KTFA Members "Sunday News" 10-18-2020

KTFA:

DELTA:  GREAT ARTICLE FROM THE HOURSE'S MOUTH...............

Samson:  The Central Bank comments on the comments to reduce the price of the dinar against the dollar

18th October, 2020

The Central Bank of Iraq confirms that the statements that have spread recently regarding (lowering the exchange rate of the Iraqi dinar against the dollar) represent the viewpoint of those who stated it and do not represent the official position of the Central Bank, and this was accompanied by a number of rumors released by speculators, which affected the price (temporarily).

This bank declares that the exchange rate is fixed and unchanged, and that its monetary policy is clear and transparent. Note that its foreign currency reserves are "very good" according to all international indicators, in a way that enables it to overcome the current crisis that the country is going through.

This bank hopes that the media will rely exclusively on the sources of the Central Bank in this regard.

 The Central Bank of Iraq
Media Office
October 18, 2020    LINK

Samson:  Kurdistan Region shall suspend official working hours for one day next week

18th October, 2020
According to the official holidays schedule for the Kurdistan Regional Government, official working hours in government departments and institutions will be suspended on the 29th of this October.

Thursday 10/29/2020 coincides with the birth of the Prophet of Islam, Muhammad bin Abdullah.

The governorates of Kurdistan Region decided to ban the celebration of the Prophet’s birthday this year due to the outbreak of the Corona epidemic.

The Prophet’s birthday is the Prophet’s birthday, which was on Rabi` al-Awwal 12 or Rabi` al-Awwal 17, according to the Shiite perspective. As Muslims celebrate it every year in some Islamic countries not as a holiday but as a joy for the birth of their Prophet.

The regions and cities of the Kurdistan Region are witnessing all special celebrations on this occasion, by setting up majlis in which he sang poems praising the Prophet, and in which he received lessons from his biography, mentioned his virtues and offered food and sweets.  LINK

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Samson:  Banks Brace for ‘Big Bang’ Switch on $80 Trillion Worth of Swaps
15th October 2020

It’s being called the “big bang,” and it has derivatives traders on high alert.

In a critical development in the global shift away from old benchmarks that was triggered by Libor’s shortcomings, interest-rate swaps on more than $80 trillion in notional debt will transition this weekend to a new rate for determining their value.

While the switch to the secured overnight financing rate, or SOFR, is expected to boost longer-term liquidity in the new benchmark, it also is fueling concerns about unruly price action because it is expected to trigger the sale of swaps on tens of billions of dollars of debt. “The big bang is one of the most important steps in the Libor transition,” said Marcus Burnett, director of SOFR Academy, an education technology firm whose clients include banks and asset managers. “We expect rates desks from the largest banks in New York to be participating.”

The reset, which will see SOFR replace the effective federal funds rate in calculations that value swaps, is part of a push to make SOFR a standard U.S. reference rate in debt and derivatives markets. SOFR is intended to replace dollar Libor, which still underpins hundreds of trillions of dollars of assets such as mortgages in the U.S. and syndicated loans in Asia. The big bang follows a smaller-scale pivot in Europe this July, a less-complicated switch that occurred without much impact on the market.

Interest rate swaps allow two parties to trade one stream of payments for another, over a set period of time. The most common variety, known as a vanilla swap, involves exchanging payments from a fixed rate for payments from an adjustable rate that is based on Libor or some other reference rate. Another kind, known as a basis swap, involves two adjustable rates.

While SOFR has struggled to gain traction since its introduction in 2018, analysts say the upcoming big bang has already triggered a shift toward more trading in SOFR-linked swaps. This could help pave the way for a curve that reflects expectations for where the rate will be in the future, addressing one of the new benchmark’s key weaknesses. The big bang “will have a very, very good impact on liquidity,” said Jason Granet, chief Libor transition officer at Goldman Sachs Group Inc.

Compensation

Still, in the immediate future there will be turbulence in pricing. Clearing houses are planning to effectively neutralize the changes in swap values caused by the big bang, and traders will see their positions automatically adjusted. LCH Ltd. and CME Group Inc. are preparing to distribute compensation from clients whose position values go up to those who see them decline.

LCH will facilitate payment of hundreds of millions of dollars in cash to cover lost value, and at least tens of billions of dollars in basis swaps to compensate for risk, said David Horner, head of risk at SwapClear, which is part of LCH. However, some firms do not use basis swaps to hedge their discount-rate risk or are otherwise incapable of keeping them on their books, so they are expected to sell them. This Friday LCH will hold auctions in which 18 banks can close out $25 billion in unwanted basis swaps.

Buyers, ideally, would snap them up either as hedges against risk or for their own value. But the approach is largely untested since basis swaps were not distributed in the European version of the big bang.“For about six months our members and clients have been able to look on their screens and see a forecast for the compensating cash payments and compensating swaps they will receive, so they are familiar with what’s about to happen,” said Horner. “It’s important for the market that it runs smoothly.”

CME will hold a similar auction on Monday. Clients have agreed to a maximum loss, said Sunil Cutinho, president of CME Clearing, and “if their positions cannot be auctioned off then they are fully protected and they can use their own private means to dispose of their positions.” However, there are concerns about price swings in the market amid a surge in supply as some banks ditch basis swaps they received as compensation.

The big question is how well the auctions go. Clearing houses are not guaranteeing the minimum prices for the basis swaps, which could fall below the maximum that firms are prepared to tolerate, said Joshua Younger, a strategist at JPMorgan Chase & Co. “Many would then likely unwind them in the open market and the price action could get very disorderly,” he said.

Firms need to understand they are facing more risk from this change first before they eventually get less risk, said Pieter Van Vredenburch, a principal at Market Alpha Advisors and previously a member of the Alternative Reference Rates Committee, which is guiding the U.S. Libor transition, when he worked for HSBC Holdings Plc in 2016.

“The big banks are very prepared for the big bang,” said Van Vredenburch. “But do I think the smaller banks are ready for this? Not even close.” When it comes to the overall switch to SOFR, he said, “there are so many nuances to the transition and the devil is in the details. There is nothing simple in all this.”LINK

Samson:  Consultant: The Reasons For The Rise In The Dollar Are Contrived To Embarrass The New Governor Over The Greed Of Corrupt Money

18th October 2020

The consultant of Islamic banks, d. Bashar Qaddouri said the reasons for the rise in the dollar are "fabricated, not real."

Kaddouri said in a statement to (Al-Mustaqilla) that "the exchange rate is fixed and stable in the Central Bank. What happened is that the black market outside the authority of the Central Bank is the one who caused this crisis in the phantom rise."

He pointed out that "the rise was behind it by corrupt money and some speculators who do not want the exchange rate to stabilize, for reasons such as undermining the confidence of citizens in the central bank, as well as embarrassing the new governor before the government, especially after a wave of objections by some corrupt politicians with banking and commercial interests."  LINK

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Samson:  Headed by Al-Kazemi ... a high-ranking government delegation is on a tour to France, Germany and Britain

18th October, 2020

The Central Bank of Iraq announced, on Sunday, that Governor Mustafa Ghaleb Mechif will participate in the European tour of the Prime Minister, Mustafa Al-Kazemi, to discuss banking relations and financial investment between Iraq and European countries.

The bank said in a statement that Mawazine News received a copy of, that "the governor of the Central Bank of Iraq, Mustafa Ghaleb, will participate, accompanied by a high-level government delegation headed by the Prime Minister, this Sunday, in a visit to France, Germany and the United Kingdom."

The statement added that "the governor will meet during the four-day visit with counterparts to discuss a number of common issues, especially "raising the name of Iraq from the European Union's high-risk list as well as discussing the development of banking relations and financial investment between Iraq and these countries because of the economic weight they constitute in Europe and the World.”LINK

Bravo13:  Looks like the big dogs are headed to Europe for a pow wow to clear there name and shore up some business I presume. Looks like there are still some loose ends to tie up yet, I’m assuming this is next Sunday not today ? If so this won’t be done before the riots start on the 25th which I was hoping would be avoided, we will see. IMO

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Samson:  Al-Kazemi will meet Merkel next Tuesday

10/18/2020 13:51:39

 The Prime Minister, Mustafa Al-Kazemi, will meet with German Chancellor Angela Merkel in the capital, Berlin, on Tuesday.

The German embassy in Baghdad said that Al-Kazemi will meet Merkel in Berlin next Tuesday, noting that “the meeting will deal with bilateral relations, economic cooperation, combating the Corona epidemic, the war against ISIS, and international and regional files of common interest.”

An informed source revealed the date of the start of the European tour of the President Minister Mustafa Kazmi, this week and the start of the French capital Paris to meet with French President Emmanuel shifty at the Elysee Palace at the official invitation. The source told {Euphrates News} that "talks Kazmi and Shifty will focus on the development of bilateral relations between the two countries and increasing joint cooperation in various fields They include the security and military forces, in addition to discussing developments in the region.” 

After Paris, the prime minister will travel to Germany and then Britain. And Foreign Minister Fuad Hussein said last month that "among the topics discussed in the prime minister's visit to France is the submission of an Iraqi request to purchase French weapons, according to the needs of the Iraqi army." On September 2, French President Emmanuel Macron visited the capital, Baghdad, where he met the three presidencies and met with the President of the Kurdistan region, Nechirvan Barzani, in Baghdad. LI