Tidbits From Tlar & Currency Chatter Member Discussion:
The appearance of Mohammed Saleh attributed the high dollar prices to determine the Bank's ceiling of sales
Mike Agreed, Rxxxx, it just doesn't seem possible that little ole Iraq can cover that much of an RV when their GDP is around $100 billion annually. I also see a correction in the rate and then a managed float based on new investments and a growing economy. I just wish we knew what the amount in circulation was, it would really help us figure out what the next step would be.
--" We are all born ignorant, but one must work hard to remain stupid " Benjamin Franklin
HandOverFist Thanks, Rxxx and Mike. Didn't Saleh tell us the dinar in circulation is 4 trillion? Then, someone figured it at 3 trillion and someone else said 1 trillon. Sorry, I can't remember who said what.
How much would the correction be figured at 4 trillion, 3 trillion and 1 trillion in circulation. (Sorry, I'm math challenged and can't figure it out myself.)
I think, if you guys can come up with those figures, we may have an idea of what the correction could be. I still remember Abadi's speeches in Switzerland and Germany, when he made the same "mistake" twice and the calculations came out at 8.8 cents per dinar.
HandOverFist Rxxxx,I went back and looked at an example that you gave. If Iraq has 4 billion dinars in circulation and they come out at 10 cents, that gives them $400 billion in purchasing power. Would that be too much or is it reasonable?
Could they sustain more purchasing power than $400 billion and come out at a higher rate than 10 cents?
HandOverFist Well, that 20 cent number is not too far off from the 27 cents exchange rate that 4 other MidEast countries have. I'm gonna go with the 4 trillion in circulation that Saleh talked about.
Therefore, I'll stick to my prediction of an adjustment to 27 cents, then free float. :D Thanks so much for your help, Revbo.
HandOverFistI found this regarding United States currency in circulation:
"There was approximately $1.34 trillion in circulation as of January 7, 2015....."
Does knowing this change our calculations toward Iraq, considering that we have 10 times the population?
Rileysetter I would think looking at the money supply,, currency reserves and GDP for countries with similar economies (ie: predominately oil exporters like Kuwait and Saudi Arabia), would provde a better picture as to where Iraq may end up. Someone may have this data readily available and can post it here.
However, as someone else posted earlier in the thread, a $3 rv makes little sense even with the 3 trillion Dinar in circulation number. And as many others have pointed out, getting to the real money supply number is very difficult.
HandOverFist Found this on Dinar Recaps: "Delta at KTFA: "New Updated Swift Codes For Iraq"
"WE HAVE A CONFIRMATION THROUGH ONE OF IRAQI BROKERAGE... THAT CBI HAS SUSPENDED ALL OUTGOING WIRES THROUGH IRAQI BANK SINCE LAST WEEK!!!"
You can see the Swift Codes by clicking on the link:
Dog Gone I think we have repeatedly seen that they are referring to "4 trillion.. which will become 1 trillion".. but they are not talking about the VALUE. They are talking about the actual note count.
-Not knowing how many of each denomination leaves us in the dark as far as total for value.
-I agree with Rxxxx.. a dinar will be a dinar. There will only be one rate, NOT two rates, as they exist side by side for the two years.
There will not be a long period of merchants listing two prices.. one price in new dinar and one in old dinar. It simply wont happen like that , IMHO.
-Since it fits here... Tlar has also opined that only physical, paper dinar will reap the one time jump in profit.
He asserts that digital dinar on deposit with a bank or stock exchange , etc will be treated as a contract, and so will not reap the profit.
There have been long threads argueing this. I dont mean to derail this thread or start those old arguments.
I am simply clarifying what I believe to be in front of us.
-4 trillion notes will become 1 trillion notes.. ( removed zeros) making the marketplace easier.
1 Dinar will be equal to 1 dinar.. new or old. No lop. No dual rates in country. No double pricing for merchants.
Basic and straightforward. If you are holding paper dinar.. you will reap a one time windfall profit.
Whether you are in country or out.
-Deal is... dinar is so scarce in country.... only the ones who are wealthy have squirreled away paper dinar from the old days.... it's not like you can go out and get a lot of it from the bank today.
I don't think that Jordanian Dinar Dealers can sell in country... and I dont think the average citizen can afford to travel to Jordan to go buy from a dealer, either.
I dont think there will be a lot of windfall profiting in Iraq.. simply because they have drained the dinar from the economy quite effectivly... but there will be some. I fully expect the Kurdish region and the politcal class are two areas that certainly have squirreled away some Dinar.
-They dont have to worry about a lot of citizens becoming wealthy overnight... not a lot of citizens have been able to hold onto a lot of Paper notes over the last 8 years.
-Just my 2 cents... but once this happens.. and the smoke clears... once the one time windfall / accounting/ change/ lifted rate happens.... ( whatever it works out to be)
a day later.. a citizen holding that precious 25,000 dinar note.. will be able to go to the bank... open an account, deposit 25,000 dinars... get a smart card... and be in a position to start a new life.
And that wil be good for their economy, as well... because they Iraqis are about to tax the *** out of the ctizens... they NEED the citizens to have money and jobs and income to generate the GOI revenue streams. All part of Shabibi's original plan.. IMHO.--
Schiz Central banks and governments don't make their people richer, just not going to happen imho. But I hope they do, would be nice for them to be poor one day and rich the next....like me lol
I think they will have two prices, like they have now but instead of one in dollars and one in dinars they will be old dinar and new dinar values. jmo though but it's what the iraqi people know and are used to :)
We shall see, not that we will care once the event happens ;)
Heck they could even have 3 prices to make it really confusing, dollar, old, new :lol:......who cares?
Aloha Alex But if it floats from 1166 it doesn't matter. (not sure if that's supposed to be funny or not)
Greg No disrespect dog gone, but if 1 or 4 Trillion is the note count, then we are really screwed!!! If there are just 1Trillion notes in circulation and 100% of them are the lowest note possible (50's) which we know is not the case but anyway.. That means they have at the very least 50 Trillion dinar value curculating.. Impossible IMO.
Dog Gone 4Trillion paper notes will become 1 trillion paper notes.. that is what they have said over and over.. I'm not bringing any news here.
That said.... of the total notes... I submit that most are out of country.. and those in country... are damaged and tattered.. collected.. drained.... already in the CBI's possession.
We saw the article that said over 80% of the circulating IQD was on deposit with the banks.
Bottom line is there is absolutely no way to know how much viable, valid, IQD is actually in the Iraqi economy... they have created this liquidity crisis.. and from what I can tell it is scarce in Iraq.
That is why I Disagree with Schiz... they are not going to make all their citizens wealthy by lifting the value.... so few are actually holding IQD it wont be more than a whistle in a windstorm..
and for those lucky few who do hold intact paper IQD.. well that is part of the plan... and they will become entrepreneurs and merchants and pay taxes... which are necessary for the marketplace to thrive and the GOI to collect revenue.
What wont work in the marketplace is dual rates for new and old... if that is the case.. then we get screwed, too.
If the argument is.. that NO CENTRAL BANK would ever allow it's citizens to reap the windfall.. and the CBI will not honor the new rate for the old IQD... then we are all about to get screwed by the UST as well.
Let's call a spade a spade. Schiz is describing an in country lop on existing paper IQD.
A lop is a lop. They wont do an in country lop.. and an out of country windfall profit.
It's gonna be one or the other... JMHO
( and for clarification... Tlar's hypothesis is different... his assertion is that prior deposits will be treated as a contract, and hence fall under a similar situation of the Law of Indebtedness. We saw this type of language in banking documents back when Greek accounts got a haircut... they called deposits by other words.... made it soudn like monies were just a promise of value... or some such verbage. )
Dinarblowyourhorn I do not think it is possible to have 4 trillion notes. Not possible. 4 trillion dinars, yes. 4 trillion notes... Not possible...in my only slightly humble opinion. Hehehe
Rainmaker You're absolutely right... it's simple math.. Theoretically speaking, even if the 4 trillion notes were all 50's... that would amount to over 200 trillion dinar... not possible. Is my math off?
Dog Gone Maybe the articles said 4 billion notes to become 1 billion notes.... my point is the same.. the note count is different than the value total.
It all comes down, anyway.. to the liquidity crisis... and the fact that most notes are outside Iraq... and will go to International Central Banks... the CBI will not be called upon to immediatly redeem every single dinar in existance.
Dog Gone C'mon guys... does no one remember that slew of articles from the CBI saying they'd reduce the note count from 4 to 1 whatever? I have been looking > I can't get the right keyward to search and bring it up.
And it is my bad.... they were not talking 4 trillion... it must have been 4 billion .. sorry .. but the idea is the same... 4 reduced to 1.
HandOverFist I remember those articles, but can't remember if it was trillion or billion.
Rainmaker I remember,... it was billion.
Rainmaker HERE WE GO:
The independent Iraqi News Agency (INA) quoted Abdul Hussein al-Yasiri, a member of the Iraqi parliamentary Finance Committee, as saying that 2014 will witness the deletion of zeros from the Iraqi currency. He noted that the deletion will occur in coordination with the CBI, and that as a result of the project, the number of banknotes in circulation will be reduced from 4 billion to 1 billion.
Dinarblowyourhorn Simple mistake Dog. Just liking the reduction of 4 to 1 billion. Nice. After all this damn dinar thinking, a trillion, a gazillion, a billion....it all bleeds together..
Schiz Ok now we're getting somewhere :D Ths forum is the best for discussing things from different angles to get to where we wanna get to :)
and blue I agree, the people are not gunna get rich from a rate change, just not gunna happen, if they hold they old dinar and travel outside of iraq and cash it in then yes they would make alot of money.
There is no in country lop, need to stop looking at it like that. In iraq a dinar is a dinar, they will exchange from old notes to new. Exactly the same as we did in this country many years ago when new coins and notes came out. Simple straight swap over, no fanfare, no fuss, just business as usual.
People in Iraq don't see an exchange rate. The same as I wouldnt walk into a bank here in the uk and say here's a tenner, i just watched the forex charts go up by 2 pence on the pound, can i have that increase added on to my tenner please. thanks.
They would just look at me and go wtf, a tenner is a tenner, even if the rate dropped by two pounds, that tenner is still a tenner, even if the rate went up by 30 pounds, that tenner is still a tenner. Now if i left the uk with that tenner and changed it in to dollars, boy i would be happy.
That's how the iraqi people will get richer. They will work their asses off in jobs, save and travel and when they check there bank accounts in a foreign country they will be *** loaded compared to what they were at home lol
Schiz Not once have i seen an article saying the iraqi people will get richer, not even one saying iraq will get richer....lots about the people and iraq getting increased purchasing power though
tlar 4 Trillion dinar is not 4 trillion notes. 4 trillion is the beginning number stated around January of 2012, 2.5 yeqars ago. Auctions were heavy selling USD all through 2012 and all of 2013 and 2014.
37 trillion dinar is all dinar everywhere including what you and I hold.
The CBI stated that they were hoping to reduce 4 billion pieces of paper down to 1 billion - this was stated now over 2 years ago while still operating the auctions during that period, again the base number today has to be far less.
Check out Kuwait currency reserves vs. Iraq. Check out Kuwaits oil production and oil reserves vs Iraq. Check out Kuwaits exchange rate vs Iraq.
Shabibi had as part of his plan from early on to use this project to "juice the banks". In otherwords he saw this as a way to not only get Iraqi's to start using the banks again but to assist in capitalizing the banks with new depositors. At 1166 nothing changes.
Only the paper dinars will take advantage of this (my opinion only). It's the only way this can work IMO.
All indicators point to the fact we should know the truth of this investment this month. There appears to be no more stoppers, but remember it is Iraq and there are people who don't want to see Iraq prosper at all both inside and outside of the country starting with Maliki. Some will do anything to stop this. tlar
DreamWeaver I personally don't believe anything is stopping RV right now--especially not Maliki or GOI. IMO CBI no longer needs anything from GOI. If they did need something--additional laws, etc--
CBI would never have actually implemented a mechanism of delete the zeros, which is withdrawing 50 dinar notes in preparation of releasing new smaller denoms: 1/2, 5, 10, 25 & 50.
Think Abadi already had a plan for dealing with Daash, fully believing Iraq could liberate Mosul by end of May. How fast Daash becomes a non-issue to Iraq's security is only thing that may slow RV down.
Never believed O was a factor ... and Maliki hasn't been one for quite a while. Abadi and CBI and Parliament have done what is necessary for RV as far as infrastructure, mechanisms, laws, etc. That's why we don't see them pushing furiously to get anything done lately.
Agree Maliki and his minions will never give up on disrupting Abadi's government, but really believe momentum is on Abadi's side.
Let's pray Mosul is liberated swiftly--as that is only thing that feels like a factor in RV--which I've always believed was going to be a holdup to the RV, even after necessary laws were passed. Seems those necessary laws, etc are handled--so expecting RV in May ... but will take it ANY day. :P
Kimberley Me too DW.....Any day is a good day....but I don't expect it until after all the 50's are in April 30th.... So yes, May works for me...
Mike Agreed, DW, I don't believe Maliki or Obama are holding this up. I would say that Parliament has more to do, at least pass the depositors insurance that the CBI is submitting, it would definitely help with foreign investment.
I don't see ISIL out of Mosul by May though. I would be happy to see Tikrit completely cleared of the terrorists by the end of May, but ISIL has already halted their progress being made because of snipers and IED's.
In 2007/8 it took an American troop surge of 50,000 troops to remove Al-Quaeda from Fallujah and the rest of Anbar province and Iraq just doesn't have that kind of military nor it's numbers.
These guys are a bunch of rag tag militia's and newly trained troops, they don't have the weapons, training or motivation that the US troops have.
I hope I'm wrong, but we've seen an invasion of Anbar 10 years ago and it was messy; steet fighting block to block with civilians in the middle. Instead of progress, I'm seeing more of the same out of Iraq.
When the oil prices dropped I was confident that Iraq would need to change their centric ecnomic model and move to an open market economy with a currency that was freely traded. I mean, come on, if not now when?
Their only real product of export has suddenly lost half of it's value and surely these guys would try to source and create new revenue streams to offset the loss, the economy and the ISX would all suffer without a concerted effort given to joining the world and creating jobs and business opportunities for the citizens.
For years Iraq has kept a tight lid on investment and entrepreneurs in the country. Everything went through the central government, contracts for roads, construction, agriculture, everything.
The leaders wanted to maintain control and did a great job of it, to the detriment of their citizens.
I think there are many in Iraq who are afraid of change, the only thing they've known is a central based economy and I just don't see much action towards moving to an open market economy.
How many times has the IMF and WB advised them to just that? Iraq has ignored them every time and continued down the same self destructive path they've been on for years.
Yes, there have been a flurry of articles where they say they're going to move, but where's the beef? Placating the citizens with platitudes is all I've seen so far.
Again, I thought this year we would see something, anything, that showed a commitment towards an open market economy. Instead, I see Iraq borrowing $5 billion from the WB.
I see them floating $12 billion in bonds to make payments to the oil companies that were due in 2014.
I see them implementing and taxing the citizens, which will further erode the already poor quality of life that most Iraqi's are enduring, and they're doing this without raising the purchasing power of a currency that no one else wants to trade in.
For me, all I've seen are band aids being applied to bullet wounds, they're temporary fixes designed to allow them to limp along until, hopefully, the price of oil returns to it's former glory and things can return to "normal."
Iraq is missing the political willpower to make concrete, effective changes that will provide a better life for it's people.
Parliament is clearly apathetic towards the citizens, their inability to work together is hampering any chance at passing economic and investment laws to at least allow the influx of capital to make infrastructure improvements.
For some reason, the GOI and CBI are unable to work together as well, no one can seem to champion the cause to remove the currency from Article XIV and allow the citizens to enjoy more purchasing power,
it's been over ten years since the invasion and yet the citizens continue to pay the price for the poor leadership of the former regime.
I'm not negative on this investment, at some point, these guys are going to have to do something, right? Here's hoping. I'll be a lot more optimistic when I see real laws being passed and a move by the CBI, until then, it's just more Iraqi rhetoric designed to calm the masses. IMO
--" We are all born ignorant, but one must work hard to remain stupid " Benjamin Franklin