July will be full of “turmoil” and will be a major transition period moving through the end of the year. Will this transition also include the RV? Two main issues concerning the monetary policy:
The first issue is about the cash outside of the banking system. Economist Munar Al-Obaidi announced that pointed out that the percentage of cash outside the banking system reached 91%. If you recall they already told us they have plan to retrieve this money. Do you know how they can get it from the citizens hands? Remember also as investors in the dinar that part of the 91% also includes our dinars. They told us this money is desperately needed in the banks to loan out for housing and businesses. But how will they get ours, as investors? So, the answer is the same in both cases as the CBI will have to revalue the dinar enough to a significant level to get us foreign investors to run to the bank and turn it in. Within Iraq, however it is much different and they only need to overcome the parallel market rate of the dollar and these notes will come flowing back in to the banks. This is also when they can begin the swap out to the newer lower denominations.
The second is the reluctance of the US to allow the currency reform process to move ahead as the 3rd phase of the strategic plan calls for and is supposed to have already begun. But can it really begin without this measue? It is already a week into July and still the US has not given its confirmation as to the support they will give for this next part of the phase. If you notice there is not really much going on in the currency reform process, as least nothing new to indicate that the 3rd phase is started. Why is this? Could it be it is stalled and waiting for a step not yet executed?
The Parliamentary Finance Committee told us last Thursday (July 4, 2024), that the rise in the dollar exchange rate in the parallel markets is “temporary”, expecting it to decrease within the next two days. That the increase was as a result of the EID holiday making dollars available to travelers. Now after the holiday is over the CBI is restricting the dollars to travelers once again, which should shrink the parallel rate.
However, this is the part I do not understand. If you want to use the dinar then use the dinar and don’t favor travelers with dollars going outside Iraq to other middle eastern countries for holidays. Oh… but the CBI has to have this policy still in place for now since the Iraqi dinar is still worth only 1/6 of a penny and not many countries still want it or will freely take it. Why is this?
One solution, as we learned, was for the three letter agencies to open the spigot and pour out the very good news about Iraq’s stability. They are prepping for something really big in the very near future. They are trying to kickstart this 3rd phase of the strategic plan. I wish I was giving you more positive news today and could tell you that we are going to bank today or very soon. You can only create reality by ACTIONS and so there is no action on the part of this revaluation and it is stalled. My contact in the CBI has confirmed that the paperwork and agreements are all completed only except the US. Anyone who tells you Biden is the only president that has approved the RV is simply lying to you.
So, now we watch to see just how low and stable the parallel market can reach down to the official CBI rate. We will keep an eye on the Oil and Gas law. There is a very good article on the HCL in today’s new. But we all should already be aware of the main issues around getting this law passed anyhow. If you don’t know please educate yourself. The HCL law is not all about giving the people a monthly basic income check, as in oil revenue sharing. Instead, the HCL is about how Kurdistan and will follow the laws set in Baghdad governing the oil to market and the delivery of the oil revenues to the general coffers of the Federal Government. It is all about both regions working together for one united Iraq.
