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Kaperoni says -- a currency's value is intertwined into the economy and directly related to the GDP

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Kaperoni says -- a currency's value is intertwined into the economy and directly related to the GDP

Post  Ponee on Mon Aug 06, 2018 11:45 am

Newshound Guru Kaperoni    

Everyone needs to understand that a currency's value is intertwined into the economy and directly related to the GDP so that is why the government is working so hard to stabilize the security and invite investment into Iraq.

  Hopefully the end result will be an influx of capital and investment to rebuild Iraq creating a significant appreciation of the currency but the conditions need to be set first. 

Those conditions are all encompassing including but not limited to the banking system, security, laws and momentum from investors.



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Re: Kaperoni says -- a currency's value is intertwined into the economy and directly related to the GDP

Post  Sam I Am on Mon Aug 06, 2018 1:23 pm

A pegged currency's value is determined by three things - money supply, the total in foreign currency reserves used to back the currency, and the percentage amount used to back the currency.  For example, if you have 100 billion units of your currency in your money supply and you have $25 billion in your foreign currency reserves you can back the currency at 25%.  If the reserves amount goes up you increase the money supply.  If the reserves go down then you decrease the money supply.  Otherwise you would either have to change the % used to back the currency or change the currency's value, and most countries with pegged currencies like to maintain a stable exchange rate.  

In the case of a free floating currency, there are too many variables involved to take into consideration to fully explain the valuation process.  You have FCR, precious metals, GDP, politics, geopolitics, inflation, monetary policy, fiscal policy .... etc.  Trust me, you won't find anybody qualified to discuss this in any dinar forums.  They're all too busy servicing their Fortune 500 clients, running their investment firms, or working on Wall Street.  They're not making tacos or pizzas, working on diesel engines, or running adult humor websites.  The IQD will never be a free floating currency however, so this is a moot point.

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