Thread: Iraq/Dinar News. 09/05 to 01/14/07

Originally Posted by Omicron2127

Our huge national debt is the reason that we depend on foreign investment to stay solvent. Iraq's debt isn't nearly what ours is, and they are working on debt pardons from a lot of countries, so that won't be as big a factor for them as it is for us.

Yes, I agree with you, but there is faith on the part of other countries that we will be solvent. So I guess what I am thinking is that if we don't back our currency with gold or any other commodity why do some folks say that the CBI can only reval to a certain level because of the lack of reserve. Granted that most if not all the folks I am referring to are at another forum, which shall remain secret. couIIFgh In theory based on the demand for oil, the CBI could go directly to the previous 1 IQD to $3. This is my thoughts and I am putting them out there so I can be corrected.

Having been in the game for over a year now, I have never read such insightful comments on how governemnts thrive or don't thrive in the worlds economy. This great stuff. As Kudlow would say "the best story never told".

Thanks for all your inputs, from the inputs that raise me from my lows to the inputs that broaden my mind.

Originally Posted by Vipor

Although your thinking here makes total logical sense Socata from a schedule standpoint, how will that month-long wait until Dec 12th be affected by the fact that announcements have already been made by certain dignitaries about their intentions to increase the dinar value? That would give many RICH people plenty of time to stock up with dinar. Thoughts?

didn't they say raise the value ( which they have been doing for the past week or so ) they didn't say r/v

what would be the difference between r/v now or after the dec. 12 deal?

Originally Posted by Vipor

Originally Posted by Socata 850 View Post
I have been mulling this point over in my mind and wondered where it would take us if it were to continue. I starting subtracting five points a day for the number of days that the CBI will hold auctions for the remainder of this year. When I came to the number 1365 the date corresponded with the eve of the IAMB meeting on the 12th of December. 1365 is the designated level that the IMF said it wanted the Dinar to be at, sometime near the end of 2006. If the IAMB turns over total control of the CBI to local control, and the Dinar is at 1365 to the dollar, then the IMF requirement will have been met, excess Dinars will have been pulled from the economy, inflationary pressures will have been mitigated and the CBI will be free to set the value of the Dinar at whatever level they want. We will see what happens in tomorrows auction and then again on Sunday and Monday to see if the trend continues. I'm thinking that the 12th of December and the IAMB meeting is one of the keys to the reval.

Originally Posted by Vipor

Although your thinking here makes total logical sense Socata from a schedule standpoint, how will that month-long wait until Dec 12th be affected by the fact that announcements have already been made by certain dignitaries about their intentions to increase the dinar value? That would give many RICH people plenty of time to stock up with dinar. Thoughts?

I think...that if they didn't make the announcements and still appreciated the currency then there is more weight to Viper's Dec 12th theory. But since they did...I would assume that they are aware of the need to act fast(RE-FREAK'N-VAL!). Which makes watching these auctions one of our biggest indicators as to there possible direction.

Originally Posted by shotgunsusie

no, youre missing my point. some time ago when the yazzaman rate was discussed you posted your figure but someone else came along and said that the older yazzamen rate was $3. something, having NOTHING to do with the previous figure of the dinar.

Susie, I guess I am missing the point. Were you able to find the link to the post? I'm not sure where the yazzman rate of $3.?? came from...is that in dinars or dollars and was there a link backing this up? As far as having nothing to do with the previous rate, it actually does. The 3.22USD/.31 IQD rate was ONLY available to Saddam Hussein and his cronies, a rate that has remained the same since 1982. For the Iraqis outside of Saddam's inner circle, the only way to obtain foreign currency was through the black market. From my understanding of the things I have read, the current peg had been established off of a survey by CBI of the operative black market USD-IQD rates post-invasion. The "black market" set the rate...the 3.22USD/.31 IQD was a faux rate imposed by Saddam for HIS benefit. So I don't understand this statement of having NOTHING to do with the previous rate, when it had EVERYTHING to do with it. So much so that it was always a bone of contention with the CBI.

As of today there is NO "black market" rate to speak of (and this in the context of a tradition of black markets under the Sadaam regime which set a completely fictional exchange rate).The most serious problem for pegs arises when the pegged value departs seriously from supply and demand (and/or economic fundamentals) equilibrium. Pegged rates too high end up penalizing domestic production in favour of imports (which seem cheap), too low is nice for exports but may feed inflation. But the key practical indicator for a truly unreasonable rate is the emergence of a black market with rates seriously different than the official one.

There is not a central bank in the world that doesn’t intervene to some extent to manage its currency value, and so long as a Central Bank has foreign currency reserves, of course, it can maintain any rate it wants by buying or selling where private sectors will not. That being said, obviously maintaining a value far off what the market will support is expensive, and experience over the past 30-40 years suggests that rates divorced from supply and demand reality (i.e. something far over/under what a ‘free float’ or pure market rate would set: size and economic importance of the country counts of course) suggest that even when a cash flush Central Bank can defend a rate, a black market will emerge. A rough rule of thumb, no black market, the exchange rate is, at the very least, not wildly unrealistic. It may not be a good rate, or the best rate, but if there is no black market, one has nice practical evidence that the rate is not from outer space, whatever theoretical models and the like say.

Alot has happened in 3 years, not much positive. However, that merely underlines that despite a tradition of black market dealing, despite instability, CBI has managed to achieve a relative stability. Of course, everyone is driving blind in Iraq and any “market conditions” are… well "messed up" in Iraq. Nevertheless, messed up war market conditions are still market conditions, but regardless, war markets do transmit information, and the ability of a Central Bank to maintain currency value does transmit some real information.

So saying that the black market rate has nothing to do with the value of the dinar just doesn't make ANY sense to me. And for the CBI to say they want to return to the Yazzmen rate says to me that they are trying to stay one step ahead of the marketers to get the rate they want when the gougers raise their ugly head. JMO Hope I'm on the right track of what your wanting to know, that link would help.

Cheers!
DayDream

Originally Posted by mike brown

didn't they say raise the value ( which they have been doing for the past week or so ) they didn't say r/v

what would be the difference between r/v now or after the dec. 12 deal?

I don't think they would even whisper that glorious word util it HAS revaled. Because, if I was in there shoes, I would be aware of all the "eyes" just waiting for such a word to be said. So they use phrases such as that. Example: (if I remember that translated article in July from the MoF) "We wish to raise the value to it's previous level...blah, blah (reval), blah (or something to that effect)

And the differents between now or the Dec 12...

I can do number 2 below faster...

Originally Posted by RetMil

Yes, I agree with you, but there is faith on the part of other countries that we will be solvent. So I guess what I am thinking is that if we don't back our currency with gold or any other commodity why do some folks say that the CBI can only reval to a certain level because of the lack of reserve. Granted that most if not all the folks I am referring to are at another forum, which shall remain secret. couIIFgh In theory based on the demand for oil, the CBI could go directly to the previous 1 IQD to $3. This is my thoughts and I am putting them out there so I can be corrected.

Having been in the game for over a year now, I have never read such insightful comments on how governemnts thrive or don't thrive in the worlds economy. This great stuff. As Kudlow would say "the best story never told".

Thanks for all your inputs, from the inputs that raise me from my lows to the inputs that broaden my mind.

Great Post RetMil,

That has been my feeling as well, these past couple of weeks have seen great posts and much brain power being expended. Much good stuff. And funny.. couIIFgh... lol.

Randy

Name me 1 Nation that is getting anywhere the financial attention that Iraq is getting. My guess is zip. AND, it brings an old saying to mind - there's no such thing as a free lunch...

Now, will someone please explain as to why Afghanistan's exchange rate is still higher than Iraq's?

Originally Posted by d-man

Now wait a minute... Are you saying the Iraqis have missed a proposed date for something. Say it ain't so.

Go back to Old Kent Road. Do not pass go, do not collect £200

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Originally Posted by D-Day

Name me 1 Nation that is getting anywhere the financial attention that Iraq is getting. My guess is zip. AND, it brings an old saying to mind - there's no such thing as a free lunch...

Now, will someone please explain as to why Afghanistan's exchange rate is still higher than Iraq's?

Hell Iraq is not even close to Afghanistan's rate ..........