Re: Gulf Pegs To Usd

[Chaka]

http://search.netscape.com/ns/boomframe.jsp?query=kuwait+peg+to+usd&page=1&offset=0&result_url=redir%3Fsrc%3Dwebsearch%26requestId%3De 03877264c984154%26clickedItemRank%3D2%26userQuery% 3Dkuwait%2Bpeg%2Bto%2Busd%26clickedItemURN%3Dhttp% 253A%252F%252Fwww.ameinfo.com%252F57897.html%26inv ocationType%3D-%26fromPage%3DNSCPTop%26amp%3BampTest%3D1&remove_url=http%3A%2F%2Fwww.ameinfo.com%2F57897.ht ml


However the dollar's continued decline of the last three years has led to increasing debate about the continuing efficacy of the USD peg. So far any discussion of abandoning it has been linked to a single Gulf currency, something that is at least five years away.
Saudi Arabia, the largest Gulf economy, appears to remain opposed to any switch from the dollar but the consensus across the Gulf may be shifting. During recent pan-Gulf discussions, the UAE officials publicly declared that any new currency would probably be floated soon after its launch.

Investors, institutions and corporates are unlikely to need to worry about the USD peg going anytime soon



Take a moment to read this article

['Prior' Dinar]

Take the time to read this, its a good one. :wave:

[sprtbuf]

Good stuff...Will the GCC and its possible one currency hedge med to long term ya think?

[sprtbuf]

Also, would a stronger dollar mean a higher peg? Or is the one being discussed pretty much set in stone? Maybe a DrC question?....

[Dinardreams]

http://search.netscape.com/ns/boomframe.jsp?query=kuwait+peg+to+usd&page=1&offset=0&result_url=redir%3Fsrc%3Dwebsearch%26requestId%3De 03877264c984154%26clickedItemRank%3D2%26userQuery% 3Dkuwait%2Bpeg%2Bto%2Busd%26clickedItemURN%3Dhttp% 253A%252F%252Fwww.ameinfo.com%252F57897.html%26inv ocationType%3D-%26fromPage%3DNSCPTop%26amp%3BampTest%3D1&remove_url=http%3A%2F%2Fwww.ameinfo.com%2F57897.ht ml


However the dollar's continued decline of the last three years has led to increasing debate about the continuing efficacy of the USD peg. So far any discussion of abandoning it has been linked to a single Gulf currency, something that is at least five years away.
Saudi Arabia, the largest Gulf economy, appears to remain opposed to any switch from the dollar but the consensus across the Gulf may be shifting. During recent pan-Gulf discussions, the UAE officials publicly declared that any new currency would probably be floated soon after its launch.

Investors, institutions and corporates are unlikely to need to worry about the USD peg going anytime soon



Take a moment to read this article
link: http://search.netscape.com/ns/boomframe.jsp?query=kuwait+peg+to+usd&page=1&offset=0&result_url=redir%3Fsrc%3Dwebsearch%26requestId%3De 03877264c984154%26clickedItemRank%3D2%26userQuery% 3Dkuwait%2Bpeg%2Bto%2Busd%26clickedItemURN%3Dhttp% 253A%252F%252Fwww.ameinfo.com%252F57897.html%26inv ocationType%3D-%26fromPage%3DNSCPTop%26amp%3BampTest%3D1&remove_url=http%3A%2F%2Fwww.ameinfo.com%2F57897.ht ml
third paragraph from the end.
A more dramatic abandoning of the US dollar peg and moving to a basket of currencies or a flexible exchange rate is also possible, although probably not in the near term. This would not be done lightly. Across the Gulf, dollar pegs have successfully provided broad based macroeconomic stability for the last twenty years. The pegs have endured both periods of dollar strength and weakness largely unchanged.


Could Iraq lead the way into a basket of currencies exchange rate? Will GCC member countries follow suit? It is a topic that has gained strengh in debates among these coutries and soon to be GCC member Iraq. I lean more towards the basket of currencies scenario. Members of this forum could benefit by exchanging a portion of their Dinars when it opens for trade and the remainder when a basket exchange rate is adopted. The possible gaines are unimaginable, but the rewards to be realized are dream like. Take time and plan well. That's the best advise I can give.Good day all..Good luck. DD :happy26:

[Hollywood]

Exchange rate adjustment.
Currency revaluation.
I like to read words like these.

[Dinar Is Served!]

nice...very nice - thanks buddy!

[stargazer1968]

http://www.menafn.com/qn_news_story_s.asp?StoryId=100454

[Tinydancer]

http://www.menafn.com/qn_news_story_s.asp?StoryId=100454

Saudi official denies reconsidering single Gulf currency peg to US dollar



Kuwait News Agency (KUNA) - 17/07/2005

RIYADH, July 17 (KUNA) --

A Saudi financial official denied reports that Gulf Cooperation Council (GCC) countries have decided to reconsider pegging their future single currency to the US dollar.

Dr. Mohammed Al-Jasser said the GCC has not made any decision yet on pegging the single Gulf currency, which is expected to be put into effect in 2010.

"refuted a report published yesterday by the British Times newspaper which claims that the GCC could reconsider pegging their currency to the US dollar. The report also expected the Gulf currency to be linked to the euro".

The British paper quoted Gulf economic sources as saying that the single Gulf currency could be pegged to the euro or a basket of currencies instead of the dollar.



One Word:



Embargo... :p

[BBbucks]

1. Does anyone know how the exchange occured when the Euro hit?
I assume that the countries with the lesser valued currency took a big leap
when it was absorbed by the Euro. If so, did they have any rules for exchange that might be helpful for us. For us long-termers, is it best to hold onto the IQD until it turns into the GCC currency or just before?
Seems that we might need to think about this when we plan to gradually cash in.

2. Is it to the GCC's benefit to have an Iraqi currency that has a high peg
or a low peg. I know a high peg is good for us- but I'm just trying to get an idea of how the other GCC countries might view how this would affect them.

[tattatu]

no effect should be the theoretical answer regarding currency revaluation. Membership should increase trade between countries, but exporters also need to overcome trade barriers. So for example, it was predicted correctly that Poland would benefit more than Turkey. Turkish agriculture suffered -- more competition from EU members, lower food prices in Turkey, yet agricultural products could not be exported from Turkey because they did not meet EU standards. However, over the long run, everything should achieve parity, or you find another trading partner.

2. strong peg or strong currency? Assume you meant the latter. Pegs imply locked currencies. If GCC and Iraq are pegged to USD, then there should be no change in prices. If you have a weak currency, then generally you are an exporter (again raising capital and building the economy). There is no economic benefit gained by joining the GCC, when there are already no trade restrictions between countries. However, if you were a British expat living in Bahrain and the USD got weaker, your salary would buy fewer Pounds (Ouch). So if your trading partner is GB and the major export is oil going to GB, pegged to the dollar -- then your losing money if the dollar gets weaker relative to the pound - not to mention your reserves if they're in USD.

3. If you already have a strong currency with an export like oil, and an ally like the US why would you join GCC? If you need capital, the best choice is to trade it for assets at bargain prices and include hefty fees for transactions. With enough time, Iraq will become the next Japan.

4. Raising oil workers wages or revaluation of currency? Which would you choose?

[BBbucks]

Thanks for your response-
Yes, perhaps the word "currency" would make more sense than a "peg".
So I am wondering, does this mean that you are concurring eith the previous comments made by others that you think they will start with a perhaps a basket peg (maybe USD/oil/Euro) to start and to keep the currency strong and steady and if they decide at some point to break away from the peg and join the GCC, that is when you may see them change to a Float in order to prove their value to the GCC?
Are you of the opinion that the GCC may never include Iraq, as long as the US and Iraq continue on with a stong & successful trade agreement- maybe they won't bother to join the GCC after all?

I look forward to your response. thanks again-

[tattatu]

The GCC would certainly welcome Iraq joining them -- Iraq is a strength, not a weakness. That is why there have been concessions. Currency is the key, but if you have a strong currency already (strong in the sense of building capital) and a growing economy then why join. EU was created because of a weak dollar (strong US economy) -- so you could argue it was a protectionist policy -- I think opinion has changed since then.

To answer the second question -- Iraq exports oil to US and Taiwan. Oil is number one. The strategy that would work best for Iraq would be to continue pegging to the USD with a gradual increase probably in yearly increments -- this is the tradeoff for debt reduction -- both the Iraq people and the region as a whole benefit. The downside is lower wages and higher relative prices in Iraq.

[tattatu]

so small increments would be the most profitable strategy --> 10 - 100 NID increments -- just enough to keep up with inflation and whet everyone's appetite. Reasons: Dual currencies (USD/NID) and ample USD reserves for purchasing overseas. Iraq will stabilize and grow. As speculators, how long are you willing to wait for your investment to be profitable. From currency holders and government point of view this would involve the least risk in terms of speculators being able to exchange their Dinars and government's risk of further destabilization of the economy. Long time horizon (5 - 100 years) is favored for worthy Dinar appreciation. As a speculator, the best or "worst" thing that could happen would be for the Iraqi government to demand payment for oil in NID -- I dont think you would be allowed to exchange your NID for USD at least in Iraq or ???? Iraq changes trading partners for food or expertise ???? who demand payment in another currency that is not USD.

[BBbucks]

So to sum up… you are predicting that speculators won't
see a substantial gain until at least 5 years from now
and that it is likely that Iraq won't have a need to join the
GCC?
I do wonder though how this will affect their society as a whole
to continue on with low wages in order to help keep their currency
stable and also to help with debt reduction. Do you think that
this scenario will be possible? It seems to me that there is an awful lot
at stake here & the Iraqis are placing alot of trust in the US
to help them get back on their feet. How long do you think
it will take for the US trade agreement that was signed this week
to have a measureable impact on their economic growth?

[tattatu]

the risk is in how fast the Dinar will appreciate -- a low risk play means a longer time frame; high risk means low time frame. US trade agreement long time frame low risk. High risk meaning less likely you will be able to make an exchange outside of Iraq.

High risk usually linked to more than one event (eg. decoupling Renmimbi to USD --> Iran/Russia/China create an oil exchange --> Iraq signs TA with China and Iran) Good for NID speculators in terms of return, but obviously entails other difficulties, not to mention the US economy. :lmao:

Win now, or win later? I prefer to win later.

[BBbucks]

Soooo…then the trade agreement has lowered the risk
for speculators- and the Iraq/Iran oil agreement signed this
week has lowered the risk as well…for investors? :rolleye03

[tattatu]

does not carry the same weight. It will be a series of events that will increase the risk of this investment in order to get a higher return over a short period of time. This is just theory! :drunk:

[BBbucks]

Thanks for sharing your theories Tattatu! Your info was a nice reprieve from the rumour forum, which on my last check- was "getting pretty ugly"!
Good Luck with your investment!
BBbucks :wave:

[tattatu]

Actually my interest is in mathematical modeling (check out Nash Equilibrium for more info.) When no dominant strategy exists and players win by not cooperating to the fullest extent then an equilibrium can still be reached. We've all seen that happen before. In conclusion, a series of positive events does not always lead to a positive outcome or the most profitable one.

[BBbucks]

a series of positive events does not always lead to a positive outcome.

That's not just mathmatics- It's a rule to live by!
thanks for filling my empty left brain :drunk: with some good info.

Bbbucks

ps- Nash- isn't he the one they based the film "A Beautiful Mind" on?