Nephtali: WOW WOW for the USD.... this is a big article for America's currency.....
Thank you WS ......
Walkingstick: MIDEAST MONEY-Saudi should keep options open on currency peg -c.bank paper
By Andrew Torchia
DUBAI, May 25 Saudi Arabia may need to change its currency's peg to the U.S. dollar if economic conditions shift, researchers at the Saudi central bank suggested in a paper that could shape debate among policymakers as the kingdom grapples with low oil prices.
The riyal's peg at 3.75 to the dollar has been a cornerstone of Saudi policy since 1986. But the collapse of oil prices since 2014, which created a $100 billion state budget deficit, has fuelled speculation in financial markets over whether it can be sustained for many more years.
In the paper, Ryadh Alkhareif and John Qualls analysed the advantages and disadvantages of 10 possible currency arrangements.
"What is sure is that in a changing environment, a forward looking monitoring framework will be essential for pursuing the appropriate exchange regime," they wrote. "The decision for one or the other exchange rate regime depends ultimately on the structure of the economy as well as the policy objectives."
Arrangements studied in the paper, entitled "Saudi Arabia's Exchange Rate Policy: Its Impact on Historical Economic Performance", range from the use of U.S. dollars in place of a local currency to a float which allowing the exchange rate to fluctuate freely.
The central bank said the paper, which it published late last month on the same day that Deputy Crown Prince Mohammed bin Salman announced reforms to cut the country's reliance on oil, did not necessarily reflect its views.
The authors stressed that for now, keeping the peg was probably the best course for Saudi Arabia. "Going forward, there are good arguments in favour of retaining the current fixed exchange rate regime especially in the near future...," they wrote.
But the paper's examination of a range of options suggests that in the long term, Saudi authorities may not remain wedded to current policy, even though it has been orthodoxy for three decades.
Foreign bankers briefed by Saudi officials earlier this year said authorities had explored the idea of changing the peg in a broad review of economic policy. They concluded that a change would be counter-productive now but conceivable in the far future, the bankers said.
After a surge of bets against the Saudi riyal early this year, the currency has rebounded in the forwards market , showing speculation about a change to the peg has decreased.
But that is partly because the central bank warned banks not to conduct derivatives trades that would pressure the riyal. Saudi interest rate swaps, also used to hedge against the risk of devaluation, remain near this year's peaks.
The paper was published when Ahmed al-Kholifey was the central bank's deputy governor for research and international affairs. Since then, Kholifey has been appointed head of the central bank in a reshuffle of top policymakers.
The study found the riyal peg had helped to ensure healthy and stable economic growth with moderate inflation. It rejected the idea, often discussed by currency speculators, that a devaluation would ease pressure on state finances by inflating the riyal value of dollar-denominated oil revenues.
"Such a move would be far from painless, as it would raise import costs to both the general public and the government," the paper said, adding that it would be much better to handle the budget deficit with spending restraint and borrowing.
"The bottom line is that the dollar peg has served Saudi Arabia well, and is likely to do so until Saudi Arabia becomes a meaningfully diversified economy, with exports denominated in a mix of currencies," the paper concluded.
Nevertheless, it listed conditions under which the argument for keeping the peg would weaken: expected depreciation of the dollar, an unacceptably high U.S. inflation rate, or a divergence of the U.S. and Saudi economic cycles.
They are already diverging to some extent; the Saudi economy is expected to slow sharply this year because of state spending cuts, according to the International Monetary Fund, while U.S. interest rates have begun to rise in line with an economic recovery there.
The IMF has also shown signs of recognising that the riyal may need to fall at some point. After annual consultations with Riyadh last week, it said: "The exchange rate peg to the U.S. dollar continues to serve Saudi Arabia well given the structure of the economy."
But in a paper presented to a meeting of Arab finance ministers last month, the IMF said efforts by oil-exporting countries to diversify their economies could fail if their currencies became overvalued, hurting non-oil export industries.
Such considerations may keep speculation about an eventual devaluation of the riyal alive.
"I just think unpegging the currency is a necessity for the reform plan to succeed. We actually plan to invest heavily in Saudi Arabia after the event occurs," said a New York-based hedge fund manager, declining to be named because of commercial sensitivities....
ReddStarr: Why would the IBBC let a top consulting firm...that specializes in global engineering and architectural design....join right now....because Iraq's private and public sectors are about to explode....with new growth....I've said it over and over again...follow the money...
Dar Al-Handasah (Shair and Partners) Joins IBBC!
The Iraq Britain Business Council (IBBC) is delighted to welcome Dar Al-Handasah
(Shair and Partners) – a planning, design, management and supervision consultancy –
to the organisation.
Founded in 1956, Dar Al-Handasah (Shair and Partners) is one of the world’s leading design
firms. The company has ranked highly on Engineering News-Record’s annual Top International
Design Firms and Top 150 Global Design Firms lists for the past 30 years. In 2015, Dar
Al-Handasah (Shair and Partners) took out the eighth and fifteenth spots on the lists, respectively.
Dar Al-Handasah (Shair and Partners) is staffed by more than 6,900 professionals, who work
out of 40 offices across the Middle East, Africa, Asia and Europe. Its main design centres are
based in Beirut, Cairo, London, Pune and Amman.
Iraq-based projects the consultancy firm has worked on include a mixed-use project in
Al Rasheed, Baghdad (conceptual master plan); the American University of Iraq at Sulaimani
(master plan, presidency building and quad one buildings); Erbil City Centre; and Kurdistan Gate.
ReddStarr: This is BIG....very BIG....IMO....makes you wonder....is this why they updated the travel restrictions for currency....it's going to be tough for people to start traveling with all those dinars.....LOL....rolling-on-the-floor-laughing-smiley-emoticon_gif...wow...this is getting very exciting....for me......
Airlines: We have received some notices to lift the ban on Iraq next month!
Revealed director general of Iraqi Airways, Osama al-Sadr, on Thursday, for some lines
delivered notices of members of international organizations to lift the ban on Iraq in the
middle of next month.
He said al-Sadr's / balances News /, "The next meeting of the International Organization
Faisal will be final on the lifting of the ban on the Green Bird", revealing at the same time
that "the middle of the sixth month ban will be lifted from the Iraqi Airways."
He added, "The SCO members have told us that Iraq has fulfilled all its obligations from the
safety requirements and we will start the return of the Green Bird to fly in the skies of Europe."
It is said that Iraqi Airways said, earlier, it led all Maalaha on the abolition of the air embargo
on Iraqi aircraft in Europe, confirming that it was awaiting a formal official approval by the
International Organization LINK
Frank26 (reposted from Tuesday night CC) Give me Mosul! That was the battle cry that we had. But yesterday, they started to tell you more about Fallujah, and the reason why is because now they can tell you their activities, their advancements in these cities...
it’s building confidence. Great confidence, not only obviously in Abadi who is making all these proper calls, but it is also building confidence within the country.
The citizens are watching very carefully. They’re very proud. The international world is watching. The citizens and the international world are finding confidence in what Abadi, its Gov’t and its Central Bank…is doing.
They are very astute that the IMF and the CBI are together. They’re very astute that the IMF, CBI and the GOI are getting together in meetings...this is all very, very good.
Now, granted…the capture of Fallujah and Mosul, it’s not the Monetary Reform, it’s not directly but indirectly…you can not have the Reform without these cities... we’re showing them how to do their Reforms. And the Monetary Reform leads all the Reforms.
Yes, the Western World, the European investors…they’re gaining confidence to come in to Iraq. NO. MORE. WASTING. TIME! This is the IMF, this is the Twelve, this is the United States of America…and we are guiding you... Now when do you want your loan? June or July?
Obviously they want it as quickly as possible. I believe, IMO, that we will see Article 8 and Mosul next and I believe, that these two are important. I believe that these two (2) are of equal importance. Not only for financial reforms, but for all of the reforms...to me, Mosul and Article 8 are coming.
...the BIS, the IMF, the World Bank…all three (3) of them gave them permission to raise the value of their currency. Holy Cow, that’s big. we believe...that when they lift the value of their currency it’s going to be on the Arabic side for three (3) days, in Arabic, Arabic numerals…it’ll be hidden.
And then, three (3) days later…legally…the CBI has to release that information to the international world.
I told you that inside, it will stay 1:1 but outside…look out. In a few months? What were we looking at…three (3), four (4) dollars? Yeah…IMO. IMO?
If they get this done? Ya know, let’s say, June…by the end of this year…IMO they will be at a number that they’ve never even been before.
You know why? IMO, because the world is dying to trust the Iraqi currency.