Well I guess I'm one of the naysayers Kap and Joeg. I feel sure that your analysis is on target and I agree wholeheartedly with your conclusion. There will be a float I only question the start of the free float. A free float does mean allowing the market to determine the price of the currency.
Where you and I differ is where do they start the float. Do they start at 1166? Do they start at .86 by removing the zeros first? Or do they just belly up to the bar and start at $1.00?
Shabibi has said that his target was $1.00. We know there was also a plan to make the dinar go to 1000 to 1 by dropping 166 pips. At 1000 to one the jump to a dollar is easy on the math even the most uneducated Iraq. He had stated as far back as January 1st 2010 that by the end of the year he would re denominate the currency.
Again in June 2011 , then January 2012, then again in September 2012 and finally in January 2013. These are all dates the he indicated in the news that he wanted to change monetary policy meaning do something with the currency.
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As we know there has only been a 4 pip move since January of 2009 when the IMF ask him to prove he could control the dinar at 1170 as part of a practice run for bring the dinar out. All they way through this process including the study done for the CBI in 2008, the target has been about a dollar.
Recent articles in April and again in May of last year said the target was 1 to 1 and that the smalls would be being released in September of 2012. We also know that the government was vehemently against this and so Shabibi ultimately changed to a float.
The study done in 2008 also suggested that they do a float but that was after they raised the currency value to $1.13 and support it there for two years. This is why I believe that Shabibi was asked to do the dry run in 2009, holding the currency stable for 12 months, and also why after successfully holding the dinar at 1170 for the year, he announced to forex in January 2010 that he would re-denominate the dinar by the end of 2010.
We both agree that there will a float Kap. Recent articles that you and others have brought to this site have once again started to mention dropping the zeros. I am hopeful they are as accurate as the exchange rate regime articles are because neither of these things are in conflict.
I believe it just depends on what you see in the articles as it is with many of the articles we read.
Here is my take. Shabibi ran scared in Sept of last year. Something made him decide to get off the removal of the zeros. He obviously came to the conclusion that this was a battle he could not win having stated over and over he was waiting for the approval of the government.
He lobbied parliament for two years, all through 2011 and 2012 to make the government come around. Parliament did come around but the government did not for reasons we can only speculate.
Finally Shabibi felt he could not wait any longer because he was being accused on the one hand of being the person who was messing the economy up and slowing progress in Iraq. These accusations from the government put him in a no win situation for Shabibi.
Maliki and boys were making him the scapegoat for the economy. If he did not do something with the currency, they would point the finger at him. If he did do something he would have to face Maliki.
He chose to take the low road by just bring the currency out and letting market forces take over.
We know that did not happen either. Maliki issued arrest warrants for him and Saleh and most other important top employees in the bank. He installed what he thought was his "yes" man to take over the bank. What he did not count on is Turki is neither a fool nor is he stupid.
One of the very first things Turki did was reiterate to parliament the bank is independent. I think Turki has been working behind the scene with Shabibi. Thats just my speculation though.
The point is that if you watch Turki, it is like Shabibi is still there. Everything from the auctions to the changes in the banking system are pretty much what Shabibi was doing.
It is because of these things that I believe there will be an RV simultaneously followed by a float. I believe the CBI is back on track.
I also believe Maliki is beaten back enough that the bite is almost gone out of this dog. Most all institutions are acting as though they are no longer afraid of him. In addition the IMF, the WB and now our Treasury Dept have all camped out at the CBI.
I don't believe they are not there just to let the currency float or any long term investigate of Shabibi. I think preparations are being made with Turki/Shabibi to get the currency ready to be brought to market.
Also if they have decided to go just with a float, they will have to make what currency is left in Iraq last at least until the value is strong enough to bring out the smalls. Maybe they can do this but I don't see how when even cab drivers, government employees, etc. won't except the currency because of the condition. They need to do something or they need to completely dollarize Iraq.
For the time being or a least until the price goes high enough to again, "bring out the new currency". I believe the value is not settled as of yet as to how the change will take place.. The story is still unfolding. All of this is IMHO.