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OOTW: STERILIZATION, ECONOMIC (Social Science) The term sterilization is used in international economics and macroeconomics to describe the actions a central bank undertakes in order to neutralize the effects of central bank interventions in the foreign exchange market on the supply of domestic currency in the economy.
Sterilization usually takes the form of an open market operation, in which a central bank sells or purchases government bonds on an open market in the amount it purchases or sells foreign currency on the foreign exchange market, so that the amount of domestic currency in circulation remains unchanged.
OOTW: THE ISSUE HERE IS THAT THERE ARE SEVERAL FORMS OF STERILIZATION
OOTW: WHAT WE’RE TALKING ABOUT IS A FORM OF CURRENCY INTERVENTION (AS IT APPEARS ON THE SURFACE) OOTW: webcache.googleuserconten…
OOTW: A sterilized intervention to prevent currency depreciation Assume that a country’s currency is depreciating. To prevent this, the country’s central bank may decide to intervene in the foreign exchange market.
To prop up the value of the nation’s currency, the central bank may resort to creating artificial demand for its currency. It can do this by using some of its foreign exchange reserves to buy local currency.
The resulting demand stops the currency’s depreciation but also acts to reduce the domestic money supply in two ways. First the bank is directly removing some of the nation’s currency from circulation as it buys it up.
Secondly, if the central bank overshoots the target, the intervention can create or worsen a current account deficit due to the propped-up exchange rate being more favorable for importers than for exporters.
To offset the effect on the money supply, the central bank may sterilize its foreign exchange intervention. It can do this by engaging in open market operations that supply liquidity into the system, by buying financial assets such as local-currency-denominated bonds, using local currency as payment.
A sterilized intervention against depreciation can only be effective in the medium term if the underlying cause behind the currency’s loss of value can be addressed.
If the cause was a speculative attack based on political uncertainty this can potentially be resolved. In practice, the cause driving sterilized interventions in the late 20th century was often that a high money supply had meant local interest rates were lower than they were internationally, creating the conditions for a carry trade.
This involves market participants borrowing domestically and lending internationally at a higher rate of interest, a side effect of which is
The carry trade therefore continues to be profitable and the central bank must intervene again if it still wants to prevent depreciation. This can only go on so long before the central bank runs out of foreign currency reserves with which to intervene.
OOTW: BASED ON THESE TWO ARTICLES….
OOTW: Markets | Thu Jan 21, 2016 10:12am ESTRelated: FINANCIALS Iraq to sell local bonds to public for first time since 2003 – finance minister BAGHDAD Jan 21 Iraq plans to sell local bonds to the public for the first time since 2003, with a 5 trillion dinar ($4.24 billion) issue expected this year, the finance minister said on Thursday, as the country seeks to cover a widening budget deficit.
The three-year bonds will carry an interest rate of 10 percent and will be sold to “citizens and employees”, Hoshiyar Zebari told a news conference in Baghdad. Iraq already issues treasury bills to domestic banks and has international bonds outstanding. ($1 = 1,180.0000 Iraqi dinars) (Reporting by Saif Hameed; Editing by Gareth Jones)
OOTW: CBI calls on citizens to buy bonds and stop “hoarding money” Author: HH, MK Editor: AT, HH 01/02/2016 18:25 Number of Views: 124 Called on the Central Bank of Iraq, on Monday, citizens to the acquisition of national bonds, which will present soon, rather than reliance on “hoarding money”, as he emphasized that those bonds will have a “good financial benefits.”
The governor of the Central Bank on the Keywords during a press conference in the Green Zone in central Baghdad, with a number of officials in economic affairs and attended (range Press), said that “national bonds would investigate citizen good financial returns,” noting that “the Central Bank put interest on the bonds so that compete on foreign interest. “
He called on citizens to “the acquisition of national bonds, which will put it soon rather than the adoption of hoarding money,” pointing out that “the central bank wants to bring in the interest of the citizen through internal bonds instead of resorting to asking foreign bonds.”
The Central Bank of Iraq announced earlier, take the necessary measures to support liquidity in the banking system, and decided to facilitate the sale of foreign currency “to sustain the exchange rate” procedures.
and as he emphasized that Iraqi financial institutions are “unable” to cover the fiscal deficit, he stressed the need to reconsider the structure of the budget and spending and to diversify sources of income and achieve the investment more broadly to address the decline in oil prices.
OOTW: IT APPEARS THAT IRAQ, BUT OFFERING NATIONA/LOCAL BONDS IS TRYING TO PULL IN IQD
OOTW: THERE ARE SEVERAL FORMS OF STERILIZATION, EITHER MEANT TO APPRECIATE OR DEPRECIATE THE VALUE OF “LOCAL” CURRENCY
OOTW: BY IRAQ OFFERING BONDS IN LOCAL CURRENCY, THE ATTEMPT IS TO DRAW IN IQD BY OFFERING THE BONDS FOR SALE IN THE VALUE OF THE LOCAL CURRENCY..AS THE ARTICLE STATES AT “1180”
OOTW: BY BRIDGING THE DEFICIT IN THE BUDGET, (BY PROXY) THEY’RE ATTRACTING IQD AND INVESTORS WHO ARE HOPING TO REAP PROFIT BY PURCHASING THE BONDS AT A (TBD) INTEREST RATE
OOTW: THIS IMHO, WILL TEST THE CONFIDENCE OF IRAQI’S AND ALSO PULL IN IQD
OOTW: it appears to me that they do this by buying foreign currency reserves Once the cbi stops this intervention And people continue to buy dinar This will cause the exchange rate to go up – that is the hope anyway
OOTW: i keep hitting my caps key sorry
OOTW: AS YOU ALL KNOW I’M NOT AN ECONOMIST, SO I EXAMINE SUPERFICIALLY – ANY INPUT IS APPRECIATED AND BUTI WILL COME IN LATER TODAY TO PERHAPS MAKE THIS DESCRIPTION MORE SUCCINCT
OOTW: HERE ARE SOME OTHER THOUGHTS I HAVE BASED ON THE RESEARCH I’M DOING ON THIS AND PLEASE, ANYONE , FEEL FREE TO INTERJECT
OOTW: THE REASON THE DINAR DOES NOT GO UP IS THE CBI BUYS FOREIGN CURRENCY EVERY TIME SOMEONE BUYS A DINAR THIS IS GETTING HARDER FOR THE CBI TO DO WITH LOW OIL PRICES AND THE WAR ON ISIS THEY HAVE TO NOW CONSIDER RAISING THE DINAR OR DEPRECIATING IT
IF THEY DEPRECIATE THE DINAR THEY WILL GAIN MORE FOREIGN CURRENCY RESERVES IF THEY STOP THE AUCTIONS AND STOP STERILIZING BY BUYING FOREIGN CURRENCY RESERVES THIS WILL CAUSE THE DINAR TO GO UP IN VALUE
OOTW: (NOT TO MENTION HOW CORRUPTION HAS EFFECTED THE CURRENCY SITUATION – NOT JUST ISIS)
rocknrollbus: ‹@OOTW› Iraq has signed on with the ICC?
OOTW: I CANNOT CONFIRM THIS – ONLY HAVE A PARLIAMENT PRESS RELEASE STATING THEY’VE DISCUSSED THIS
OOTW: I SPENT ALL MORNING TRYING TO PROVE OR DISPROVE THE ARTICE RE THE 71 IRAQI OFFICALS ON A US LIST
OOTW: AND I CANNOT CONFIRM THIS
OOTW: NOT EVEN AT THE TAAS NEWS SITE
rocknrollbus: I thot I’d read a few days ago that they had…………..
OOTW: YES THE PRESS RELEASE DISCUSSED THAT THEY WOULD JOIN AND THERE WAS AN ARTICLE OUT STATING THEY ALREADY HAVE JOINED
OOTW: THE INFORMATION THAT WAS SENT TO ME – I WAS TOLD WAS FROM THE ICC SITE
OOTW: BUT THEN I CAME BACK INTO CHAT AND SAID THAT IT WAS NOT CERTAIN VERIFICATION
OOTW: WHAT IS CLEAR TO ME IS THAT THE IRAQI PRESS HAS AN AGENDA TO GET THE CORRUPT PROSECUTED
OOTW: TO SEE THEM PROSECUTED
rocknrollbus: ‹@OOTW› Just went to ICC site. Seems like last entry was April 2014??
OOTW: YES BUT THAT IS ABOUT ‘CASES’
OOTW: IF YOU GO TO THE MEMBERS PAGE THERE IS NO SPECIFICATION THAT IRAQ IS A “FULL” MEMBER
rocknrollbus: ‹@OOTW› And now with Maliki’s son buying that palace…………….I don’t know if these idiots will “ever” get a handle on corruption………………
OOTW: ‹@rocknrollbus› THE ART ABOUT HIS SON AND THAT HOUSE COULD BE ANOTHER DEVICE BY THE PRESS TO MAKE PEOPLE ANGRY
OOTW: HERES MORE ON THE BONDS
OOTW: Central Bank: the government is able to overcome their expenditures during the current yearadmin Last update: Tuesday, February 2, 2016 – 8:44Central Bank: the government is able to overcome their expenditures during the current year Central Bank of Iraq, announced that the government was able to overcome the expenses for the current year, adding that part of the coverage of these expenditures will be through the issuance of national bonds.
The governor of the bank on the Keywords in a press conference with a number of officials and specialists of financial affairs at the General Secretariat of the Council of Ministers that “the available indicators at the present time analysis on all aspects of liquidity, that the government will be able to overcome this year within the coverages that were agreed upon.”
rocknrollbus: ‹@OOTW› I know Abadi has done 100 time the work that McFeces ever thot of, but it seems like he’s slowed down in the last few months??
OOTW: SO THE LOCAL BONDS (AS STATED ABOVE IN ONE OF THE STERILIZATION EXAMPLES) ARE LEVERAGED AGAINST FOREIGN BONDS HELD BY THE CBI/GOI
OOTW: IRAQI POLITICS ARE FAR FROM SIMPLE AS YOU KNOW…..THIS GETS DOWN TO RELIGION
OOTW: AND DAWA AFFILIATIONS
OOTW: ABADI AND MALIKI, ESSENTIALLY FROM THE SAME PARTY – AND ALTHOUGH MALIKI WAS SAID TO BE THE FOUNDER OF THIS PARTY,
I’VE SEEN ON THE DAWA PARTY SITE THAT THEIR IS A NEW HEAD WHO APPEARS TO BE A RELIGIOUS FIGURE (IF NOT ALSO POLITICAL)
OOTW: ALTHOUGH THERE WAS TALK VIA AN ALMADA ARTICLE STATING THAT HAKIM WAS BEING DISCUSSED TO HEAD THE PARTY
rocknrollbus: I remember reading that…….
rocknrollbus: My question is……when will they start going after the corrupt??
OOTW: I AM AT THE SITE NOW AND THEY USED TO HAVE A LIST OF THE ORG’S MEMBERS AND THEIR POSTS BUT THAT PAGE IS NOW GONE
rocknrollbus: I pulled up the Islamic Dawa site……said Abadi was in charge?
OOTW: YES THAT’S WHAT I’M SEEING NOW
OOTW: BUT THEY USED TO HAVE A PAGE WITH PICS AND POSTS
OOTW: NOT THERE NOW
rocknrollbus: Thanx OOTW……….BBL…………..
Donnie: Iraq Live Update @IraqLiveUpdate 5m5 minutes ago Kurdish Official: Maliki is very very good, one of the best Iraqi leaders! …… ……#Shameless #AnythingForCash @RudawEnglish
OOTW: Send this Thread to a Friend The joint forces preparing to liberate Fallujah and Hit Topic has been read 4 times 02/02/2016 23:02 The spokesman for the Joint Special Operations Command Brigadier General Yahya Messenger, the determination of the joint forces of progress toward freeing the cities of Fallujah and Hit of control Daash terrorist gangs.
He said Brigadier Messenger that military operations in Anbar continuing, and the army advanced toward Alsjarih area in addition to clearing roads and areas and schools in those areas and raise the IEDs of them, adding that the Joint Special Operations Command have plans to purge usurped areas of the organization Daash terrorist, especially after becoming the forces army experience in urban warfare .
Butifldrm: World | Tue Feb 2, 2016 5:06pm EST Iraqis running out of food and medicine in besieged Falluja BAGHDAD | BY STEPHEN KALIN REUTERS/STRINGER
The Iraqi army, police and Iranian-backed Shi’ite militias – backed by air strikes from a U.S.-led coalition – imposed a near total siege late last year on Falluja, located 50 km (30 miles) west of Baghdad in the Euphrates river valley.
The city’s population is suffering from a shortage of food, medicine and fuel, residents and officials told Reuters by phone, and media reports said several people had died due to starvation and poor medical care. Insecurity and poor communications inside the city make those reports difficult to verify.
Sohaib al-Rawi, the governor of Anbar province where Falluja is located, appealed to the coalition to air-drop humanitarian supplies to the trapped civilians. He said this was the only way to deliver aid after Islamic State mined the entrances to the city and stopped people leaving.
“No force can enter and secure (the delivery) … There is no option but for airplanes to transport aid,” he said in an interview with al-Hadath TV late on Monday, adding the situation was deteriorating by the day.
Since recapturing the city of Ramadi – a further 50 km to the west – from Islamic State a month ago, Iraqi authorities have not made clear whether they will attempt to take Falluja next or leave it contained while the bulk of their forces head north toward Mosul, the largest city under the militants’ control.
Butifldrm: read more: wealthwatch.world/showthr…