sczin11- re-posted from various places ...news forum..chat...news releases
HOW IS THE COUNTRY OF IRAQ GOING TO FINANCE THE BUDGET? IN EFFECT, HOW ARE THEY GOING TO FINANCE THE EXCHANGE OF THE IRAQI DINAR, FROM ALL FOREIGN INVESTORS, AFTER RAISING THEIR DINAR VALUE TO A "TRUE REALITY RATE" FOR THE MOVE INTO THE OPEN MARKET GLOBAL ECONOMY!
LET'S START WITH THE CBI ANNOUNCEMENTS FROM JANUARY 27, 2015... HERE IS THE ARTICLE THAT STARTED THE CONVERSATION IN CHAT TODAY.....
CBI borrow six trillion dinars deposited by commercial banks have reserves to finance the budget
The CBI has decided to finance the state budget with a loan of six trillion dinars, through the operation of 50% of the deposited by commercial banks reserves has, and the repurchase of treasury bonds from the secondary market.
According to a statement of the bank it will buy about five trillion dinars, of which the first stage, and then to run 50% of reserves deposited by commercial banks has, and re-buy Treasury bonds from the secondary market, that these measures do not affect your Bantrza reserve in excess of $ 70 billion, the financial support of the budget and try to reduce the deficit. As well as enable them to provide housing and real estate loans for industrialists and farmers, support economic activity and job creation.
HERE IS ANOTHER VERSION OF THE SAME NEWS RELEASE: NOTE THE HIGHLIGHTED WORDS TOWARDS THE END OF THE ARTICLE... THESE WORDS APPEAR IN MANY VERSIONS OF THIS RELEASE..
Central Bank decides to finance the budget by 6 trillion dinars and agree on a set of proposals
(Independent) The central bank decided to finance the budget for the current fiscal 2015 six trillion Iraqi dinars, and as he emphasized his agreement to a set of proposals to address the financial challenge in Iraq.
The bank said in a statement received by the (independent) said Tuesday that "in line with the central bank's tasks and responsibilities in supporting the development and stimulate the Iraqi economy and in light of the financial challenges faced by the country, and approved by the Board of the Central Bank, among the proposals made by the bank's management."
The bank said in its statement that "among the proposals is to support the liquidity of specialized commercial banks $ 5 five trillion dinars to enable them to provide loans to industrial and agricultural and providing housing and real estate loans in support of economic activity and job creation, as well as financing the state budget with a loan of $ 6 six trillion dinars During the run 50% of the commercial banks' reserves deposited with the Central Bank of Iraq. "
The bank said that "the Board of Directors approved the repurchase of treasury bonds from the secondary market, where the central bank will buy about 5 five trillion dinars as a first stage of those bonds," asserting that "these actions do not affect the Central Bank of Iraq's Special Reserve." (END)
HERE IS A PIECE I DID BACK ON JANUARY 27 WITH REGARDS TO THIS NEWS...
NOW THE QUESTION IS...HOW IS THE BUDGET GOING TO BE FUNDED BY THE CBI WITH THE ABOVE INFORMATION IN PLAY?
THERE HAS BEEN MUCH DISCUSSION AS TO WHAT BONDS WERE BEING REPURCHASED BY CBI...HOW WOULD THAT HELP THE LIQUIDITY? (REDUCING DEBT TO THE GOI IS THE KEY WITH REPURCHASING THE BONDS)... BUT IF YOU READ SOME VERSIONS CAREFULLY IF NOT ALL, IT SAYS THE START OF PHASE 1, IMPLYING IF NEEDED THERE WILL BE A PHASE 2 AND MAYBE MORE..ALONG WITH THE 6 TRILLION LOAN, (THAT SEEMS TO BE COMING FROM THE WORLD BANK, FROM OTHER NEWS WE SAW), AND ALONG WITH THE PHRASEOLOGY, THIS WILL FUND THE BUDGET... AS SEEN IN THE ARTICLE ABOVE..
OKAY, SO SOME HAVE STATED, INCLUDING ME, THAT THE BUDGET NEEDS THE RV...MEANING IN ORDER TO IMPLEMENT MAJOR INVESTMENT PORTIONS AND OTHER AREAS OF THE BUDGET, THE DINAR VALUE MUST BE INCREASED, TO MAKE ANY SENSE OF IT... IN ORDER TO DO THIS, THE CBI NEEDS MONEY....EVERYONE HAS BEEN ASKING THE QUESTION, WELL MANY ANYHOW, WHERE IS THE MONEY COMING FROM, TO BUY BACK OUR DINAR...EXCHANGE OUR DINAR...WHATEVER YOU WANT TO CALL IT...
DINAR LAND MYTHS TALK ABOUT USA OIL CREDITS, CHINA IS FUNDING..BLAH BLAH BLAH..MAYBE SOME IS TRUE, MAYBE NOT, BUT ULTIMATELY IT IS THE CBI WHO KNOWS THE NOTE COUNT LESS DESTRUCTED BILLS, AND KNOWS HOW MUCH THEY NEED TO BUY BACK OUR DINAR, AT A TRUE VALUE REALITY RATE, FOR INTERNATIONAL COMPLIANCE AND STANDARDS, AND FOR GLOBAL OPEN MARKET ECONOMY....
BUDGET SAYS THEY MUST BE FUNDED BY THE MOP, MOF, AND THE CBI, THE CRISIS CELL MEMBERS, IF YOU WILL, AND HENCE THE REPURCHASE OF THE BONDS REDUCING THE DEBT THE GOI HAS TO COVER, THUS REDUCING THE MONEY THE CBI NEEDS TO
FUND THE GOI WITH IN MONTHLY EXPENDITURES... BRINGING IN THE BONDS, IS FREEING UP CASH, LIQUIDITY FOR CBI, AS THEY DONT HAVE TO FUND THE GOI TO PAY THE BOND DEBT, THUS GIVING CBI LIQUIDITY..HENCE, PHASE 1 MENTION, AND MAYBE PHASE 2 AND MORE ALONG WITH THE 6 TRILLION IN LOAN TO FUND THE REST OF THE BUDGET, AS PRESCRIBED BY THE LAW! (REF.CBI ANNOUNCEMENT ABOVE)
THE THEORY WAS FORMED, WHEN I READ THE 5 PART RELEASE BY CRISIS CELL/CBI JANUARY 27, AS REFERENCED ABOVE, AS TO WHY THE LOANS AND WHY THE BUY BACK OF BONDS, BUT.... THE REAL BUZZER, ALARM, WAS WHY THE SPECIFIC MENTION OF PHASE 1, LEAVING IT OPEN ENDED FOR FUTURE REPURCHASES..
AND THEN WE SAW THE BUDGET..ARTICLE 58 I THINK, ...IF PASSED, THE MOF,MOP, MUST EXECUTE/FUND THE BUDGET..... IMHO...THIS CAN NOT BE DONE AT 1166 DINAR PER 1 US DOLLAR...............
AND LASTLY, I WILL TRY AND TIE IT ALL TOGETHER....IF YOU FOLLOW ALL THE ABOVE, AND THEN READ OR RE-READ MY OPINION PIECE FROM YESTERDAY AFTERNOON, YOU WILL SEE AND GET CLUES ON WHERE WE ARE RIGHT NOW, IMHO!
SCZIN11- OPINION PIECE..... A DEBATE IN DINARLAND...... WHY????
LETS LOOK AT SOME DEFINITIONS FIRST..
Managed float regime is the current international financial environment in which exchange rates fluctuate from day to day,
but central banks attempt to influence their countries' exchange rates by buying and selling currencies.
It is also known as a dirty float.
Managed float regime - Wikipedia, the free encyclopedia
Fixed exchange-rate system
From Wikipedia, the free encyclopedia
A fixed exchange rate, sometimes called a pegged exchange rate, is a type of exchange rate regime
where a currency's value is fixed against either the value of another single currency,
to a basket of other currencies, or to another measure of value, such as gold.
There are benefits and risks to using a fixed exchange rate. A fixed exchange rate is usually
used in order to stabilize the value of a currency by directly fixing its value in a predetermined ratio to
a different, more stable or more internationally prevalent currency (or currencies), to which the value
is pegged. In doing so, the exchange rate between the currency and its peg does not change based
on market conditions, the way floating currencies will do.
This makes trade and investments between
the two currency areas easier and more predictable,
and is especially useful for small economies in
which external trade forms a large part of their GDP.
A fixed exchange-rate system can also be used as a means to control the behavior
of a currency, such as by limiting rates of inflation. However in doing so,
the pegged currency is then controlled by its reference value. As such,
when the reference value rises or falls, it then follows that the value(s) of any
currencies pegged to it will also rise and fall in relation to other currencies and
commodities with which the pegged currency can be traded. In other words, a
pegged currency is dependent on its reference value to dictate how its current
worth is defined at any given time. In addition, according to the Mundell–Fleming
model, with perfect capital mobility, a fixed exchange rate prevents a government
from using domestic monetary policy in order to achieve macroeconomic stability.
In a fixed exchange-rate system, a country’s central bank typically uses
an open market mechanism and is committed at all times
to buy and/or sell its
currency at a fixed price in order to maintain its pegged ratio and, hence, the
stable value of its currency in relation to the reference to which it is pegged.
The central bank provides the assets and/or the foreign currency or currencies
which are needed in order to finance any payments imbalances.
READ MORE AT
OKAY, SO NOW THAT WE FULLY UNDERSTAND THE DIFFERENCE, (LOL), LET'S
LOOK AT THE VANILLA ICE CREAM, HOPEFULLY EASY TO UNDERSTAND, THEORIES..
EVERY COMPANY, COMMODITY, CURRENCY, ETC...THAT TRADES ON AN EXCHANGE,
ANYWHERE IN THE WORLD, TRADES BASED ON SUPPLY AND DEMAND, ECONOMIC
OUTLOOK, AND CURRENT PERFORMANCE...
THERE IS ALWAYS A SPREAD.... A BUY AND A SELL PRICE ( BID AND ASK )...
YOU BUY FOR THE HIGHER PRICE, AND SELL FOR THE LOWER PRICE... THERE
MUST BE A SELLER OF WHAT YOU WANT TO BUY, IN ORDER FOR A BUY ORDER
TO BE EXECUTED...
WHEN A NEW LISTING BECOMES AVAILABLE IN THE MARKET PLACE
( IPO, INITIAL PUBLIC OFFERING ON AN EXCHANGE), IT IS HYPED, MARKETED,
AND RESEARCHED BY ASTUTE INVESTORS, MONEY MANAGERS, TRADERS,
AND WHEN IT FINALLY OPENS UP FOR TRADING TO THE PUBLIC, (THERE ARE
ALWAYS OFFERINGS TO INSIDERS, LEGAL, FOR CERTAIN AMOUNTS
AT A LOWER PRICE THEN THE OPENING PRICE), THE PROJECTED "TRUE VALUE" OR
"REALITY RATE", INITIALLY PROJECTED BY THE UNDERWRITERS, RARELY
IS WHAT IT IT OPENS UP AT... USUALLY HIGHER, AND IN MANY HIGHLY
EXPECTED COMPANIES, ISSUES, ETC... MUCH HIGHER! (SEE FACEBOOK AND TWITTER
AS 2 RECENT EXAMPLES)...
THEN THE PRICE FLUCTUATES FOR A PERIOD OF TIME, SOMETIMES A DAY, A WEEK,
OR MORE...AND THEN WHAT HAPPENS, INSIDERS DUMP A LOT, PRICE STABILIZES,
AT ITS "NEW TRUE VALUE.."!
NOW BASED ON SUPPLY AND DEMAND, THE PRICE WILL FLOAT, WILL FLUCTUATE,
UP AND DOWN, GOING FORWARD, WITH INVESTORS WATCHING VARIED NEWS
REPORTS, CORPORATE EARNINGS AND PROJECTIONS, PRODUCT DEVELOPMENT,
PAST PERFORMANCES AND FUTURE HOPES....
SO YOU CAN SEE, BASED ON ALL THE REPORTS, RELEASES, AND ANNOUNCEMENTS,
WE ARE LED TO BELIEVE THAT THE IRAQI DINAR, SHOULD BE SUPPORTED WITH EASE,
BY THE CENTRAL BANK OF IRAQ, ( CBI ), AND FURTHER REPORTS INDICATE THE VALUE
OF THE CURRENCY SHOULD BE ONE OF THE STRONGEST, IF NOT THE MOST
POWERFUL CURRENCY IN THE WORLD!
THE COST OF EXCHANGING THE OLD DINAR, ( WHAT WE OWN) WITH THE NEW VALUE
PAIRED TO WHATEVER CURRENCY OR COMMODITY THEY CHOOSE, IS ONE OF SIGNIFICANT
LEVELS...IT WOULD POSSIBLY BEHOOVE THE CBI TO PAY AS LITTLE AS POSSIBLE,
THUS COMING UP WITH A LOWER INITIAL EXCHANGE RATE...CORRECT? I SAY NOT!!!
THE MOST IMPORTANT REASON I FEEL THIS WAY, IS DESCRIBED IN THE
DEFINITIONS ABOVE.. READ THEM AGAIN... A FIXED RATE NEEDED FOR GLOBAL TRADE
IN AN OPEN MARKET ECONOMY.. A TRUE VALUE... IF THE CBI COMES OUT WITH
A LOWER RATE THEN THE INTERNATIONAL MARKET WARRANTS AND DEMANDS,
WHAT KIND OF CONFIDENCE DOES THAT SHOW THE WORLD?
NEXT, IF THE RATE CAME OUT LOW, HOW LONG WOULD IT TAKE THE MARKET TO ADJUST
TO THE TRUE VALUE....BEFORE YOU COULD GET TO THE BANK, THE RATE WILL
HAVE CHANGED... REMEMBER, ONCE THEY RELEASE THE "NEW RATE", AT WHATEVER
LEVEL THAT IS, IT IMMEDIATELY BEGINS TRADING ON THE FOREX CURRENCY EXCHANGE..
AT THAT TIME, THE ONLY CONTROL THE CBI WOULD HAVE OVER THE VALUE,
WOULD BE THE CONTINUED TAKING IN THE DINARS OFF THE STREET, OR THE PRINTING
OF NEW DINARS... EITHER WAY, THERE ARE MANY INTERNATIONAL STANDARDS AND
COMPLIANCE ISSUES AT STAKE, THAT THEY HAVE WORKED SO HARD TO OVERCOME,
IMPLEMENT, AND BECOME IN THE GRACES OF THE GLOBAL COMMUNITY...
IRAQ HAS INVESTED HUNDREDS OF BILLIONS OF DOLLARS, IS BEGGING FOR THAT
MUCH AND MORE TO COME IN AND INVEST WITH THEM, AND IS RAPIDLY BECOMING THE
SOVEREIGN , DEMOCRATIC, UNIFIED , WEALTHY, POWERFUL COUNTRY,
THE NEW REGIME HAS PROMISED THEIR CITIZENS.... AND AS OF A FEW DAYS AGO,
PRIME MINISTER ABADI HAS CLEARLY STATED TO THE WORLD, FROM GERMANY,
"IRAQ IS OPEN FOR BUSINESS!"