"RV UPDATE" BY KAPERONI, 27 JAN

  Kaperoni 

 Article "US and Iraq agree to start talks to end presence of US-led coalition"

The dinar either rises gradually over time as Iraq's economy prospers reducing the money supply or Parliament will authorize the deletion of zeros reducing trillions to billions and a LOP. Not what we want to see.

 there is no way Iraq can RV the Iraqi dinar with [120] trillion dinar in circulation. No country could afford. Iraq's total net worth is only around $16 trillon dollars.

 There is no significant RV of the Iraqi dinar.  And if the dinar does ever go up in value, it will be based on the success and growth of Iraq's own economy.  There are no shortcuts.

  Article:   "Ali Al-Alaq, the current governor of the Central Bank of Iraq confirms that Iraq's money supply exceeds 100 trillion dinar."

 If and when the Central Bank decides to increase the value of the Iraqi dinar more than likely it will be based on some type of gradual float as a result of the success and growth of Iraq's own economy and an increase in GDP.

I hope each and every one of you find success in this investment...It may take time.  It may  be another 1 to 5 years.  I certainly hope not but I believe things could happen quickly over the next 36 to 48 months.  It all depends on Iraq.  

 ...We all know things don't happen fast in Iraq. Iraq has a lot of work to do in order to succeed. The first of which is pass over 100 stalled laws through Parliament to encourage investment in Iraq.  And at the same time the Central Bank of Iraq has to continue reforms to the banking system, digitalization, and apply monetary tools to meet compliance .

 A country's exchange rate is the result of the success and growth of their own economy. When you have a weak economy, you have a weak exchange rate.  Until Iraq passes laws, diversifies their economy and increases their GDP, nothing will happen with the dinar.   When Iraq passed their tripartite  3 year budget a few months back, it created the conditions for them to diversify and privatize their economy over the next three years.   Now Iraq is on the clock to accomplish such.

There's a new article out that many people are translating and confusing.  They are not talking about an RV in Iraq, they are talking about the spread being in compliance early next year. 

 Just a reminder the spread is the difference between the official rate and the market rate or street rate and has been way out of whack recently in Iraq. This article simply means they expect the spread to come down closer to the official rate early next year. There is no RV.

    A very important statement was made back in 2020 by the prime minister's economic advisor Mohamed Salah who used to be Deputy Governor of the CBI under Shabibi. He stated that Iraq's entire wealth including all minerals in the ground amounts to only $16 trillion dollars. Knowing that information one can then determine that there is no way a significant RV could ever occur with over 90 trillion dinar in circulation.  It doesn't make sense...

 They...have to have the dinar stabilized within the country and within the 2% rule mandated by the IMF in order to then accept IMF article VIII and begin to float the dinar which would raise its value based on supply and demand.  All of these processes and or steps required time.

https://dinarevaluation.blogspot.com/2023/12/rv-update-by-kaperoni-10-dec_0650267841.html

https://dinarevaluation.blogspot.com/2023/12/rv-update-by-kaperoni-18-dec.html

Iraqi Dinar WOW Around $7.25 News Update Dinar IQD | Iraqi Dinar 2 New Rate

The Pentagon reveals the truth about the negotiations with Iraq: they are not about withdrawing from its lands, 27 JAN

The Pentagon reveals the truth about the negotiations with Iraq: they are not about withdrawing from its lands, 27 JAN

Shafaq News / The American newspaper “The Washington Post” confirmed that talks between Baghdad and Washington on the issue of the American military presence were ongoing even before the attack launched by Hamas on Israel on October 7, 2023, which led to the ignition of unrest in the region and exacerbated tension between the forces. However, it is not a negotiation to withdrawfrom Iraq.

In a report translated by Shafaq News Agency, the American newspaper quoted the Pentagon spokeswoman, Sabrina Singh, denying that the Iraqi-American Supreme Military Committee talks, which were announced by the Iraqi Ministry of Foreign Affairs and the US Department of Defense, were related to the withdrawal of American forces from Iraq.

According to Singh, the issue “is about the future of Iraq and ensuring that it is prepared to succeed in defending its own security and sovereignty, and how the United States can support Iraq to do that.”

A senior American official, who requested to remain anonymous, told the newspaper, “We have been discussing this for months. The timing is not related to the recent attacks.”

While the newspaper pointed out that Pentagon officials refuse to provide additional details about the form of the new arrangements that will take place in Iraq, it quoted a senior defense official as saying that the recent wave of militia attacks against American forces led to the delay of the committee’s meetings in the fall, but they will begin now, adding that “There is no way to predict exactly where this will lead, or on what timeline it will lead us.”

The newspaper pointed out that this lack of clarity left the door open to the possibility of the United States withdrawing its forces from some locations in Iraq, and perhaps from Syria, adding that American forces in Syria depend on logistical support from American soldiers stationed in Iraq.

The report quoted a senior military official as saying that about 70 Americans had been injured in militia attacks since October 2023, including one soldier who was seriously injured, noting that the continued American military presence played a role in preventing nearby ISIS cells from carrying out larger attacks.

shafaq.com 

"RV UPDATE" BY PAULETTE, 27 JAN

  Paulette  

 If they are truly heading to a simple 3 decimal space move on their exchange rate and...they are heading to 1.31USD to 1 IQD, they would have to make another move first to 763.4 from 1310...As of now, a simple decimal move  of 3 places would mean 1310 IQD to 1 USD would become 1.310 IQD to 1 USD or 76 cents per IQD..

The basket of currencies is what they intend to peg to instead of just pegging to one currency - the USD...This is what the CBI and the GOI has stated...If they are pegged to just one currency, if the value (purchasing power) of that currency drops significantly, so does the value (purchasing power) of the IQD.  If they are pegged to a basket a currencies, if one drops the others keep the IQD "propped up". This is extremely important to Iraq as they are predominantly an import country.  This is precisely what they stated years ago...Bottom line, the pegging to a basket is to maintain the purchasing power and stability of the currency and not a singular event to increase the IQD purchasing power.

 Clare:  With the closure...the dollar price decreased

1/20/2024

The main stock exchange in the capital, Baghdad, closed today, Saturday, due to the decline in the exchange rate of the dollar against the Iraqi dinar.

Selling prices in money exchange shops in local markets in Baghdad reached 153,250 Iraqi dinars for 100 dollars, while purchasing prices reached 151,250 dinars for 100 dollars.  LINK

Sir_Shawn:  IMO- CBI official rate 1310
1 USD ~ 1310 IQD = 0.000763
Drop the three zeros 
1USD ~ IQD 0.763 = 1.310 
Anyone for a mic  drop…

Question is when….

Paulette:  IMO......I don't believe .76 USD for one IQD (1.31 IQD/1USD) would be adequate for the Iraqis to want to abandon the more valuable USD......The MOP/MOI study all the way back in 2009 stated 1.14-1.18USD to 1 IQD to start for 3 years prior to reinstating the true value of 3.22USD per 1 IQD

Sir_Shawn:  Well in my opinion, you are right, so this brings up the basket of currencies and the float. The Dinar will correct itself probably instantaneous. The question is the second set of books where I believe they were using the 1.31 per Dinar. We know that all those buildings and cities were not built on 1310 Dinars. But still we wait…  IMO

Paulette:  IMO......the basket of currencies is what they intend to peg to instead of just pegging to one currency - the USD.  At least this is what the CBI and the GOI has stated in the past.  If they are pegged to just one currency, if the value (purchasing power) of that currency drops significantly, so does the value (purchasing power) of the IQD.  

If they are pegged to a basket a currencies, if one drops the others keep the IQD "propped up".  This is extremely important to Iraq as they are predominantly an import country.  This is precisely what they stated years ago and those articles are probably somewhere within the pages of the Final Article thread.  Bottom line, the pegging to a basket is to maintain the purchasing power and stability of the currency and not a singular event to increase the IQD purchasing power.

The issue I still see is in order to peg to a basket of currencies, they would "officially" have to depeg from the USD.  While I have yet to see the US relinquish their receivership status over Iraq and the fact that the US is desperate to try to keep the USD propped up, I am unsure the actual mechanism of how they will be allowed to depeg and then repeg.  It seems like receivership would need lifted first for that kind of move.

The buildings and cities were built on the USD value predominantly from oil sales.  The number of IQD to the USD value seems irrelevant.  Look at Vietnam and all they have accomplished with a currency value of less than a tenth that of the IQD.  The big difference is Vietnam expanded their currency supply and Iraq has not.  Iraq clearly has full intent to RI their currency and change their currency structure to rid itself of the 3 zeros.  These articles are definitely contained in the FA thread.

If they are truly heading to a simple 3 decimal space move on their exchange rate and as you said they are heading to 1.31USD to 1 IQD, they would have to make another move first to 763.4 from 1310.  Frank has said they had planned on one more move.  As of now, a simple decimal move of 3 places would mean 1310 IQD to 1 USD would become 1.310 IQD to 1 USD or 76 cents per IQD

https://dinarevaluation.blogspot.com/2024/01/discussion-about-news-of-dollar-price.html

Iraqi Dinar✅CBI Big News Revaluation Last 24 Hours-This is Good News Co...

An “election lie” by Biden… An American report discusses “rumors” of withdrawal from Iraq, 27 JAN

An “election lie” by Biden… An American report discusses “rumors” of withdrawal from Iraq

Al-Sumaria News – International News
A report by the American newspaper “Politico” discussed the growing talk about the imminent withdrawal of American forces from Iraq or Syria, amid speculation that this would be “effective electoral propaganda for Biden as he enters the atmosphere of the American presidential elections.”
The newspaper said in a report translated by Al-Sumaria News, that suddenly, there was a lot of talk about the withdrawal of American forces from two countries in the Middle East, coinciding with the exposure of forces in the region to increasing attacks by militants, noting that US Secretary of Defense Lloyd Austin announced that official discussions between Washington “And Baghdad about the future of the 2,500-strong American military mission in Iraq that will begin in the coming days.”

She pointed out that at the same time, experts in Middle East affairs said that there were internal discussions about withdrawing nearly 900 soldiers from Syria, a claim denied by the administration, indicating that there is no imminent withdrawal order from President Joe Biden or heading to his office from what we heard from five. US officials, all of whom requested to remain anonymous, and the Pentagon confirms that Iraq has not asked the US military to leave.

She explained, “What is happening, in general, are discussions throughout the administration about where forces are most needed in the region, and that the talks on Iraq and Syria are linked to each other.”

Regarding Iraq, Austin confirmed the start of the long-awaited US-Iraqi Supreme Military Committee, which the two countries agreed to support in August, and officials will discuss how the US-led coalition will “transition” to defeat ISIS based on three factors: the terrorist threat, “the requirements.” operational and environmental capabilities,” and the capabilities of the Iraqi security forces, according to the Pentagon.

She stressed that at the present time, the Biden administration is very careful not to say that the United States will leave Iraq, and as for Syria, three senior officials in the administration have confirmed that there are deliberations about withdrawal.

Officials in multiple corners of the government are looking into the threat ISIS would pose if American soldiers leave Syria, as well as the possibility that more service members might be injured from escalating strikes by Iran-linked groups, similar to conversations officials had about their position on Syria at the beginning of the administration. Since then, a review of that decision has led to the same conclusion: stay, and two senior administration officials and a Defense Department official have said the Pentagon is not considering withdrawal.

The newspaper considered it strange that all this talk about ending missions in the Middle East could serve as a political blessing for Biden, as former President Donald Trump’s message in foreign policy is that he will avoid World War III and end ill-fated missions abroad, which is the argument that is being repeated. It resonates with voters in both parties, but Biden can boast of getting the United States out of Afghanistan, Iraq and Syria by the time voters go to the polls in November.

alsumaria.tv

"IRAQ BOOTS ON THE GROUND REPORT" BY FIREFLY, 27 JAN

  Frank26 

[Iraq boots-on-the-ground report]

FIREFLY:  Sudani is on TV saying Iraq is on the verge of a transformation process. 

 FRANK:  Every day Sudani is joining in the direction of your new exchange rate and your new national currency.  He tells you there's a new direction occurring, yeah, from a program rate to an international rate.

FIREFLY:  Television is showing Parliament Finance committee saying we are close to closing the parallel market and solving the dollar exchange rate.  FRANK:  How many ways can they tell them?

 FIREFLY:  Channel One TV is saying we just overtook and stopped the most dangerous and most corrupt organization that has ever stolen dinars.  They stole over 1 trillion dinar...individuals arrested and groups have been stopped. 

 FRANK:  The money was recovered...This is the phase of the monetary reform right now, to recover this type of money, to be in position to float internationally...

   FIREFLY:  TV showing the meeting in Davos with CBI governor, IMF, World Bank and Sudani have shortened the time on financial and banking reform.  They're saying it's a shorter time expected now to complete the reforms .  

FRANK:  He is telling you they are very very close to giving you the new exchange rate with the lower denoms ...What happened at Davos put the monetary reform on light speed.

FIREFLY:   On the economic news an economic specialist is saying Iraq needs to use a basket of currencies to add value to the dinar against the dollar.  

 FRANK:  Sudani sends out another expert in the financial field that you know and trust...Exactly what we've been telling you.  This is the next phase IOO... This is the most powerful part of the monetary reform education to you as an Iraqi citizen...The basket of currencies is required in order to add value to the Iraqi dinar.

 They will never talk to you about something that needs to be done.  They will talk to you about it after it is done.  That is what is called the float and that is what is going to take you back to your RI.  Your currency rate has to be reinstated back to $3.22 but that's the international side of Iraq...

The goal of the CBI is to reach the Real Effective Exchange Rate.  In doing so it adds value to you even thought it's 1 to 1 in country...It will stay at 1 to 1 to the American dollar in Iraq but you will finally have your purchasing power that you have long waited for.

https://dinarevaluation.blogspot.com/2024/01/iraq-boots-on-ground-report-by-firefly_0959338502.html

Iraqi Dinar | CBI Apply Real Effective Exchange Rate | Iraqi Dinar News ...

The Supreme Council of Iraq calls for an end to the foreign military presence this year, 26 JAN

 The Supreme Council of Iraq calls for an end to the foreign military presence this year

The head of the Iraqi Islamic Supreme Council, Hammam Hamoudi, called on Thursday, through paragraphs of his statement, to call for an end to the foreign military presence during the current year.

Dr. explained. Humam Hamoudi, in a statement issued by him, said that the official agreement between the governments of Iraq and the United States and the efforts it includes to end the mission of the American forces according to a timetable that guarantees their gradual exit represents a national demand to preserve the sovereignty of Iraq and the stability of the region that is facing a state of tension, and the presence of these forces has become part of Sources of concern for their countries and a provocation for their people.

He added, as we urge the government to continue in this direction, we renew our call for the necessity of setting the year 2024 to end the foreign military presence, and for the negotiator to be serious, determined, and aware of identifying the risks, the level of cooperation, and its controls that preserve national sovereignty.
Dr. Hammam Hamoudi stressed the need to ensure popular oversight to follow up on this file and the level of achievement, as the United States’ compliance is the result of the effort and coordination of the government, parliament, and the courageous national and popular forces that had previously succeeded in their political resistance in ending the occupation in 2011, to impose today their will again to expel the coalition forces. International, and confirming its national capabilities to protect Iraq’s security and sovereignty.

burathanews.com

"RV UPDATE" BY MNT GOAT, 26 JAN

 Mnt Goat 

 Remember again this is not all about us investors. It is about the Iraqi people and their  lives. We will only benefit too because we helped invest our money in Iraq in their time of need... I have never seen such a rate of progress since the end of the wars in 2003 and I entered this investment.      

Quote from Deputy Prime Minister and Foreign Minister Fuad Hussein:  “Iraq’s endeavor to occupy its natural position in the region and the international community”.  ...Part of what it means for us investors in the dinar is to realize that when they mention international community, they are talking global...liberating Iraq from the war years.  

It is a FACT they cannot operate effectively in the global arena without a tradable currency on the currency exchanges, such as FOREX. Iraq is also at the sheer brink of a final announcement into the World Trade Organization (WTO), which we know they want back their dinar in the process...I believe that when you put all the FACTS together you can clearly see where they are leading Iraq and it is down a very nice road of prosperity and abundance...   

On the sidelines of the Davos Forum...held in Switzerland last week, Iraqi Prime Minister Al-Sudani and his accompanying delegation, and Ali Al-Alaq, Governor of the Central Bank, continued to hold meetings, understandings, and negotiations with the World Bank, the International Monetary Fund, the President of the European Bank for Reconstruction, the American bank, J.P. Morgan, and international financial institutions, with the aim of accelerating the procedures that… and I quote – “It is implemented by the government in cooperation with the Central Bank towards achieving financial and banking reform”. ... It is all VERY GOOD news for us investors.

Iraqi dinar CBI Meeting 🔥 Dinar major changes few days away 🔥 Dinar reva...

Masoud Barzani supports the position of the Sudanese government to resume discussions with the American side, 26 JAN

Masoud Barzani supports the position of the Sudanese government to resume discussions with the American side

Shafaq News/ On Thursday, Kurdish leader Masoud Barzani sent a message in which he supported the Iraqi government’s position regarding resuming discussions with the United States to formulate a future relationship in security and military matters.

The message distributed by Barzani’s headquarters and received by Shafaq News Agency stated: “We support the position of the federal government headed by Mr. Muhammad Shiaa Al-Sudani, and we support the statement of the Iraqi Ministry of Foreign Affairs to resume discussions with the American side with the aim of formulating a future relationship within the military and security framework to ensure the continued confrontation of terrorism and the protection of the country’s security from external attacks, including the security and safety of the Kurdistan Region.”

Barzani added; “Negotiations are the correct way to build sound relations based on common interests between the Republic of Iraq and the United States of America.”

shafaq.com

"10,000 IQD =$23,530 USD IN THIS BANK" FROM KIMBERLY BANK STORY, 26 JAN

 Bearded_PatriotUSA

Telegram post
1/25/24

Forwarded from Kimberly:

A close friend here in East Tenn just went into Regions bank and asked what was the rate on her 10,000 Dinar Note and it was 23,530 on the screen. 

Very exciting!! The Dong is not yet valued.

https://t.me/Bearded_PatriotsUSA/13885

iraqi dinar✅CBI Action About IQD Revaluation Today 2024 / Iraqi Dinar Va...

Instead of Romanski, Biden nominates an extraordinary “new” American ambassador to Iraq, 26 JAN

Instead of Romanski, Biden nominates an extraordinary “new” American ambassador to Iraq

Shafaq News/ US President Joe Biden announced on Thursday his intention to nominate Tracy Ann Jacobson for the position of Ambassador Extraordinary and Plenipotentiary of the United States of America to the Republic of Iraq, replacing Elena Romanski.

And Tracy Jacobson, Senior Career Member of the Diplomatic Service, Career Minister category, most recently served as Chargé d’Affairs at the U.S. Embassy in Addis Ababa, Ethiopia.

Over the course of her distinguished career, she served as U.S. Ambassador on three occasions – to Tajikistan, Turkmenistan, and Kosovo, and as Deputy Chief of Mission at the U.S. Embassy in Riga, Latvia.

In addition to senior leadership roles overseas, Jacobson served as Principal Deputy Assistant Secretary of State in the Department of State’s Bureau of International Organization Affairs and Dean of the National Foreign Affairs Training Center (FSI) for the College of Professional and Area Studies. At the National Security Council, Jacobson was Deputy Executive Secretary and Senior Director For management.

Jacobson earned her bachelor’s degree. She holds a bachelor’s degree from Johns Hopkins University and a master’s degree from the School of Advanced International Studies, also at Johns Hopkins University. She has received numerous awards from the Ministry of Foreign Affairs, two Presidential Class Awards, and the Medal for Peace, Democracy and Humanity “Ibrahim Rugova” (Kosovo).

shafaq.com

"WE ARE CLOSE TO THE END OF THIS" BY WOLVERINE, 26 JAN

 WOLVERINE CHAT NOTES FROM JANUARY 25, 2024:

 I know people are stressed out. I know it is close to end of January and people are stressed. I want to tell you something: Wolverine was right! The funds were released! I was on call with the Admirals group, and lawyers associated with Michael Rubin. 

The funds have been released to the paymaster accounts.

 The notifications will be going out to the whales, and the payment will be released way before the end of the month. 

 The payments will go directly onto the QFS account. They told me, “Wolvie nothing is going to stop this now..” 

Again, guys, I am  just letting you know, Wolverine is right! No matter what people say. hold on!  

We are close to the end of this.

 we will be blessed. We will celebrate. Lots happening behind scenes. This is just a short and sweet call to confirm what I said before! Have a beautiful day. It will be about 90 degrees here today!   

Thanks guys, Wolverine

https://t.me/Bearded_PatriotsUSA/13928

🔥Iraqi Dinar🔥This is Huge🔥News Guru Intel Update IQD Value to USD🤑💵🤑🎉

Parliamentary Finance: We are close to ending the phenomenon of "parallel markets" and prices are heading down, 26 JAN

 Parliamentary Finance: We are close to ending the phenomenon of "parallel markets" and prices are heading down

Information/private..
Representative Waad Al-Qaddo confirmed on Friday that America acquiesced in leaving Iraq for four reasons.

Al-Qaddo said in an interview with Al-Maalouma, “America is an occupying force and has been practicing arrogance and aggression for years by bombing at times and threatening the economy at other times through its various tools,” pointing out that “the slogan of combating terrorism is false and the truth is different.”

He added, “America acquiesced in leaving Iraq for four reasons, the most prominent of which are: the people’s rejection of its survival and the exposure of the falsity of human rights allegations after its participation in the genocide against the Palestinians, in addition to the strikes of the national resistance,” stressing that “the position of Parliament and its national forces increased the strength of the position.”

He pointed out that “the departure of the occupation forces is important for the security and future of Iraq because they are the direct cause of many of its crises over many years,” pointing out that “Baghdad has the ability to competently manage the security file and protect its borders from any external challenges.”

The central government announced a few days ago the start of consultations for the exit of American forces from the country according to contexts that will be determined by the joint committees.

almaalomah.me

"RV UPDATE: " PLATFORMS ARE NOW LOADED" BY WOLVERINE, 26 JAN

 Bearded PatriotUSA

Telegram post
1/25/24

Forwarded from Wolverine:

Thursday January 25, 2024
Rubem BAZ: He says
15:22 P.M.

Finished last night, all 86 platforms are now loaded with money and ready to launch. We expect the official launch any day now.

RENO says it’s all ready and waiting for the gold-backed dollar to be introduced (last night at 4:47 AM)! *

15:22: Sie sind gestern Abend fertig geworden, alle 86 Plattformen sind jetzt mit Geld geladen und startbereit. Wir erwarten jeden Moment die official Veröffentlichung. Reno sagt, alles sei bereit and warte nur auf die Einführung des goldgedeckten Dollars (gesten Abend um 04:47 Uhr)! *

15:54: Things are confirmed to go live tomorrow, but around the world the first payment runs will take place from Monday; 01/29/2024 15:00 CET / 09:00 USA New York Time

15:54: Obviously getting started means government first, then businesses and individuals. If they are finished before 15.02.2024 we can be happy. *

t.me/mhc70

Iraq and the Pentagon - Latest News BY SANDY INGRAM

Al-Fatlawi: Iraqi policy is continuing to remove the occupation forces from the country, 26 JAN

  Al-Fatlawi: Iraqi policy is continuing to remove the occupation forces from the country

Information / Baghdad.

Ali al-Fatlawi, a member of the Fatah Alliance, said that Iraq is on the way to removing the combat forces of the US occupation, while maintaining diplomatic cooperation like other countries that work on this principle.

Al-Fatlawi told Al-Maalouma that "Iraq's policy is proceeding on the right real track to end the US presence in the country and remove the occupation forces from military bases."

He added that "the removal of the occupation forces from Iraq opens the door to the continuation of diplomatic cooperation, as any Arab or foreign regional country does, provided that the combat presence of US forces inside Iraq is ended."

He pointed out that "America has cards to play against countries that oppose its path and project in the region, and Iraq has taken a decision to remove the occupying forces from the country, where it works through its cards to exert pressure to ensure the achievement of its goals, but the matter cannot pass on the Iraqis as they will not obey any pressure exerted by Washington towards them." 

Foreign Central Banks Rejecting US Treasuries as Bond Values Collapse BY AWAKE-IN-3D, 26 JAN

 Foreign Central Banks Rejecting US Treasuries as Bond Values Collapse

On January 25, 2024
By Awake-In-3D

As a follow up to my previous article reporting that foreign buyers of US Treasuries are surging, let’s now look at the fact that foreign central bank purchases of US bonds are significantly drying up.

The landscape of US Treasury investments is witnessing a notable shift, primarily driven by foreign central banks.

Traditionally viewed as the epitome of safe investments, US Treasuries are now being questioned by these major global players due to several emerging risks.

These include the US government’s tendency to impose sanctions, its growing deficits, and the persistent inflation crisis.

Looking ahead, the US Treasury Market is transforming into a highly speculative (volatile) environment.

Since early 2022, the increase in rates from near zero to 5.5% has resulted in considerable valuation losses, particularly affecting the holdings of central banks in emerging markets.

Once seen as a risk-free asset, these bonds are now approached with caution by foreign central banks, signaling a major transformation in the global financial landscape.

Foreign Central Banks Rethink US Treasuries

Foreign central banks are rethinking their stance on US Treasuries.

It’s hardly surprising to see them exit. Holding US bonds comes with significant risks. The US government’s propensity to use sanctions to freeze assets poses a clear danger.

Yet, this is just the surface issue. Deeper concerns revolve around the burgeoning US deficits, the never-ending inflation crisis, and the Federal Reserve’s loosening grip on the treasury market.

While foreign investors robustly continue to purchase US Treasuries, central banks are showing a diminishing interest.

Foreign central bank holdings are, at best, stagnating and, in reality, being offloaded.

This leads to a pressing question: why are central banks abandoning what was once deemed the world’s risk-free asset?

What Implications Does This Have For The Future Of US Bonds?

Central banks typically seek stability in their investments. A 10-year Treasury bill is expected to maintain a consistent value. However, the last two years have seen a stark reversal.

Since early 2022, the Federal Reserve hiked interest rates from near zero to 5.5%, causing significant losses for central banks on their bond holdings.

The inverse relationship between interest rates and bond values is critical here. As the Fed combatted inflation, the value of US Treasuries plummeted.

US 10-Year Bond Values Have Collapsed by 40% Since 2022

According to Fidelity, a 1% hike in interest rates can decrease the value of a 10-year Treasury by 9%. A 3% increase could lead to a 27% crash.

What happens with a 5% hike? A catastrophic collapse in bond prices of over 40%.

Ironically, this turmoil coincides with a time when central banks, particularly in emerging markets, desperately need US dollars.

As interest rates soar, so does the dollar, forcing central banks to defend their local currencies. In this scramble, many governments incur substantial losses by selling their Treasuries, wiping out years of interest payments.

The Fall In Treasury Holdings Of Central Banks Is Evident

Since 2022, there’s been a noticeable value drop (loss) in foreign central bank US Bond holdings.

Central Banks lost $49 Billion in US Treasury value holdings just last month. Source: Reuters

November alone saw a loss of almost $50 billion in Treasury holdings by central banks. The instability in value poses a significant risk for future investments.

The chart below shows that, since 2008, Treasury holdings by foreign central banks have plummeted from over 40% to under 15% this year—a clear indication of a major shift away from what was once considered a risk-free asset.

The Dangerous New Buyers of US Treasuries Filling the Gap

The landscape of US Treasury buyers is undergoing a dramatic change, with significant implications for both the US and the global economy. The two traditionally largest and price-insensitive buyers of US Treasuries – the Federal Reserve and foreign central banks – are either scaling back or selling their holdings.

This shift leads to a precarious situation where new buyers are emerging to fill the gap.

These include banks, pension funds, and retail investors, all of whom are highly price-sensitive.

This sensitivity spells trouble for the stability of the US Treasury Market. Inflation in the US could easily surpass the yield of a 10-year or 30-year bond, even if held to maturity.

This scenario presents a significant risk of loss, either through inflation outpacing yields or the government effectively defaulting by inflating away its debt.

Consequently, new buyers demand higher yields to compensate for these heightened risks. The new buyer base is poised to demand substantial premiums to finance Washington’s spending habits.

With the best buyers withdrawing due to Federal Reserve and government policies, the world’s largest bond market is now facing significant turmoil.

This situation is exacerbated by the ever-increasing supply of US Treasuries.

Two decades ago, the Treasury debt outstanding was only $3.6 trillion, but as of December, it ballooned to $26.4 trillion.

With deficit spending on the rise, more bonds are issued, and traditional buyers like central banks are retreating.

In their place, bargain hunters and speculators emerge, demanding higher yields and showing readiness to offload their bonds without hesitation.

Market speculations, such as the anticipated Federal Reserve rate cuts, further complicate the situation. With inflation resurging, investors are becoming increasingly wary.

For instance, JP Morgan clients significantly reduced their long bets on US Treasuries, dropping from nearly 40% in November to just 20%. This shift indicates growing speculation in a market traditionally characterized by stability.

Looking ahead, the US Treasury Market is transforming into a highly speculative (volatile) environment.

As a result, we can expect two things: bond yields, and by extension, real economy interest rates, to decline more slowly than anticipated, unless a recession occurs.

Additionally, the era of zero interest rates is effectively over.

With the best buyers withdrawing due to Federal Reserve and government policies, the world’s largest bond market is now facing significant turmoil.

Supporting article: https://www.reuters.com/markets/us/foreign-central-banks-think-twice-us-treasuries-mcgeever-2024-01-23/

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© GCR Real-Time News

CBI Meeting Alert, Major Developments in Iraq's Currency Exchange Rate!

An American spokesman reveals the details of ending the international coalition’s mission in Iraq, 26 JAN

  An American spokesman reveals the details of ending the international coalition’s mission in Iraq

A US State Department spokesman confirmed that Washington and Baghdad are "close" to agreeing to start the work of the Supreme Military Committee in preparation for transforming the mission of the US-led International Coalition to Defeat ISIS into bilateral relations. 

The spokesman told Al-Hurra website: “As we announced in August 2023, we are looking forward to moving forward with (the formation of) the Higher Military Commission (or HMC for short), because it reflects the United States’ deep commitment to regional stability and Iraqi sovereignty.” 

The spokesman added, "The United States and Iraq are close to agreeing on the start of the Supreme Military Committee dialogue, which was previously announced in August." 

The spokesman stressed that "HMC is a point to discuss the transition of the international coalition to defeat ISIS to steadfast bilateral security relations between Iraq and the United States." 

He stated, "The two parties will discuss how the mission can develop within a time frame according to several factors, including the threat from ISIS, the operational environment, and the capabilities of the Iraqi forces." 

The spokesman concluded his statement to Al-Hurra by saying: "We have talked about this matter for months, and the timing has nothing to do with the recent attacks. The United States will reserve its full right to defend itself during the talks."  

Al-Hurra website says that the spokesman’s confirmation came in response to a request for comment regarding reports published by Reuters and CNN that talked about the launch of negotiations between Washington and Baghdad regarding the American presence in Iraq. 

Yesterday, Wednesday, the Iraqi Foreign Ministry received a letter it described as “important” from the US government, conveyed by Ambassador Elena Romanski, indicating that the Prime Minister “will study this message,” according to what the Iraqi Foreign Minister announced.

Subsequently, Al-Sudani chaired a meeting of the Ministerial Council for National Security, in the presence of the Minister of Foreign Affairs, during which developments in the security situation in Iraq were discussed.

Four sources told Reuters yesterday, Wednesday, that the United States and Iraq are about to begin talks on ending the mission of the US-led military coalition in Iraq and how to replace it with bilateral relations, a step in a process that was halted due to the war in the Gaza Strip.

Iraq, one of the few countries that is an ally of both Tehran and Washington, has witnessed an escalation in mutual attacks between armed factions and American forces since the outbreak of the war in Gaza, as the factions seek to put pressure on the United States because of its support for Israel.

American forces in Syria and Iraq were subjected to about 150 attacks launched by factions allied with Iran, and the United States launched a series of attacks in response to what it was exposed to, the last of which was on Tuesday.

The escalating violence prompted the Iraqi Prime Minister, Muhammad Shia al-Sudani, to call for the speedy exit of the Washington-led coalition forces through negotiations, a process that was about to begin last year, but the war in Gaza led to its faltering, according to what was reported by Reuters.

Washington did not want to negotiate a possible withdrawal while it was under attacks, as it feared that any change in the mission would appear to occur under pressure, which would embolden regional rivals, including Iran, according to Reuters.

Two sources told Reuters that calculations had changed amid the realization that the attacks would likely not stop and that the current situation was leading to a steady escalation.

An American official told the same agency that the committee will allow for a joint assessment of the Iraqi security forces' ability to fight ISIS "and determine the nature of the bilateral security relationship."

The attacks are carried out by Iraqi armed factions with close ties to Iran, most of whom are not represented in parliament or the government, but have influence over the decision-making process.

Iraqi and American officials hope that the formal start of the talks will contribute to easing political pressure on the Sudanese government and perhaps reduce attacks on American forces, according to Reuters. link