The 2% spread
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Thread: The 2% spread


    
  1. #1

    The 2% spread

    I hate to burst any bubbles here, but the "street' rate for the IQD equal to 1201 IQDs per dollar is NOT within 2% of the CBI rate of 1,166 IQD per dollar!!! In order to get within 2% of the CBI rate, the street rate for the dinar has to "rise" to 1,189 IQD per dollar (The mathematical equation is 1,166 x 1.02 = 1189.32).

    And for those who might be looking at the math from the perspective of the street rate, the 1201 rate still isn't within 2% of the CBI rate. From this perspective the street rate needs to be even higher at 1177 dinars per dollar (1201 x .98 = 1176.98).

    So from either view, the current rate of 1,201 is more than 2% away from the CBI rate of 1,166 IQD/dollar.


    Don't confuse the CBI rate (1166) with the Official rate (CBI rate + commissions). The IMF clearly states the Official rate must be maintained within 2%. Therefore, compliance is at 1202 or less dinars per dollar. With the recent increase in commissions, that allows it to drift as high at 1213 dinars per dollar. In either case, the current rate of 1201 is well within both and therefore they are now officially in compliance with the IMF.

    Kap



  2. #2

    Re: The 2% spread

    In February the CBI raised its commission rate on currency auction sales from 13 to 24 Dinars/$ (on top of the 1166 IQD/$ official exchange rate). The purchasing banks therefore are paying 1166 + 24 = 1190 which is within 2.02% of the street rate. That is my understanding, but please correct me if I'm wrong.

  3. #3

    Re: The 2% spread

    Don't confuse the CBI rate (1166) with the Official rate (CBI rate + commissions). The IMF clearly states the Official rate must be maintained within 2%. Therefore, compliance is at 1202 or less dinars per dollar. With the recent increase in commissions, that allows it to drift as high at 1213 dinars per dollar. In either case, the current rate of 1201 is well within both and therefore they are now officially in compliance with the IMF.

    Kap

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