are no dinars left circulating in Iraq that leaves the dollar worth one dollar. Problem solved. It also sets up the stage to do what they will with the dinar.
They can continue to call it 1166, or declare it is now 1000 to one or declare it some other higher number. They won't have to spend anything de\fending it because the errant banks and street vendors will no longer be able to sell dollars for a profit. Everybody will have them and be using them.
This obviously is not going to go that far but in reality, if they continue to hold dinars and pay everything in dollars including government salaries, the disparity in rates will disappear quickly.
Iraqi's are already Leary of using dinars because of counterfeits and condition. A month or two, more, Iraq will be dollarized almost completely. Paying everybody in dollars is a smart Idea.
2COLLECTG: thats`what they`re mouths say punisher they are working round the clock pressure is on i`m a numbers guy (jeweler by trade) so there`s some good numbers i`m watching and it contradicts the artical`s! i bought this stuff for a penny i just want to sell mine back for a dime!
Punisher: We would be that much closer 2Collect if Parliament didn't take so many vacations and/or passed the big laws. I can see why the protestors are not happy with Parliament. I hope while they are eating pork and grapes and the average person suffers, they know what they need to do when they get back!
The fact that there has been so many of these articles talking about swift action for the dinar against the dollar is a good thing.
Carrello: Punisher, the Parliament is not out until 5/15. and there is talk about staying in session due to number of important laws that need to be passed.
Kaperoni: Carrello, there is a reference in a few articles now that Najafi recessed Parliament to 6/18. LINK
DarbSalad: Carrello, I hope you are correct. Unfortunately, I have little faith in Nujaifi. The parliamentarians have a wonderful arrangement. Rarely work and rob the Iraqi people blind with a nice salary. Nujaifi and the parliamentary members live in an alternate universe.
I believe the Iraqi people no longer have anyone in government on their side. They will probably need to replicate the recent Egypt route. Hopefully, they will have a better outcome. It is self-evident that the Iraqi politicans are incompetent and unable to move the country forward.
Let us hope the CBI will initiate this process and maybe that will shame the GOI into action.
BNA13: "He noted that World Bank officials "expressed great confidence in the power of the Central Bank, for its cash reserve of hard currency, estimated at $ 74 billion, pointing out that" the problem is limited to the difference between supply and demand in the Iraqi market for the dollar. "
It's as simple as that.
There aren't enough dollars being released throught the auctions to meet the demand. Half a dozen or so articles have harped on the same theme since Shabibi's article came out. "There aren't enough dollars for everyone", "the dollars don't reach into the furthest corners of the country", on and on.
The World Bank is telling Turki that $74B is plenty to cover every demand and then some, so we're confident you will do the right thing. Shabibi started it the other day. "
I've just reminded us that the difference between the exchange rate of the Central Bank and the market price under the current administration is about 8%.
The Bank did not indicate the cause of this difference, we believe that economically due to the failure of the Bank to satisfy every demand, leading to this disparity between the Central Bank and the market price, and this is contrary to article III of the law on the Central Bank.
I think the assertion that the auctions are a "waste of public money" just sticks in Shabibi's craw, and he finally blew off some steam.
Ever since Turki took over the auctions have dwindled and the rate has tanked. Either Turki was a believer in the "waste" story, or he was just too sensitive to the criticism. Whatever it was, he's figuring it out the hard way. Shabibi again.
"The change in the exchange rate is not a waste of public money and satisfy the demand for the dollar is not a waste of public money and must equal supply and demand to stabilize the price (the first objective of the Central Bank as stated).
These market operations and our economy is an economy in transition to a market economy and openness as this accompanied by fluctuations in demand and supply affects the movement of cash. The important thing is to return the market to stabilize."
Watch for the auctions start to grow larger from today's $223M, another $50-$55M per day larger.
BlueyesinLevis: PORK? Punisher... brush up on your Allah loving Muslims...
"Allah is omniscient, all-mighty and a pork-hater. In fact, he hates pork so much he forcefully outlined in the Koran that, “Any of my followers contaminated by swine at the time of his death will be denied entry to my paradise forever, I hate the stench of swine.”
I forget the details... but I think it was in the Spanish American War/ Philipines theater.... a US General put out the rumour that his troops were coating their bullets in swine fat... using it to lubricate the barrels of their rifles... and BINGO... just like that the enemy disapeared.. the battle was won without firing a shot. ... lol.. NO, Punisher they are NOT eating Pork in Iraq.
Terry: Blue, you are correct. The general was Blackjack Pershing.
Carrello: Blue, Punisher was just saying that some Iraqis ate luxurious food, while others do not get even crumbs. No harm, no foul...or swine.
Punisher: Blueyesinlevis, LOL...I said Pork on purpose (good eye) ;)
BNA13, what do you think the auctions will grow after today? And what will be the result of this? We do want to see the auctions go down, not up!
Shelley: Yes Parliment calling from their vacation tents.... Who has it better than them ???
BNA13: "We do want to see the auctions go down, not up!" Please explain.
BlueyesinLevis: I think a lot of these MP's have bascily checked out. I think they have enriched themselves beyond their wildest dreams through corruption and graft.. and they KNOW they are not gonna win re-election....they are gonna go live in Jordan where it is safe and comfortable.... all fat and happy on their ill-gotten gains.
The ultimate in Lame - Duck politics... this parliament has become a joke.. and for Najafi it is like herding cats. I think whatever they get done.. they get done with small committess.. lord knows how it will all work out or how long it will take... but I have faith that it WILL HAPPEN. Maybe the CBI will just pull the trigger and let the chips fall where they may?
DarbSalad: BlueyesinLevis, Hopefully, Turki is on the side of the Iraqi people. The CBI needs to pull the trigger. That will take care of the money exchangers immediately or in short order depending on the adopted regime exchange. These constant concerns of the CBI will disappear once the dinar becomes the sole currency on the street.
Turki is putting his reputation on the line if that means anything to him. Below is a short excerpt from the speech he delivered during the January Banking Conference. There was a large crowd in attendance. I recall watching it, but obviously could not understand it.
Governor of the Central Bank of Iraq; Dr Abdel Bassit Turki Saeed speaking January 12th 2013 at the Union of Arab banks conference in Baghdad. The governor explained current changes in banking law in Iraq and the monetary prevailing situation.
Mr. Turki went on to state Iraq soon plans on applying this wealth to back the currency of Iraq, for the benefit of the Iraqi peoples.
Mr. Turki said steps will be taken to "restructure" the Iraqi currency, which will be based on the country's resources, and the wealth of the resources will be reflected and applied to the value of the currency."
One would think he was not just providing lip service to a large crowd. A CBI delegation and Mr. Turki recently traveled to Washington and New York to meet with IMF and World Bank officials. I would think they instructed him to adopt a regime exchange during those meetings. Kap had just reiterated the thirty day period which has passed not too long ago.
Punisher: DarbSalad, it has now been over 60 days since they should have choosen an Regime Exchange. I hope the decided on one because if not, they will drag that out like they do everything else. I also hope Turki was not just providing lip service.
BNA13, the lower the number is when we know they are finished with the auctions and have basically no more dinar to pull in (or reached their goal or close enough to it).
BNA13: Well, that is just not the case. Iraq's M1 money supply (dinar in the street) is steadily growing.
Money Supply M1 | Notes
Money Supply is the aggregate amount of monetary assets available in a country at a specific time. According to the Financial Times, Money Supply M0 and M1, also known as narrow money, includes coins and notes in circulation and other assets that are easily convertible into cash.
Money Supply M2 includes M1 plus short-term time deposits in banks. Money Supply M3 includes M2 plus longer-term time deposits. Money Supply includes M3 plus other deposits. And the term broad money is used to describe Money Supply M2, M3 or M4.
Iraq Money Supply M1
Money Supply M1 in Iraq increased to 65024 IQD Billion in February of 2013 from 64051 IQD Billion in January of 2013. Money Supply M1 in Iraq is reported by the Central Bank Of Iraq. Historically, from 2004 until 2013, Iraq Money Supply M1 averaged 30242.62 IQD Billion reaching an all time high of 65024 IQD Billion in February of 2013 and a record low of 6294 IQD Billion in January of 2004. This page includes a chart with historical data for Iraq Money Supply M1.
Just this fact alone dictates the auctions should be growing just to keep pace. The FC is suggesting they pay government employees in dollars for a month instead of dinar, which obviously they pay every month. And as an aside, the CBI must be recycling the IQD many, many times instead of destroying it and issuing new notes. Thus the sorry state of cash in the street.
Carrello: Thanks BNA13.
Kaperoni: I would wonder how the M1 can increase while at the same time the dollar is flooding Iraq. Something does not make sense. You cannot keep pumping dollars in exchange for dinar and not effect the money supply.
I know some like to follow the CBI charts, but I think they are keeping something from us in that regard. No M0 reported for a year or more. M1 may show currency in circulation..but I bet it is not in Iraqi's hands. It may very well be stacked up in banks waiting to be destroyed.
mexia74: Question for BNA13. Do we know how much actual Dinar is included in the money supply? It is my understanding that the money supply numbers include both Dinar and US$. If that is not true, we may be in for a really long wait. The Dinar in circulation must be reduced or Iraq cannot afford to increase the rate to even $1. Am I correct in my thinking?
In other words, we have been led to believe that they have been dollarizing their economy in preparation for this revaluation. If the actual dinar on the street is not being reduced, we are either going to be disappointed or have to wait a really long time.
Kaperoni: This is starting to get a bit off topic. This article is about the currency auctions and dinar exchange rate.
Tlar: Nice point BNA13. Just so as not to confuse the issue, M1 money supply is "Money Supply M0 and M1, also known as narrow money, includes coins and notes in circulation and other assets that are easily convertible into cash."
The Key words are easily convertible into cash. 65 trillion in February means the some total of cash, coins and anything easily convertible to cash. Iraq at its height only had 30 trillion dinar in circulation as also stated by the Central Bank.
We know that many of these dinars are out of country and what was circulating in Iraq last year at its height was 4 trillion.. We know there has been an intense effort to retire many of these dinars as the auctions are mostly buying dinar selling USD.
We also know 1 dinar today is the equivalent of 1166 dinars. How many dollars and dinars are in this number is up for interpretation. So what other highly liquid asset, that is easily convertible to cash, and is growing exponentially everyday must they be considering as part M1?
Until they supply a breakdown of what they are considering as part of M1 over and the cash circulating in Iraq, we can't truly understand what these numbers mean.
Buying 1166 dinars for 1 USD at an auction alone, cannot account for the rapid growth of M1. Personally, and I remind you its just a guess, I think they are taking into account oil.
Iraq has no other segment of its economy or its society, nor does it have the boom in industry that would account for this astronomical kind of growth of M1.
It would be interesting to see both the M1 chart put up against a chart showing growth in production. Oil is an asset easily convertible into cash. Again, this is just my speculation.
The only other area that could account for such rapid growth of the money supply would be Iran's contribution of counterfeit dinar. That a joke everyone so don't lambast me.
ReVbo: Ask and ye shall receive, tlar. Here's Iraq's oil production graph and their M2 (Sorry, couldn't find a graph on M1 on such short notice but M2 seems to be increasing roughly the same as M1), and it appears there is a correlation.
Notice, around Jan 2012, oil production dips and so does M2. Then, around April 2012, oil production begins to increase again as does M2. The correlation loosens a bit after that due to a slight drop in oil production, but the general trend in both has been up since April of last year.
This would account for about 9 trillion dinars at any given time in their M2, I would imagine, since both figures are reported monthly and they get about $8 billion a month from oil production. No idea what the other 55, or so, trillion is, but I sure hope there's a lot of dollars counted in there as dinar equivalents because there's no way they're going to revalue 55 trillion dinars into $55 trillion.
ReVbo: Edit: Mean to say 55 trillion dinars in M1, not M2. Sorry, had M2 on the brain.
Punisher: Correct me if I am wrong but Parliament does have to approve currecny reform in the country right?
Juliebug I think that while Parliament is enjoying their month long vacation, the CBI should just go ahead and raise the value. Let's see how they like that! LOL
Kaperoni: Punisher correct. But, it is clear that Maliki wants these laws and policies in place before he is willing to let the currency raise in value. As well, they need the law that adjusts accounting records and contractual obligations passed before the zeros can officially come off. Can the CBI begin a float? Sure they can. Will they RV to 1 to $1 overnight, not without the law in place.
Punisher: Kap/Julie, if the C.B.I. today decided to raise the value/float with Parliament gone and no laws in place, would there not be a negative effect? And that would then put Parliament in a place where they would have to move at warp speed to get things done???
The U.S. dollar registered a rise against the Iraqi dinar. Parliament calls for reforms
Baghdad: a Published on the 7th day on 13-05-2013
Search the Iraqi Parliament Speaker Osama Al-nujaifi Sunday with the Iraqi Central Bank Governor Abdel Basset Turki agency reform actions to adjust the exchange rate of the dollar and reduce the phenomenon of money laundering in the dollar's rise was recorded 1127 Iraqi dinar for the first time in months.
FULL ARTICLE & LINK
According to a statement by the Iraqi Parliament, "nujaifi and his two deputies Qusay Al-Suhail and Arif taifour met with Chairman of the Supreme Audit Agency, Iraqi Central Bank Governor Abdel Basset Turki to discuss" reform measures include adjusting the exchange rate of the dollar and reduce the phenomenon of money laundering and to strengthen the capacity of the Central Bank in economic development ".
Deputy Secretary Hadi, a member of the Finance Committee in the Iraqi Parliament, said that "preliminary indications for the reasons that led to the rise of the dollar against the Iraqi dinar was due to lack of access to hard currency and some private banks seized a large amount of that currency.
"The solution to the problem of high dollar exchange rate is the Central Bank adopted a mechanism to ensure the spread of currency in all regions to be available and not private banks can exploit them and raising the value of Iraqi dinar."
Saw the Iraqi dinar exchange rate against the US dollar over the past few days declined as the dollar rose to 1,127 after the dinar was stable for the past months when 1120 dinars to the dollar. LINK