Posted on 02/15/2017 4:59:31 PM PST by Lorianne
On November 3, the Egyptian Central Bank removed all exchange-rate restrictions and raised its benchmark rate by three percentage points. This was done to obtain that all-important $12-billion bailout loan the IMF had provisionally agreed to provide in August, though by November 3, the IMF’s executive committee still hadn’t ratified it.
In the unofficial market, the pound had already collapsed against the dollar. With the peg gone, the official exchange rate instantly plunged from 9 pounds to the dollar to over 15 pounds to the dollar, and four days later it was at 18 pounds.
On November 11, the IMF stopped dragging its feet and ratified the $12-billion loan.
At today’s rate of 17 pounds to the dollar, the currency has lost 48% of its value since November 3. This chart, showing the value of each pound in US cents, depicts that plunge in its horrific brutality:
But Egypt imports about $60 billion per year in fuel, raw materials, and finished goods. And for Egyptians who have to pay for them in pounds, there are some bitter consequences.
(Excerpt) Read more at wolfstreet.com ...
Iran just said they won’t be using the dollar after their fiscal year that ends in march ostensibly because of Trump’s travel ban. This is actually a huge deal that few are talking about. This is one of the things I actually critisize Trump for, he apparently is clueless as to the effects of this. It’s complicated to explain, but yes it is serious and very naive of Trump to go this route. He needs better advisors.
I think they were already talking about doing that several years ago and did some deals in oil instead of dollars if I remember correctly
Trump doesn’t seem to understand the dollar standard, you know the thing that allows us to run incredible deficits without nary a penalty. It is a huge advantage. If we get too uppity we can be called to task with disastrous consequences. I assume you are aware that China and Russia are already trying to undermine the status quo.
I think Gaddafi was killed for threatening the same thing. Where did his gold go?
Yeah it's notable that those leaders who trashed the dollar don't survive for long. Rumor has it that Libiyan gold went to France lol.
The Egypt thing is very different from Iran.
They are still doing intl trade in $.
Their currency would have fallen vs all other intl benchmark currencies just as much. This is a plain float/devaluation.
As for Iran, they wouldnt even be thinking of trading in non-$ unless they had that huge $kitty the US gave them, ironically.
As much as I understand the benefits of the "dollar standard", they have to be balanced against the strong likelihood of very significant inflation in Iran if they drop the dollar.
Since they are an enemy of the US, it seems to me that there are positives as well as negatives for the US in this move. Anything which undermines the social order in an enemy state is good for America.
There is a trade off here and possibly Trump's advisors feel the benefits of weakening Iran outweigh the downside of one country dropping the dollar.
Not sure what you’re saying about Egypt but Iran was still selling oil to China and Italy and a few other places using dollars.What are you trying to say, that Iran’s move against the dollar is irrelevent? If it’s irrelevant why did we take down both Iraq and Libya both of whom went against the dollar? Are you aware of the advantages the dollar as global currency gives to us? Trust me the rest of the world certainly is aware of this.
Inflation could happen to them reguardless of them accepting dollars in trade, it has very little to do with that for them.Iran has no Central Bank so their currency manipulation is minimal. They have the oil so that is what determines the value of their currency to some extent, and maybe a greater extent now once they vacate the dollar. I'm sure you're aware that China is pushing in a major way to get rid of the dollar in global trade, and Russia is going along with it. What the f**k do you think these wars are about anyway, spreading democracy?
Im not sure thats why we took out Iraq and Libya.
Iraq had trivial foreign trade at the time, and Libya wasnt all that important. And the real reason both were trying to use other currencies is because respectable buyers were avoiding them, leaving dodgy bottom feeders.
Egypt is easy - its what a hundred countries have done, some many times - they simply devalued their currency. Its meant to improve their balance of payments, make imports dear and exports cheap. Its not about the dollar as a reserve currency.
“Iran just said they won’t be using the dollar after their fiscal year that ends in march”
this is nothing new, really. Many of these kinds of oil-producing states have been trying for a decade to replace the dollar, and none have worked so far. I remember the last failed attempt a few years ago was something they were touting as “a basket of currencies”.
I thought the wars were about keeping the lid on the boiling pot of the post-war order, as it had been since 1945. No more WWII is what it comes down to.
The US greatest asset was not the dollar but its consumer market, the goal of all foreigners since 1945.
The USD as a reserve or trading currency always seemed a questionable argument.
It’s not out of the contention and it has a lot to do with our foreign policy.
It's complicated, but yeah that is one of our primary reasons for going to war. Some whine that the Israel lobby is solely responsibible for us doing this and no doubt that plays a significant part, but the dollar hegemony is a huge deal and people need to be aware of this. It's complicated to explain, but yeah it's a big deal.
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