Strange days here lately when it comes to the news, it seems to be lite but yet a lot of talk about the low value of the dinar in the market place. Pops our friend and member working in Afghanistan posted an article early this morning called: Will experts succeed in maintaining Iraqi Dinar exchange rate?
Wherein the Iraqi citizens are standing in long lines at banks day and night to buy the USD but they almost all end up in hand or knife fights. The police are called in to break up these fights all over the depreciating Iraqi dinar against the raising price of the USD.
This growing demand for the USD has caused Iraqi speculators and currency traders to make a run on the USD by using Iraqi citizens to help purchase the USD for gain. The bank owners have been forced to hold meetings to find solutions and they are holding the CBI responsible for the falling value of the dinar.
Read More Link On Right
I have been doing some research and if you look at this chart here: Exchange rates
you will find that the daily auction up until a few days ago were below $100 million USD per day and between April 15th thru April 30th, a two week span all but one auction was above $100 million and as low as $39 million.
Well folks I'm no economist but I have followed this long enough to be able to say this two week period was the start for the following dinar against the USD.
It was May 1st before it exceeded just over $100 million and only five days at around $130 million USD, well below the normal daily average auction. Up until yesterday where they had a more average auction day at $231 million USD but even these have been very far between since the beginning of the year.
It was also yesterday when a letter went out to all licensed banks that told them that the CBI canceled the ceiling amount on USD that they could buy and why I believe they had a big day.
Click to see letter: To all licensed banks (canceled ceiling amount of hawala)
It is funny that I commented on this high auction yesterday and then I find this announcement to the banks from the CBI at 4 am this morning on the Arabic side of the CBI website. Will this help to bring the market rate back closer to the CBI official exchange rate if they continue to have these higher auction days, well historically it should but the real question is; why in the heck did the auctions get so low in the first place.
We have read where it was due to restrictions put on banks that buy the dollars thru the auctions but yet we also read that they opened the sell of the dollar up to citizens so that would help bring the two together, thus the article from Pops this morning.
Folks, we will never see the real reason for this growing difference because the CBI and the powers that are in control of the economic structure in Iraq will never show their hand that way.
I still believe that the low liquidity articles hold the true and real reasons this artificial floating orbit is losing it's orbit, meaning there is very little good hard currency (dinar) in the market place causing the high demand on the dollar.
So they better make their change to a new Monetary System and fast before they end up with high inflation and the point of no return. If this system falls out of orbit and comes crashing down around them then they will lose all that Dr. Shabibi as accomplished over the last 10 years.
If you have any question that I can try and help answer on tonight's show please email me at: info@StrykerBlog.com
Thanks for being with me on this journey and have a great day, Stryker