Pimpy

  In Pimpy's Investment Chat 

Article “What is the area in which the central bank moves in the area of controlling the currency exchange?” When it’s a “free float” then it’s up to supply and demand. That means the market decides the value of the exchange.  You have a “fixed rate”. That’s where we are right now. They’re telling you right now you get 1460 dinars for every $1. That’s a fixed rate.

A “dirty float or managed float” you let the market determine the value of the currency but if it goes too far one way or the other the bank can intervene and fix it. In other words, peg it to something for a second. There’s been a lot of talk about the currency. Are they going to free float it? The funny thing is why are they having these types of conversations? If we’re being told the rate is going to remain the same for the next 3 to 5 years, why do they have these conversations going on? I’ll tell you why. It’s because they have no intentions of on keeping this rate fixed for that long. It’s just not going to happen.

 

Tags: , , /