Geezer: Something to chew on as we pass the time......I sure hope that Tlar's perspective/intel is correct with regard to the RV/rate vs. Kap's float theory...
Currencies don't revalue when they change Exchange Regimes, they simply move from one to another. So the current rate is 1166 which means when they enter Article VIII and a new regime it will be at 1166.
That being said, it won't stay there long. Every expert that I have ever seen has stated it is under valued which means that it will rise.
And if Iraq lines up the economic activities as we stated, it should be like turning on a kitchen facet because once the CBI opens the Capital Account, investment will flow into Iraq and put people to work, new constructions, businesses, etc.
Which will cause inflations with a fixed currency...so the dinar must rise as a result of transition to a market economy.
In fact, reading the "transition to a market economy" documents...state the central bank must move to the new Exchange Regime prior to opening the Capital Account.
Which is great news for us because it gives us a timeline. Also, it make no sense for the CBI to RV prior to moving to a new regime as they would be forgoing profits (which is what the CBI wants) as the dinar rises.
No international banks or central banks are going to just take "a leap of faith" on some RV of the dinar at say 1 to $1 rate. This is a much more complicated matter than just some simple RV...
As Saleh stated...they want the dinar to be a "hard" currency (which means it must float) and be traded around the world and held in central banks for a very long time.
The only way that happens is if the dinar appreciates gradually so the bankers can profit.
BlueyesinLevis: Tlar has very thoroughly explained what we can expect.... and has detailed how the float was a Shabibi plan to do an end run around Maliki.. and we know how that worked out... and now things have reverted back to the original plan.... and the "facilitator" and the "float from 1166" are highly unlikely. -All we can do is watch and wait... -Patience.
Tlar: I MO Kap has missed something along the way. I hate to keep quoting the 2008 strategic study commissioned by the CBI but it concluded that far back that Iraq with its resources in 2008 could support 1.13 dinars to 1 USD.
The reserves were sitting at around 30 billion at the time (not the 100 billion they are today), and they were producing 1.5 mbpd (not the 4 mbpd they are today).
No gold had been discovered as of yet and the CBI did not own any gold then (certainly not the 120 tons as it does today.
Their was no relationship with BIS with deposits in the billions being made into BIS, and they did not have the other assets reported to be 180 billion which includes the DFI had not been released and earmarked for the CBI due to the fact THEY HAVE BEEN RELEASED FROM CHAPTER VII.
The point I am making is what's changed from 2008 when it was determined back then the currency was worth 88 cents per dinar and the plan was to RV the currency per Shabibi according to the strategic study? I will tell you.
Assets, and more assets, and some additional assets. Added altogether and if it were ever to be published on their stinking website, it is: 100 billion in foriegn currency reserves, 120 tons of gold 82 billion released early last Oct-Nov which I think because Maliki had stated he was going to get the money, Turki deposited in BIS, and the additional 180 billion the US just stated was being released in the US of property, financial instruments, bank accounts and DFI funds.
Somebody please tell me again how is it that a country that is this wealthy cannot RV their currrency? Remember their neighbor next store Kuwait, has less the 40 billion in their reserves and only produces 1.5 mbpd (the same as Iraq back in 2008) and has a currency worth $3.48 USD per dinar?
What is he missing? What am I missing? By the way Kap banned me because we did not see eye to eye on this exact subject and because I could not swallow his float theory. tlar.
Rileysetter: don't agree with the float from 1166 theory either. However, I am not sure comparing Irag's currency with Kuwait's currency is comparing apples to apples. The most glaring difference for me is the shear size of the M1 currency supply of of the two nations. Kuwait has 9.5 billion in Kuwaiti dinar (M1) in circulation while Iraq has an estimated 73 TRILLION iragi dinar (M1) in circulation. That means Iraq has 7000 times more currency in circulation than does kuwait.
Economics should tell us that everything else being equal, Kuwait's currency should be more valuable than Iraq's. And yes I know, not everything else is equal. Iraq has a larger economy, more reserves etc.
Rockstar: Good thing it's value is not tied to the M1 currency than because if it was and it does float from 1166 as Kap thinks then it will go to probably 11660 if it were to float based on M1!
Please do you research before posting this ridiculous theory, but it will give you a brief synopsis, the only thing they have to include is what is "in country" when determining a base value or starting point but of course a countries reserves and economics play a huge factor as well.
As we have seen they have also changed what is allowed to back a countries currency including oil!
Sorry to be so short but it just gets under my skin when something like this gets posted, ask yourself if you truly believe that their value is based off the M1 Value of 73 trillion than I would suggest you sell your dinar to anyone for $800 and get out, jmo!
Theloupe: First, let me say I basically agree with your point and really appreciate all you do here, but you asked a question, so I will address it...
Yes, the assets of the CBI are key, but you also must look at the number of currency units representing those assets. If there were only 1000 dinar in existence (whether Kuwaiti or Iraqi), each dinar would represent 1000th of the assets you mentioned. Making each dinar incredibly valuable.
If there are 100 trillion dinar, then each dinar is not so valuable because the assets are spread thin over so many dinar. This was a big stumbling block for me to get over before buying dinar.
If there are 30 trillion dinar, then how can Iraq handle such a large rate? It was presented to me that other countries (primarily the US Treasury/Fed) would help facilitate the RV by storing up dinar for oil credits. This seemed plausible to me, but without some proof this is a leap of faith.
I felt the Lord was leading me to this, so I could take that leap. The quantity of currency is the issue that must be dealth with if addressing the potential for RV logically. Leaving that out of the discussion makes everything else irrelevant.
Another thing that has developed over the years is Iraq sucking the currency off the streets, so perhaps there is not all that much in circulation?
I'm probably not stating anything you don't already know Tlar, but throwing it out there none the less...
TheLoupe: Looks like Rileysetter beat me to the punch. NOt sure why you're getting upset Rockstar.
Riley was bring up basic economics. If all of us holding dinar outside of Iraq turn in our dinar at once and want $3 for each, we would bankrupt the CBI in no time at all.
There has to be a plan for this or it simply doesn't work. I personally belive very strongly that there is a plan for this (I believe that RV will happen Aug 4th...might as well become a guru since I'm posting anyways :)) So, if we assume there is a plan, than everything is ok. But you can't fault someone for wondering how that will happen.
Tlar: rilleysetter, The currency in circulation is at issue here not all the currency ever let out of the CBI.
Any currency you or I hold or any investor holds is not considered currency circulating.
Any currency held in any currency reserve in any Central Bank world wide is not considered circulating. Currency not released from the Central Bank of Iraq is not considered currency circulating.
Saleh said at the beginning of 2012 there was estimated to be 4 trillion circulating at a time when the CBI had let out 30 trillion ish.
The CBI does not publish this number of circulating currency because there is no requirement to do so and it never has.
At the beginning of 2014 the CBI reported it had 35 trillion total dinars ever let out and by the end of of June of this year because of the auctions, we assume there was less circulating than at the beginning of the year 2012.
About October of last year the CBI reprinted bills to change out the circulating dinar.
They printerd only 5 trillion but they would have printed more than they need as do all Central Banks do when they print just to make sure they don't runout.
Any excess they printed is not considered circulating until it is so there is no penalty to print more than you need.
They have been on a mission to replace the existing worn out circulating currency 1 for 1, meaning they are not increasing circulating currency one dinar. They are retiring one as they release one as one comes in. Much like it is done here in the US.
When they printed the 5 trillion in the same article they stated it was to replace the 2.7 billions of USD value that was circulating.
2.7 billion USD at 1166 is approximately 3 trillion circulating showing a reduction from what Saleh had stated in the 1st quarter of 2012. They also have required that all banks in Iraq wishing to sell USD, deposite all thyeir dinar with the CBI.
This is then turned into an electronic number in USD with which these banks can make withdrawals from in USD to sell to the public. We have no way of knowing how much this took off the streets and has continued to take off the streets since its inception but that has to be a large number.
But since they printed the 5 trillion dinars the auctions have continued and more dinars have been brought in. No body knows how many dinars are still circulating as of this date but I would hazard a guess at less 2 trillion left in circulation especially with that great move by the CBI sucking in all the dinars from the independent banks in one move..
If you get a chance and have the time, look up and read the about the IMF and what is required in the way of reserves and what it is supposed to cover.
Having reserves and assets such as gold or other assets that are considered "liquid" and how they are considered in the cover of a countries currency It is not an easy look up and also deals in things like debt etc. but a there are many many articles on this and it is confusing.
Overall there is a lot to be learned from this kind of study and it is worth the read.
The thing that comes through as you read these opinions and articles is that each country is judged on many different factors but it is that Circulating Currency is what we need to be looking at on a country such as Iraq, and not how much has been let out of the CBI. Hope this helps in your quest. tlar
Rileysetter: Thanks for that explanation. Very much appreciated.
BeastMaster: Guru theloupe - that has a nice ring to it.:). Curious - why do you believe we see an RV Aug 4th?.
The Loupe:: BeastMaster, I probably stated that a bit too firmly. If I solidly believed that, I would spend the next week quite differently than I plan to spend it.
I had a dream a couple weeks ago in which a guy told me it would happen Aug 4th. That's all I remember of the dream.
If this had happened at another time I might be completely convinced this was from the Lord because He has spoken to me in dreams multiple times.
However, my wife is very pregnant and tosses and turns alot which is making me wake during many bizarre dreams. So I have no certainty whether this is from the Lord or of my own soul. But hopefully it was indeed from the Lord. Wouldn't that be awesome!
Tlar: I have stated that I thought this would be over by the end of July and have continued to think that up until very recently. The decisive factor IMO is the government being put together and it becomes really obvious that Maliki is not a part of and the coalition won.
It continues to amaze me that the SOL has not broke with Maliki choosing to destroy their own party.
They have eaten their own body fat and have lost any potential for good will. That was the unknown for me and many others.
Most thought by now the SOL would have thrown him out, but here we sit broken hearted, came to - well you know where I am going with this.
The SOL has caused as many delays as it could but you have to remember the forming of this government is now in site and it only started on July 1st.
That is a record for Iraq as everyone has to realize by now that this task of navigating through and around the SOL did not come easy. It took alot of serious collaboration from a lot of different folks both Iraqi's and others..
Anyway if you will allow me I would like to change my prediction to within days of the parliament nominating a prime minister which means it could take another week.
I don't think his submitting the COM applicants for a vote is a factor. If he is an acceptable candidate then his COM will be to. So once we see a nominee announced in parliament, my guess is that starts the clock. Ok Parksutton, get you fork while the meats still fresh. tlar
PS BLUE I APOLOGIZE BECAUSE I KEEP USING YOUR COLOR BUT EVERY OTHER COLOR ON MY COMPUTER DOESN'T SHOW WELL.
Issues: Iraq would have reinstated their currency long ago if Kap were correct. Iraq's currency was brought down because of a war and sanctions making it basically worthless.
There are not just changing their currency regime. Matter -a-fact, I don't believe they are changing their currency regime. They have been a managed float for some time.
Their currency was valued at $3.00 + prior to the war. Re-instatement would bring it back to that. Before the war their oil production was 70% less than what it is today. Iraq with their increased oil production, their gold deposits and their reserves could support much more than the $3.71.
Iraq is not ready for a free float scenario. They learned the lesson from Kuwait that came out at $3.00 something and then went all over the place.