Update 2: Swiss Bank UBS Halts Iran, Syria Business - Forbes.com
Iran has $50 billion in reserves around Europe that it might need to sell quickly.
Hat tip to David Taylor.
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2 comments:
So if the Central Bank of Iran writes a check drawn on a European bank and deposits it into a Hong Kong bank, in Euros on both sides of the transaction, does it really make much difference?
The underlying assumption I've detected in comments on the Iranian reserve movement is that something must be sold on a scale that will matter to the markets. If they're holding stocks or bonds then it might be a concern but I doubt they have much money tied up in anything but the most liquid assets. 50 billion $$$ in the forex market is a spit in the ocean, even if they move it all in one week. And note that it is in the Iranians best self-interest to minimize market disruption.
Last year, US corporations repatriated many billions of dollars due to an expiring tax break. How much disruption did that cause to the financial markets? Did anyone even notice?
My take on the article is that they would moving out of dollars into other currencies and other financial institutions.
Assuming I have it wrong, though, than yes it might not have much impact.
I would disagree with you on the HIA. It was a catalyst behind the big year end dollar rally. The fact the the dollar has generally moved low in 2006, I think, corrborates that idea.
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