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 Kaperoni's explaination and support for his FLOAT THEORY DinarDailyUpdates?bg=330099&fg=FFFFFF&anim=1

Kaperoni's explaination and support for his FLOAT THEORY

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 Kaperoni's explaination and support for his FLOAT THEORY Empty Kaperoni's explaination and support for his FLOAT THEORY

Post by Ponee on Mon Aug 05, 2013 11:39 am



 Kaperoni's explaination and support for his FLOAT THEORY. I have put the articles on the scroll, but here are the links to the articles he has referrenced.  Following is his analysis.


https://www.dinardaily.net/t26335-central-bank-report-of-the-international-monetary-supports-our-goals-in-the-liberalization-of-the-foreign-exchange-market#179800

https://www.dinardaily.net/t26334-central-in-a-strong-position-and-can-preserve-the-value-of-the-dinar#179798

https://www.dinardaily.net/t26333-central-bank-imf-endorses-our-foreign-exchange-market-liberalization#179797



FROM KAPERONI :



Now read them carefully and you will learn a few things....If not, I will spend a few minutes point them out for you...



1. The CBI has a "target" to liberalization of the foreign exchange market.

2. The IMF endorsed that event.

3. The IMF considers this important..enough so it says..."it needs to follow up the implementation of the agenda in all its contents."

4.That this will improve growth and reduce poverty

5. They need to liberalized foreign exchange regime at the earliest opportunity where this is technically feasible.

6. This event means at a minimum, allow access by any Iraqi citizen, foreign exchange, if it wishes to conduct any ongoing international transaction, for example, for the purposes of the importation of the goods, as well as for interest payments, or remittances to family expenses.

7. The CBI has ample amount of reserves amounting to more than 70 billion dollars (only 30 billion or so needed to buy back any dinar in circulation in country).



So, what we have is a decision by the CBI to "liberalize the foreign exchange market" and they set a target date to accomplish this and the IMF is in full support of it.



Here is where it gets interesting, because I doubt you know what that means. Well I do. And I will give you a few examples....



First off...it must be known that the IMF since 1973 ecourages members to float their currencies. And the way you accomplish that is to "liberalize your foreign echange."



Here is a quotes to read from IMF doc....







"This paper examines the hypothesis that financial market liberalization can create a basis for more stable exchange rates, as deviations of exchange rates from equilibrium levels, defined here at the Hodrick-Prescott filter, bring forth stabilizing flows of liquidity. This “endogenous liquidity” hypothesis is relevant in the context of the gradual switch from pegs to floats in Central European countries—both to the extent that pegs are more difficult to maintain in liquid markets that respond quickly to participants’ changing perceptions and to the extent that such markets create more favorable conditions for a market-determined exchange rate."




Now, for those who want to understand how this works, here is a case of "foreign exchange liberalization" using Jamaca as an example...





HOW THE FOREIGN EXCHANGE MARKET WORKS





What is the Foreign Exchange Market?





"In a market there are buyers and sellers who negotiate and agree on the price for the commodity being exchanged. The foreign exchange market is no different. However, here the commodity being traded is foreign exchange and the price is the foreign exchange rate. Specifically, a foreign currency is being traded for the Jamaica dollar at a particular rate of exchange. The foreign exchange market in Jamaica is fully liberalised with exchange rates being determined by the forces of supply and demand. The market is quite extensive and is highly accessible to individuals and companies. There are numerous financial institutions within this market, many of which have several branches islandwide through which foreign exchange transactions are effected. Jamaican residents and visitors are therefore able to access foreign exchange freely and easily."


http://boj.org.jm/uploads/pdf/papers_pamphlets/papers_pamphlets_How_The_Foreign_Exchange_Market_Works_.pdf



http://www.imf.org/external/pubs/ft/wp/2004/wp0435.pdf





Now if you took the time to read the articles above and the list I presented, you should know by now this is exactly what the IMF is asking of Iraq...to "liberalize the foreign exchange."



Still not convinced?



Here is another emerging market, through Article IV consultations, the same request was made to them...The result is...





Myanmar seeks to liberalize foreign exchange market

Xinhua | 2013-7-17 13:04:51

Myanmar will seek to transform its managed float foreign exchange regime to free float exchange one as part of its efforts in liberalizing the foreign exchange market, local daily Voice quoted the Finance Ministry as reporting Wednesday.

In preparation for the move expected to start in August, rules and regulations will be prescribed and efforts will be made to modernize the domestic banks and raise its working capability, said deputy Finance Minister U Maung Maung Thein.

Myanmar started to introduce the managed float exchange system in April 2012 after decades-long application of complex dual exchange rate -- the official rate and the market rate before it was unified into market rate but fluctuated around 800 Kyats per dollar for the past one year.

Meanwhile, the exchange rate between US dollar and Myanmar Kyat has reached its peak this week for the first time this year, trading at 988 Kyats per US dollar at the official exchange counters but as high as over 1,000 Kyats per US dollar in the outside market according to market sources.

The exchange rate has been going up daily since early this month from 860 Kyats per US dollar.

To eliminate illegal foreign exchange trading, 14 private banks have been granted as authorized dealers to open official money changers since Oct. 1, 2011 to enable official trade of three kinds of foreign currencies with Myanmar Kyats at a rate designated in line with daily exchange rate transacting in the international exchange market.

These foreign currencies are US dollar, Singapore dollar and euro.



Meanwhile, Myanmar announced in March this year abolition of Foreign Exchange Certificate (FEC), which has been terminated for use as of July 1.



http://www.globaltimes.cn/content/796805.shtml





So there you have it..Proof that the dinar will free float as I have stated for over a year...via the CBI's own words in February 2013 in which they said to the international banking community they would have a "floating orbit of exchange." This statement is totally in line, and right on target of these very statements above directly from the CBI and now the IMF.

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 Kaperoni's explaination and support for his FLOAT THEORY Empty Re: Kaperoni's explaination and support for his FLOAT THEORY

Post by Levitations on Mon Aug 05, 2013 12:29 pm

Interesting support of the float.  Not sure I agree since translations should always be taken with skepticism but thanks for bringing this.  gives us more to digest

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Post by Ponee on Mon Aug 05, 2013 12:48 pm

 I actually borrowed this from an interesting discussion on ChangesXchange.  I felt that it had some merit for those who have an interest in understanding why Kap is always saying it will gradually float.

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Post by Troyboy on Mon Aug 05, 2013 2:59 pm

Good thread.
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Post by Kevind53 on Mon Aug 05, 2013 4:37 pm

Good info, but if I understand the process correctly, then it would almost have to RV first and then float as the IMF rules limit the amount any given currency can float up or down per quarter. So then RV to some reasonable rate and then let the float take over?

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