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Thursday, March 23, 2017

TNT CHAT, 23 MARCH

TNT:

Lilypad:  Take a look at #3 from the Dept of Ministry of Planning in Iraq

Dallred123:  Lilypad holy cow I love #3

Lilypad:  Yes Dallied-no if you will check out Deltas notes on recaps what he found on the CBI spread sheets two days ago, this is the same exchange rate that they have estimated at the liberation of Mosul.(1.13) Delta's report forthcoming.  (KTFA Notes from Wed. Night)

Doc Savage:  The fact that the MOP rate information is showing in plain sight is pretty exciting.

Eccl519: The value of the Dinar has to outshine the value of the Dollar in Iraq to get the confidence of the people. The support and confidence of the people is important to Abadi. The drop in the Dollar is helping….
....
Lilypad:  Yes--Good info Ecc. Iraq is the ONY place that the dollar value is dropping.

Believer2:  So would #3 mean when it RV's, our rate might be $1.13 per dinar?

Eccl519:  Remember...the in-country rate will be different than the market rate (when they go international)

Believer2:  Thanks Eccl519. So hopefully our rate will be higher than $1.13 then

Eccl519:  Most likely Believer, the demand for the Dinar will drive up the rate but will have to find a bank/brokerage that reflects the market rate. Most banks will deal with the international rate whatever that comes out to be

Yada:  Believer,,think it is 1.13 dinar per dollar,

Believer2:  If the international rate the banks will follow is around $1.13 per dinar, is there a leveraging opportunity here?

Yada:  the other way around Believe,,1.13 dinar per $1…. The opportunity I see is what Ray suggested last week and last night,,exchange what you need right away,,,wait for the rest to go up,,,

Yada:  the 1.13 dinar divided into $1 = 88¢ per dinar exchanged,

Jose: im good with 1.13 or .88

Readynow:  or $22,000 per 25,000 dinar

Lilypad:  I am not a mathematician, but I think the 1.13 in-country may be pretty close to the $3.71 Ray has been telling us.

Yada:  lilypad this may be a reissue rate and eventually go up,,,iraqi economist purposely have it start out low so the value climbs without messing with the economy

Lilypad:  Yes yada-likely to go up. this was projected rate from the ministry of planning. If anything, the planning would publish a lower rate.

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Exchange Rate from Ministry of Planning Iraq.

 The Exchange Rate of Foreign Currency in Economic Feasibility Studies
Below are the central controls related to the exchange rate of the foreign currency to convert the project inputs and outputs from foreign currency to its equivalent in the local currency, and that is by calculating the net discounted present value standard and the internal return on investments in economic analysis that governs investment projects that costs excess one million dinars.

Estimate the shadow price of foreign currency:

1. It is necessary to put central controls to amend the official exchange rate * to reflect the shadow price of the foreign currency, and that is considered one of the necessary  requirements to implement  the net discounted present value standard and the internal return rate on investment in the economic calculation stated in the instructions, paragraph nine.

The central controls for adjustin
2. Justifications for exchange-rate adjustment: there are a number of important and powerful arguments which support the view that the official exchange rate reduces the real value of foreign currency for purposes of calculating the  economic national profitability for investment projects and hence for the purposes of investment planning. It is demonstrated in this context to call for assessing the dinar for less than (3.208) dollar (official exchange rate) when assessing project outputs and inputs of traded goods of exports, substitute imports and imports... etc.


 The justifications to call for the use of an exchange rate that is lower than the official exchange rate are:

 The use of an exchange rate that is lower than the official rate is the appropriate action at the investment planning level to translate the country’s economic strategy aiming at stimulating central investments in the sectors that encourage the development of non-oil exports, as well as sectors that encourage the expansion of domestic production base in order to reduce imports and compensate it with local commodities. This helps to reduce reliance on foreign exchange earnings from crude oil exports and increases the share of non-oil sectors in the local production.

 The application of the amended exchange rate on project imported inputs will assist in directing investments away from aggregated sectors dependent on imported inputs and the preference of those sectors that rely on locally produced inputs.

 The use of the amended exchange rate helps to correct the balance in favor of the traded goods sectors compared to non-traded goods.

 The real exchange rate has declined rapidly since the early seventies, through rapid rise of the level of prices and local costs which led by the steadiness of the official exchange rate to change in prices and actual local rate costs that gave an advantage for imported goods at the expense of locally produced goods, meaning that it led to deterioration of the competitiveness of alternative replacement goods and export commodities.

This action shows that the official exchange rate overestimates the value of the dinar, compared to the foreign currency and from the promoting goods substituting imports and export commodities point of view of.

And in support to this view is the state’s utilization and in a broad approach to the customs and quantitative protection policies especially for consumer goods, as well as export subsidies that exports have through an amended export exchange rate.

3.  Estimate the amended exchange rate of the Iraqi dinar to be used in technical and economical feasibility studies and for (1.134) dollar per dinar. This price should be approved for 3 years until re-appreciation by the competent authorities.

http://www.mop.gov.iq/mop/index.jsp?sid=1&id=308&lng=en

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