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    Convertibility

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    sandyf
    Gold
    Gold

    Posts : 259
    Join date : 2013-01-29

    Convertibility

    Post  sandyf on Tue 19 Jan 2016, 22:05

    An article out yesterday has caused a bit of a stir in dinarland.

    An invitation to link the Iraqi dinar to the global economy
    http://www.alsabaah.iq/ArticleShow.aspx?ID=108592

    Iraq certainly has to move forward but I believe that the words are being taken out of context.

    "and thus achieve a monetary value to him in front of the world’s currencies, which in turn will give the power of the economic process within the country."


    I believe he is referring to convertibility, a subject never addressed in dinarland, and that Iraq must move away from a non - convertible currency.

    Types of exotic currency

    (1) Fully convertible
    A fully convertible currency can be traded without any limitations imposed by government. They typically come from more stable countries, although there are some exceptions. The Mexican peso is an example of a fully convertible, exotic currency.

    (2) Partially convertible
    A partially convertible exotic currency is the legal tender of a country that is traded in low volumes on the global foreign exchange market. The exchange of the partially convertible currency is partly controlled by the state that issues it. The Indian rupee is an example.

    (3) Non-convertible
    Non-convertibles are also known as “blocked currencies”. A non-convertible currency is the legal tender of a country that is not traded at all on the international FX market, usually because of government restrictions. It is normally a method of protection as an exotic currency’s economy is usually particularly vulnerable to market movements. If the exotic currency decreases or increases in value sharply, its potential adverse effects could be devastating for a country. The only way to trade a non-convertible is on the black market. The Brazilian real and Chilean peso are two examples of nonconvertibles which represent considerable challenges for businesses operating in Brazil and Chile, respectively.


    This is what they need to get away from.

    Currency black markets

    A currency black market is the consequence of government-implemented artificial official FX rates and a subsequent lack of foreign currency available. There are then effectively two exchange rates in a country: The official rate and the unofficial, black market rate. Many exotic currencies have black markets, where illegal trading of a country’s currency takes place, nearly always in cash, as the parties to the illegal transaction do not wish to leave a trace. Black markets gain prominence when countries typically reach a point of economic woe where interest rates may be high, imports and access to foreign currencies is restricted and in general, confidence is lost in the value of the currency by its home citizens. Due to currency controls imposed by government on foreign currency access, people often turn to the foreign currency black market in order to protect their finances. They usually pay a significant premium on the black market compared to the real exchange rate.
    avatar
    Seck
    Admin
    Admin

    Posts : 1040
    Join date : 2013-01-17
    Age : 56
    Location : NJ

    Re: Convertibility

    Post  Seck on Tue 19 Jan 2016, 22:11

    sandyf wrote:An article out yesterday has caused a bit of a stir in dinarland.

    An invitation to link the Iraqi dinar to the global economy
    http://www.alsabaah.iq/ArticleShow.aspx?ID=108592

    Iraq certainly has to move forward but I believe that the words are being taken out of context.

    "and thus achieve a monetary value to him in front of the world’s currencies, which in turn will give the power of the economic process within the country."


    I believe he is referring to convertibility, a subject never addressed in dinarland, and that Iraq must move away from a non - convertible currency.

    Types of exotic currency

    (1) Fully convertible
    A fully convertible currency can be traded without any limitations imposed by government. They typically come from more stable countries, although there are some exceptions. The Mexican peso is an example of a fully convertible, exotic currency.

    (2) Partially convertible
    A partially convertible exotic currency is the legal tender of a country that is traded in low volumes on the global foreign exchange market. The exchange of the partially convertible currency is partly controlled by the state that issues it. The Indian rupee is an example.

    (3) Non-convertible
    Non-convertibles are also known as “blocked currencies”. A non-convertible currency is the legal tender of a country that is not traded at all on the international FX market, usually because of government restrictions. It is normally a method of protection as an exotic currency’s economy is usually particularly vulnerable to market movements. If the exotic currency decreases or increases in value sharply, its potential adverse effects could be devastating for a country. The only way to trade a non-convertible is on the black market. The Brazilian real and Chilean peso are two examples of nonconvertibles which represent considerable challenges for businesses operating in Brazil and Chile, respectively.


    This is what they need to get away from.

    Currency black markets

    A currency black market is the consequence of government-implemented artificial official FX rates and a subsequent lack of foreign currency available. There are then effectively two exchange rates in a country: The official rate and the unofficial, black market rate. Many exotic currencies have black markets, where illegal trading of a country’s currency takes place, nearly always in cash, as the parties to the illegal transaction do not wish to leave a trace. Black markets gain prominence when countries typically reach a point of economic woe where interest rates may be high, imports and access to foreign currencies is restricted and in general, confidence is lost in the value of the currency by its home citizens. Due to currency controls imposed by government on foreign currency access, people often turn to the foreign currency black market in order to protect their finances. They usually pay a significant premium on the black market compared to the real exchange rate.

    Sandy sounds like Iraqs IQD falls in the the last Black Market
    avatar
    meatball
    SENIOR
    SENIOR

    Posts : 55
    Join date : 2015-12-24
    Location : all over the place

    Re: Convertibility

    Post  meatball on Tue 19 Jan 2016, 22:25

    Thanks for posting this...... great article.

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    Re: Convertibility

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