Thread: New Info....for anything here. Taxes, Chit-Chat, Whatever.

Originally Posted by duck2000

correct we know that a letter if intent was sent hence a r/v!!!!

Didn't the most recent LoI expire unexecuted?

Originally Posted by EJAMM

They cannot revert to $3.22 and I am not sure why anyone would think that. In order for Iraq to maintain a proper economy without collapsing it would need to sustain a positive balance of payments. Even if Iraq reduced its debt to zero they still could not support a $3 exchange rate.

Why would you say that they can't? They can do what they want as long as the IMF, WB, US Fed, US Treasury, Bank of England and many others will defend the value.. They had that value for years, even when oil was below $ 10 a barrel. So, how can you say that with a straight face? $3.22 is the current "Official" CBI value.. So, prove what you say!

The recent LOI was only heresay - so we don't know that it even existed. I tend to believe not. Even if it did it was apparently dated 8/9th April - so it will have expired by now anyway.

Originally Posted by Bubba Dinar

Why would you say that they can't? They can do what they want as long as the IMF, WB, US Fed, US Treasury, Bank of England and many others will defend the value.. They had that value for years, even when oil was below $ 10 a barrel. So, how can you say that with a straight face? $3.22 is the current "Official" CBI value.. So, prove what you say!

From the CBI website: Exchange Rates Click on "History of Exchange Rates"

2007
5-Jun (Market Price) 1,272
6-Jun (Market Price) 1,272
7-Jun (Market Price) 1,260

The market rate is what you will exchange at with currency. When the reported exchange rate was $3+ I doubt the market rate was $3+. In the 1980's when the exchange rate was high the CBI had 35 billion in foreign exchange reserves the CBI currently has over 21 billion, however, Iraq is also heavily indebted and even with outside assistance and foreign direct investment in oil they would not be able to sustain a $3 exchange rate for long...there is too much currency outside the CBI vaults. A 1:1 exchange may be doable but not a $3.

Now, can you prove what you say?

Originally Posted by EJAMM

From the CBI website: Exchange Rates Click on "History of Exchange Rates"

2007
5-Jun (Market Price) 1,272
6-Jun (Market Price) 1,272
7-Jun (Market Price) 1,260

The market rate is what you will exchange at with currency. When the reported exchange rate was $3+ I doubt the market rate was $3+. In the 1980's when the exchange rate was high the CBI had 35 billion in foreign exchange reserves the CBI currently has over 21 billion, however, Iraq is also heavily indebted and even with outside assistance and foreign direct investment in oil they would not be able to sustain a $3 exchange rate for long...there is too much currency outside the CBI vaults. A 1:1 exchange may be doable but not a $3.

Now, can you prove what you say?

Those are de Facto rates (Program Rates) not the "Official Rates" maintained by the CBI. The "Official" Rate or deJure (By Law) Rate is still $3.22... Check the CBI and you will find it!

Originally Posted by EJAMM

Don't look for a reversion to a $3 range...at least not for the next 10 years.

Par values according to the IMF would only allow a 4 1/2 percent change from other member countries that have a par value.

Articles of Agreement: Schedule C - Par Values

Some things to note about Par Values:

1. The Fund shall notify members that par values may be established for the purposes of this Agreement, in accordance with Article IV, Sections 1, 3, 4, and 5 and this Schedule, in terms of the special drawing right, or in terms of such other common denominator as is prescribed by the Fund. The common denominator shall not be gold or a currency.

6. A member shall not propose a change in the par value of its currency except to correct, or prevent the emergence of, a fundamental disequilibrium. A change may be made only on the proposal of the member and only after consultation with the Fund.

FDI wil significantly create a disequilibrium for the economy and raise inflation.

Forgive me, but this is all foreign to me. Are you saying that it will only move 4.5% from 1260, which would bring it to 1203.3 to 1USD, OR are you saying it will move 4.5% from Kuwait rate of 3.45 "Par values according to the IMF would only allow a 4 1/2 percent change from other member countries that have a par value."
Thanks.

Originally Posted by Bubba Dinar

Those are de Facto rates (Program Rates) not the "Official Rates" maintained by the CBI. The "Official" Rate or deJure (By Law) Rate is still $3.22... Check the CBI and you will find it!

I fully understand that they are indeed the program exchange rates. I can link you to the EPCA which stated the program exchange rate would be 1460 and the SBA which stated the program exchange rate would be 1500. I also know that the CBI is attempting to pacify the IMF issue of inflation with small pip adjustment...of which they are failing miserably. I am merely requesting that you prove your point of a "dejure" rate of $3.22. I have heard and seen this song and dance before, albeit entertaining yet far from reality. It would seem that you are relying on other members research to make your point.

Originally Posted by barmurphy

Forgive me, but this is all foreign to me. Are you saying that it will only move 4.5% from 1260, which would bring it to 1203.3 to 1USD, OR are you saying it will move 4.5% from Kuwait rate of 3.45 "Par values according to the IMF would only allow a 4 1/2 percent change from other member countries that have a par value."
Thanks.

I am not suggesting that the CBI could only adjust 4 1/2 percent from its current value nor am I willing to state that the CBI is able to target the KWD rate. I am merely presenting the facts as they appear. My speculation is that they may possibly...possibly...choose to use a median value of the neighboring currencies to request a value. Again my speculation!

Most of the countries surrounding Iraq have an exchange rate regime based on either a peg to USD or a basket of currencies.

Originally Posted by EJAMM

I fully understand that they are indeed the program exchange rates. I can link you to the EPCA which stated the program exchange rate would be 1460 and the SBA which stated the program exchange rate would be 1500. I also know that the CBI is attempting to pacify the IMF issue of inflation with small pip adjustment...of which they are failing miserably. I am merely requesting that you prove your point of a "dejure" rate of $3.22. I have heard and seen this song and dance before, albeit entertaining yet far from reality. It would seem that you are relying on other members research to make your point.

You may want to check this out. On the site of The Bank of Baghdad there is a reprint of their 2004 annual report to the shareholders. Here is an excerpt from that report:



I would to inform all the stockholders of Baghdad Bank that the report of the managing council 2004 was prepared according to the demands of Central Bank of Iraq to balance US dollar price to0.310 ID instead of its real value (1460) ID per 1 US dollar, so, the report and general budget do not necessarily reflect the actual situation of Baghdad Bank and the volume of economical incoming indexes, so, this report was issued in order to meet the demands of the rules and instructions.


page

I think this is where the idea of the 3.22 rate originated from. If .31 NID = 1 USD, then 1 NID = 3.23 USD.

Another comment I have is that the IMF does list oil as one of the commodities that can be used to back a currency. I don't have a link for that, but I have seen that info posted more than once.

In my opinion, there is no way that Iraq will be able to rebuild their infrastructure and/or increase oil production without a substantial investment. I have seen numbers presented in the range of 100 billion or more to get everything going. They just don't have that much in their coffers and I don't see them able to borrow what they need. To encourage foreign investment and to stimulate their economy, they must do something quickly with the exchange rate. Again, that is my opinion.

Originally Posted by Cdn Scrooge

You may want to check this out. On the site of The Bank of Baghdad there is a reprint of their 2004 annual report to the shareholders. Here is an excerpt from that report:



I would to inform all the stockholders of Baghdad Bank that the report of the managing council 2004 was prepared according to the demands of Central Bank of Iraq to balance US dollar price to0.310 ID instead of its real value (1460) ID per 1 US dollar, so, the report and general budget do not necessarily reflect the actual situation of Baghdad Bank and the volume of economical incoming indexes, so, this report was issued in order to meet the demands of the rules and instructions.


page

I think this is where the idea of the 3.22 rate originated from. If .31 NID = 1 USD, then 1 NID = 3.23 USD.

Another comment I have is that the IMF does list oil as one of the commodities that can be used to back a currency. I don't have a link for that, but I have seen that info posted more than once.

In my opinion, there is no way that Iraq will be able to rebuild their infrastructure and/or increase oil production without a substantial investment. I have seen numbers presented in the range of 100 billion or more to get everything going. They just don't have that much in their coffers and I don't see them able to borrow what they need. To encourage foreign investment and to stimulate their economy, they must do something quickly with the exchange rate. Again, that is my opinion.

I agree with the bolded statement above. I have seen the BoB article before back when it was newly "discovered", I certainly hope this forum is not basing its $3.22 theory on that tidbit. The Iraqi economy cannot support a $3.22 economy...they are having a hard time getting major oil comapnies to invest since they have failed to pass the HCRSL. So where would the economic support come from? The underdeveloped agriculture industry? The oil industry is the primary introduction to major foreign investment.