[perky2] da58 what I am worried about is the deletion of those 3 zeros.
[SWFloridaGuy] perky2 Well, they have to make it look like a straight redenomination. They could never come out and say they are going to revalue their currency. The CBI simply stating a redenomination should be exactly what we expect.
A historic 100,000% revaluation is not the only option the CBI has (float and let the market drive up the value, change in peg to a PEP or broad based commodity that would help average out fluctuations etc.).
If Iraq continues to increase oil production and their GDP, the IQD can increase in value giving them additional purchasing power. If Iraq was planning a straight redenomination with no significant rate increase they would have never spent this much time studying the long term effects, in-country (and out) security issues, counterfeiting, effects of dedollarization and how to institute a market-based economy where they are respected as a borrow in the eyes of global capital markets.
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[SWFloridaGuy] perky2 I have no doubt that we will profit from this, my doubts lie with the timing and the profit margin. All we can do is have some faith and hope for the best.
[SWFloridaGuy] JamVox The toughest facet for me to understand is how the initial nominal appreciation will lead to sustained real appreciation. This has never been accomplished before but we are not alone in seeing that Iraq is a unique situation and shows a lot of promise. Iraq must choose between capital mobility, monetary policy autonomy, and exchange-rate stability and the only way they can pull off a historic straight revaluation of this magnitude is if they receive a lot of help from foreign central banks and powerful organizations like the IMF and World Bank that will facilitate the process in order to profit themselves.