Which is better? Lower or higher auction amounts?

[4Iraq]

Whis is better for the dinar holder, lower or higher auction amounts and why? Please explain it to me like I'm a 5 year old. I could never understand who is buying and selling.

[Crow]

Lower is good but even better is if there is a reversion that is when more dinar is bought by the banks then dollars are bought. The auctions by the CBI are done so the Iraqi banks can me the needs of customers for dollars or dinar when the banks cannot do it themselves with the inflows of dinar or dollars through normal business they go to the auction. Now Iraqi businesses ( bank customers ) need dollars to pay for imports as countries outside Iraq do not take dinar some of this is wire transfers and some is done in cash dollars. Large buying of dollars by banks in exchange for dinars is normal business activity, many here on the forum believe that the CBI is sucking up dinar, but that is not the case, just normal activity , larger numbers mean a lot of import activity. Now if we see the demand by banks for dinar that can mean 2 things at this point, speculators, banks, customers feel the dinar will rise in value and thus want it instead of dollars ( this happened before speculators pushed the value on the street up to 1000 to 1, we had a reversion where more dinar was bought by the banks then dollars, but this was crushed by the CBI. and Iraqi speculators lost out) Now, why I watch the numbers lately, ir the number of dollars bought is low that to me means that demand for dinar is higher, which could indicate inflows into dinar based investments like the ISX or other dinar based securities which I would like to see. The auctions are good to watch as a indicator of money flows. CROW

[Crow]

The number of dinar sold by the banks and dollars sold to them by the CBI could be in the low range Sunday in preparation for purchases on the ISX during the coming week, which dinar is needed. We will see.

[Sponson]

To add to what Crow said, and using the hypothetical example at the bottom of the page,...

Number of banks 13

...we find that 13 charter banks participated. This is a somewhat average number. Methinks the more the merrier.

We then find two exchange rates. We find this because the CBI both bought and sold - normally they just sell (the top number). From this example, they sold 37,000,000 USDs to the banks. The banks bought these dollars with dinar at an exchange rate of 1170. So if you take the Amount Sold (37,000,000 USD) and multiply it by the exchange rate (Auction Price Selling = 1170), you get 43,290,000,000 dinar. Or, in other words, the banks went down to the CBI, handed over 43,290,000,000 dinar, and in return the CBI gave them $37,000,000.

Auction price selling dinar / US $ 1170
Auction price buying dinar / US $ 1168

Amount sold at auction price (US $) 37.000.000
Amount purchased at Auction price (US $) 2.400.000

Okay. So we understand that the CBI sold 37,000,000 USDs to the charter banks (for dinar) at an exchange rate of 1170. This is an example of the banks preferring the dollar to the dinar because they're getting rid of their dinar for dollars instead.

But on this occassion some banks also sold some of their dollars to the CBI. From the CBI's perspective this is the Amount Purchased, or the second line. From our example, the CBI bought 2,400,000 USDs from the banks, and in return gave them dinar at an exchange rate of 1168. So if we were to multiply 2,400,000 x 1168, we would understand that the CBI purchased $2,400,000 from the banks and gave them 2,803,200,000 dinar in return. This is an example of the banks preferring the dinar to the dollar because they're selling their dollars to the CBI and getting dinar instead.

This days' results showed they wanted some dinar - some 2,400,000 USDs worth - but it also shows they sold 37,000,000 USDs worth of dinar too, and so the difference is 34,600,000 USDs in favor of demand for the dollar.

When the Amount Purchased is greater than the Amount Sold this is what is called 'reversion'. This simply means that demand for the dinar is outpacing demand for the dollar because the banks are selling their dollars to the CBI for dinar. This is what we want.

So, the lower the demand is for the dollar the better. If you want icing on top of the cake, a low demand for the dollar and an even greater demand for the dinar (reversion) is the way to go.

I hope this helps...



Number of banks 13
Auction price selling dinar / US $ 1170
Auction price buying dinar / US $ 1168

Amount sold at auction price (US $) 37.000.000
Amount purchased at Auction price (US $) 2.400.000

Total offers for buying (US $) 37.000.000
Total offers for selling (US $) 2.400.000

[Seaview]

Bump......