TLAR: This comes as no supprize. It is true that Shabibi held the rate down. In the early days after the removal of Saddam, Iraq was cash strapped for hard currency in which to pay the needs of the country. (more tlar comments below)
Baghdad / Orr News
Informed sources said that "the survival of the high price of the dollar compared to the price of the Iraqi dinar is intentional it has joined parties from inside and outside Iraq,"
Pointing out that "the reason for this policy was an auction sale currency." The sources agreed in separate comments for "Future of Iraq" that "auction policy panacea until 2008," indicating that "then turned that policy to PAL and on the national economy, especially after the global crisis hit the U.S. economy and the EU."
She stated that "drain purchasing power of the Iraqi dinar and keep it in the gutter turned into a goal after 2008 through currency auction," noting that "the issue shifted from maintaining the stability of the dinar exchange rate to increase the size of the daily demand on the U.S. dollar."
Read More Link On Right
She noted that "the continued demand generates a recession of alternative currency that buys the dollar and provide a profit margin of the sold currency." The sources confirmed that the "whole process a smart game and experts involved in the art of stealing Iraq's money," as she put it.
BREEZIN: "whole process a smart game and experts involved in the art of stealing Iraq's money,"
DRSUZN: Is this article saying that they will CONTINUE to keep a low exchange rate on the dinar? Can someone help me with this question? Thank-you.
MIKE: If the auctions were the reason the dinar was kept down then what does today's auction of over $245 million say? It sounds like they're blaming Shabibi for keeping the auctions high.....well.....nothing's changed.
I'm trying to keep a level head when it comes to articles from the GOI regarding the dinars value. The GOI has proven over and over that they have a low dinar policy, despite these contradictory articles stating the opposite.
I would think at the least they would need a CBI Governor in place and familiar with the program before they can RV......or shorten that time frame by having Shabibi come back and finish what he started. We still don't have Ministers for defense and interior.....does anyone really believe that Maliki will install a non-partisan governor who actually has the best interests of Iraq at heart?
MEXIA74: It appears they are talking in a historical perspective. No mention of what the future plans are.
TLAR: This comes as no supprize. It is true that Shabibi held the rate down. In the early days after the removal of Saddam, Iraq was cash strapped for hard currency in which to pay the needs of the country.
The auctions were mainly selling dinar. In Nov 2008 at a meeting the IMF had asked the CBI to hold the rate at 1170 for 12 months to see if he could control the rate.
Shabibi held it all through 2009 with every intention of Rving the currency by the end of 2010. The proof of this is the stockmarket proclaimed they would be international by the end of 2010.
They have to have an international currency in order to be international as traders need to easily swap currencies in and out if investing in foreign markets. Also they annouced to forex that they were going to redominate their currency by the end of 2010.
In March of 2010 the political Shiite hit the fan. The election wa --s just about split down the middle. By the end of 2010 through the Erbil agreement, Maliki was chosen PM. Shabibi did not pull the trigger because of the political problems.
Bickering amongst the blocks have followed up until the present. In 2011 Shabibi was still getting ready to RV but the government kept getting in the way. All through 2011 the rate was still being held at 1170 because of the continuing infighting with the blocks.
Shabibi had stated that he would not RV until the government was on board and complete. Both Erbil and the security ministers were not done. In 2012 Shabibi was still trying to the monetary policy and the currency. Once again the government was still in the way.
Shabibi did move the rate 4 pips for what reason I do not know. Toward the end of 2012 Shabibi had all but given up that the government would allow this to happen so he switched from removing the zeros to the free float Kap told us about.
So yes the dinar held at or around 1170-1166 but not for any other reason than the government. Again this article as so many others is blaming Shabibi. I believe it is a part of a continuing propaganda war against Shabibi. The auctions in April of 2011 went from net sellers of dinar to net buyers as the CBI began an intensive plan to pull the dinars back in.
When the UN put sanctions on Syria and Iran and the CBI issued an edict that it would not honor their currencies, this created a perfect environment to pull in immense amounts of dinar. Mainly because of rumors after the US left in 2012 this also created an environment for the dinar to drop.
Shabibi made the decision to take advantage of these occuranses when he did not defend the program rate choosing to let the street rate provide an opportunity to pull record amounts of dinar back into the CBI. He was successful in bringing back trillions of dinar but it was at the temporary expense of close to an 18% drop in the dinar value.
After selling US and buying trillions of dinar the bank was in the process of returning to the program rate. This is when Maliki took advantage of him to take control the CBI and that leads us to where we are today.
Most of Maliki's guys are starting to realize that raising the currency is the next step to the next phase and will soon convince Maliki that this is a positive for him and not a negative.
If he controls the bank his guys will be able to quietly change the missing six trillion dinar they embezzled and he will, behind the scene be able to feed his fatherland, Iran the hard currency they desperately need.. IMHO
DRSUZN: Thank-you; this novice appreciates the explanations. Tlar, I particularly appreciate your inciteful comments and I always read your posts. It is wonderful to be a part of this website. Thank-you Dr. Nan for telling me about DA.
TERRY: Tlar, I sure wish you knew the future and well as you do the past. t.y. keep the info coming.
KAPERONI: It's funny how this article is simply stating the plan. And of course the CBI's monetary policy which for so long Shabs did a great job as Tlar stated. Be assured the dinar that was sold (out of the country) is part of a leaked plan. It is not unlimited. I am sure the IMF and CBI have a pretty good idea how much is outside Iraq.