Thread: is this how kuwaiti dinar revaled

Originally Posted by fredgwest1999

ATMCSMD

Where it does make a difference is as a business person looking to set up shop in the region (bringing in dollars to convert for setup) I am not saying that my costs of import would be any different because those would be paid at a dollar rate;

What I was saying that my in-country setup and operating expense(s) at a nickle exchange rate for basic, core services (labor, electric, daily, office operations..etc...) I would be far better off running my office out of Bashra than I would being on the south side of the river...

the bottomline on running a business out of Bashra would in this case save me a fortune on if nothing else than the cost of labor based upon both countries' min wage (which would have a cost factor directly related to the exchange rate...remember, I'm bringing in USD/Euros for this operational setup). So, again a lot more bang for my buck.

Otherwise, why would have a vast majority of American jobs gone overseas if there is a not a vast amount of money to be made or save..in the case of a company and thaat this is due at least in part to the different exchange rates and how they impact upon all of the sectors of each country's economy...ie...cost of operations, standards of living...

So then why go south? See that would be the question asked of new investment/companies coming into the region...

But, my main arguement was that according to the IMF policy this local, operational savings between paying for labor based on nickle rate and having to pay for labor at a $4 rate would constitute an unfair advantage for the Iraqis against their neighbors.

If any that submit that Iraq would be lucky to crack a nickle on RV; then poor little Jordan is lost and you would very well see a crash of the Jordanian Economy because how could Jordan justify $1.41 when Iraq is only worth a nickle..and you can trikle all the way down the Gulf with that arguement.

This is what the IMF tries hard to aviod.

So my thought is that if the IMF said that their currency was worth $1.78 in 2003 in the middle of all the santions, no fly zones and a government involved in an internal/external civil conflict (sometimes shooting war) with Kurdastan/US/England/France/UN, 230 Billion in debt & ect... then, why with no debt, no sanctions and in control of their own oil again (instead of the UN - as of 7 April 2007) would their currency be worth less...a lot less...a nickle???

Fred

After reading Article IV, it is crystal clear, they want, above all else, stability. The shake-out theory is dead in my opinion. I think most everyone believe (actually know) that the IQD will eventually reach $3+. Even if it takes 5+ years, the IMF will NOT approve a low initial rate such as .05. As you stated, it creates a quickly rising and unstable currency, which puts a few of it's neighbors at a huge disadvantage. The initial rate is going to have to be reasonably close to where they expect it to stabilize.

Furthermore, that 12 trillion M2 figure is bogus. There is no way anyone can reduce inflation for any amount, with that kind of money supply figure. No way. The most recent figure are more ridiculous than the previous month's, which didn't include energy. It's fuzzy math.

The CBI is not going to present numbers which clearly indicate a significant revaluation is possible. That would be economic suicide and the CBI has an obligation to protect it's currency....even if it means deceiving the public. In fact, I remember an article from SGS a few months ago, which stated just that.

I think the key word to remember in the conversation is "UNDERVALUED"--as in Iraqi labor is undervalued....the ISX is undervalued...services are undervalued...

Of course there are reasons for this...security, infrastructure, the costs of imports, etc...but as all of this improves we can expect say the ISX (which I hear is in the dumps right now) value to increase and become closer to par with it's counterparts in other places.

I think right now it is possible to buy up assets for a fraction of what comparable assets would cost outside of Iraq--for example stocks that are generated in country. Yes, anything imported should retain its value--the coke analogy is correct...but I think most people are thinking of items made in country when they talk about "buying it up for a song"...after the dinar revalue, after the reconstruction and oil production starts truly humming we should expect those items generated in country to attain a value on par with their counterparts out of country.

Make sense?

On another note, I have been praying, visualizing, creating the reval to happen before I leave to go to work in Japan on the 24th...just found out I may be delayed in leaving... It seems that the universe has many ways to skin the cat!!!

Cheers! OrdinarySeaWoman

Originally Posted by Jola

Hehe...Which of the following is a correct statement?

OIL IS MONEY IN THE BANK.

and

M2 IS NUMBERS ON A PIECE OF PAPER.

Case closed.

Dang Jola, you didn't say we'd be have a pop quiz!

Plus don't forget the most important reason to get the rate correct from the start; if they RV at a nickle the way I understand the IMF is they are more or less stuck there (+-4%) by agreement with the IMF...

Fred

Originally Posted by fredgwest1999

Plus don't forget the most important reason to get the rate correct from the start; if they RV at a nickle the way I understand the IMF is they are more or less stuck there (+-4%) by agreement with the IMF...

Fred

I've been asking about that info.... I need a link to it, any ideas?

As I posted elsewhere earlier, who are Iraq following? The IMF. According to the SDR's on the IMF site, even as little as 4 years ago the IMF gave Iraq and SDR value of over $3. Does anyone truely think an opening of 5 cents is likely with all the debt forgiveness, foreign help, troops who have given their lives?

Their people want a currency that reflects it's true worth and that is not 5 cents, 1000, etc. They also want a currency that will give them buying power and make their country wealthy again. Does 5 cents do that?

I don't see it opening at $3.22, or even $2. But something like a $1 is very possible IMO.

"I've been asking about that info.... I need a link to it, any ideas?"

Actually, I believe it was posted in an earlier post on this thread or in the news section.


Fred

Originally Posted by fredgwest1999

ATMCSMD

Where it does make a difference is as a business person looking to set up shop in the region (bringing in dollars to convert for setup) I am not saying that my costs of import would be any different because those would be paid at a dollar rate;

What I was saying that my in-country setup and operating expense(s) at a nickle exchange rate for basic, core services (labor, electric, daily, office operations..etc...) I would be far better off running my office out of Bashra than I would being on the south side of the river...

the bottomline on running a business out of Bashra would in this case save me a fortune on if nothing else than the cost of labor based upon both countries' min wage (which would have a cost factor directly related to the exchange rate...remember, I'm bringing in USD/Euros for this operational setup). So, again a lot more bang for my buck.

Otherwise, why/would have a vast majority of American jobs gone overseas if there is a not a vast amount of money to be made or save..in the case of a company and that this is due at least in part to the different exchange rates and how they impact upon all of the sectors of each country's economy...ie...cost of operations, standards of living...

So then why go south? See that would be the question asked of new investment/companies coming into the region...

But, my main arguement was that according to the IMF policy this local, operational savings between paying for labor based on nickle rate and having to pay for labor at a $4 rate would constitute an unfair advantage for the Iraqis against their neighbors.

If any that submit that Iraq would be lucky to crack a nickle on RV; then poor little Jordan is lost and you would very well see a crash of the Jordanian Economy because how could Jordan justify $1.41 when Iraq is only worth a nickle..and you can trikle all the way down the Gulf with that arguement.

This is what the IMF tries hard to aviod.

So my thought is that if the IMF said that their currency was worth $1.78 in 2003 in the middle of all the sanctions, no fly zones and a government involved in an internal/external civil conflict (sometimes shooting war) with Kurdastan/US/England/France/UN, 230 Billion in debt & ect... then, why with no debt, no sanctions and in control of their own oil again (instead of the UN - as of 7 April 2007) would their currency be worth less...a lot less...a nickle???

Fred

You know the Jordanian example is the other side of the argument that the M2er's have no answer for and you're absolutlely correct and you said it beautifully. Amazing how the obvious is often overlooked and that's what article IV[ four] deals exclusively with. Nice work.

Originally Posted by wellwishes

After reading Article IV, it is crystal clear, they want, above all else, stability. The shake-out theory is dead in my opinion. I think most everyone believe (actually know) that the IQD will eventually reach $3+. Even if it takes 5+ years, the IMF will NOT approve a low initial rate such as .05. As you stated, it creates a quickly rising and unstable currency, which puts a few of it's neighbors at a huge disadvantage. The initial rate is going to have to be reasonably close to where they expect it to stabilize.

Furthermore, that 12 trillion M2 figure is bogus. There is no way anyone can reduce inflation for any amount, with that kind of money supply figure. No way. The most recent figure are more ridiculous than the previous month's, which didn't include energy. It's fuzzy math.

The CBI is not going to present numbers which clearly indicate a significant revaluation is possible. That would be economic suicide and the CBI has an obligation to protect it's currency....even if it means deceiving the public. In fact, I remember an article from SGS a few months ago, which stated just that.

You're right. The IMF even agrees that deceiving the public an allowable tool of monetary policy. Proof can be found in the lop stories of last year.

Originally Posted by Adster

As I posted elsewhere earlier, who are Iraq following? The IMF. According to the SDR's on the IMF site, even as little as 4 years ago the IMF gave Iraq and SDR value of over $3. Does anyone truely think an opening of 5 cents is likely with all the debt forgiveness, foreign help, troops who have given their lives?

Their people want a currency that reflects it's true worth and that is not 5 cents, 1000, etc. They also want a currency that will give them buying power and make their country wealthy again. Does 5 cents do that?

I don't see it opening at $3.22, or even $2. But something like a $1 is very possible IMO.

I agree 100%. that is the only scenerio that makes sense.