Articles & Links Below - At End Of Discussion
BLOWINGROCK: Another possible interpretation for discussion...I seem to recall reading another article that the black market rate for exchange of dinars for USD continues to be a problem. Could this article be asking the CBI to work harder to close the gap between the black market rate and the "normal" rate of 1166 maintained by the CBI for years?
If we can dispel this interpretation, then we can join the stampede that tends to happen as we, all filled with "hopium", want to read "RV" into almost everything we read. :
REVBO: BlowingRock: You can't completely discount that interpretation, but I can't see any reason why the IMF would need to be, or would allow itself to be, involved in fixing a 4-5% discrepancy between the street rate and the program rate. That's not their job.
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BLOWINGROCK: ReVbo...Agree, "normal" interpretation is defined by information in the article re IMF as you say, and also by the mention of the bigger monetary problem of their imbalance between the cost of imports due in large part by their very weak, almost worthless currency exceeding the value of their exports.
I just see too many folks jumping at the chance to immediately interpret every article to support their "hopium" re the rate or date, while ignoring the facts contained in the article. I often visit other sites, and these facts for example are never mentioned--just everybody jumping for joy. That's why DA is my home...facts matter!
TLAR: Nice call BlowingRock. Iraq's normal rate, program rate, has been 1170 since 2009. It was moved four pips by Shabibi to 1166 and then frozen there until now.
The street rate as of about 8 months ago was equal to the program rate and this made it easy for Shabibi the increase it by the four pips. Today we know the street rate is much lower.
About 7-8 months ago it started to drift achieving a low of 1350, until today we see it at 1250.. My interpretation of this and Ibelieve all the recent articles support it, what they mean by returning to normal is to return the street value back to match the program rate.
Until this comes back into an equalibrium, they can't do anything with the currency. In other words if they don't control the street rate, if they were to increase the program rate, all they woul accomplish is to widen the gap, creating additional profits for the independant banks and middlemen.
They have taken steps recently to do just that. By controlling where the US dollar is being sold and how much is being sold, should increase demand for the dinar. If you allow only so much USD sold at auction, this creates an artificial scarcity of currency which inturn creates a need for the dinar.
The CBI is steering the ship back to port. IMHO they created this intentionally and are now ready to swing the pendulum back the other way. Also with the new controls recently put into place to control the banks sales, the CBI is attempting to control smuggling to Iran and Syria.
IMHO the void that these currency restrictions will create will be filled sooner or later either by the CBI or by Iran. There will only be a short fuse that the CBI will have before they must do something with the dinar currency or Iran will try begin to fill this void of currency by flooding the markets with bogus bills to fill the need.
It will be almost an impossible task for the CBI to accurately predict how much USD to sell at auction. They will either sell to much or not enough, while constantantly trying to ajust to the proper amount.
I believe they will see the answer as introducing the new currency which means an increase in the value.
ADMINBOB: I do not think they are talking here about street price. 'Normal' is not 1166 as that rate is documented as a program rate. The article also talks of dollars leaving the country and that will not change until the dinar has real value.
The article is talking about raising the dinar to it's rightful exchange rate against the dollar. Steve said it best on the conference call last night. Take a listen.
KAPERONI: I agree Bob. These articles along with others in recent days from Ahmed Faizullah are talking about the raising the value of the dinar against the dollar to support the national currency. A few pips does not accomplish this. You points are also well taken. Enorrste said it best on the CC!
ARTICLES & LINKS
Weighted return of the exchange rate Natural Dinarlodah Versus Dollar
Date: Saturday 03/30/2013 03:51 pm Baghdad - News
Likely Deputy Finance Committee Chairman MP Ahmed Faizullah, the return of Iraqi dinar exchange rate to the price of natural versus the U.S. dollar, the requirement to take the central bank procedures necessary and the use of international expertise to support the national currency.
Said Faizullah that the country suffers from a floundering his policy monetary and economic terms that the money that go out of the country for imports more than the money that comes to the country from oil sales, etc., in addition to there other funds wasted in various ways.
added: that the central bank must take its measures necessary to recover the value of the Iraqi dinar to the price of natural versus the U.S. dollar, and must use international expertise, and benefit from the the recommendations of the International Monetary Fund to support the national currency. LINK
Parliamentary Finance Committee outweigh the return rate of the dinar against the dollar to normal
Likely Vice-Chairman of the Finance Committee Ahmed Faizullah, the return of the Iraqi dinar exchange rate to the normal level versus the dollar, central bank requirement to take the necessary procedures and the use of international expertise to support the national currency.
And Faizullah said "the country is suffering from confusion to its monetary and economic policy as the money that goes to outside the country imports more than the money that comes to him from the sale of oil, etc., in addition to there other funds wasted in various ways," he said. LINK