Please go read the article titled “THE DOLLAR MARKET IS ON “ONE LEG”.. A NEW MECHANISM AND THE EXCHANGE RATE IS THREATENED!” I quote from the article-
“In light of these moves, news has been raised about a move towards a new adjustment to the exchange rate, which has raised economists’ concerns about the potential impact of this move on the economic process in general.”
“Experts stressed that sudden changes in monetary policy could create additional confusion in the markets and undermine confidence in the financial system.”
What are they saying in this article?
This article is not bad news but rather they are just telling us that there is a process in place to change-out the dinar to the lower denominations and effect the rate as part of this process without causing havoc. A higher, sudden RV, if not done appropriately would cause havoc.
Now let me explain the good news about this article above and yet another one like it titled “FLUCTUATING DINAR: ECONOMIC EXPERTS URGE ACTION AS DOLLAR SOARS IN IRAQ“.
Folks the dollar rate in the parallel market should be soaring. Get it? Let me explain. To explain the news in these two articles you must realize what is happening with the new “currency sales window”. Of course, the rate of the dollar is going to surge to new highs as the demand goes up because of scarcity of the dollar in the black market (parallel market) – supply and demand. Get it? Supply creates scarcity and scarcity drives the price up. Think, think, think! Isn’t this exactly what the CBI is trying to do? The CBI is trying to finally break the parallel market with shortages of the dollar and eventually there will be very little dollars available even to sell in the parallel market. But in the meanwhile, prior to the dollars drying up, the rate will skyrocket. It will be short lived and then the plan is for it to settle down to the “official” CBI rate. At least, like I told everyone, this is the plan. We must just sit tight and pray that the CBI is correct and they can break the parallel market once and for all.
What happens next?
Once the parallel market is matched or close to the “official” CBI rate the next phase of the process that we have been waiting for now for over a year can happen. That phase is an in-country rate change at or just over a dollar. Next the currency switch-out to the newer lower denominations can begin. This was Dr Shabibi’s plan all along since its inception in 2011. He nearly executed it too in 2012-2013. After the currency switch out and period to monitor for inflationary reactions with new rate, the move to reinstate the Iraqi Dinar back on FOREX would be next. In simple terms, this is when we go to the bank and not before. The reason for the “holdup” is that these steps could not yet occur based on the current situation.
So, there is no bad news in these articles today, but you must know what is going on to appreciate exactly the ramifications of this news.
I also want to say everything so far is working according to the CBI plan of getting ready for this next phase. We just have to let it play out. I know it is not on our timetable and even what my CBI contact told us it “might happen” at this time. I can’t control it.
Unfortunately, I will not be talking to my CBI contact on Wednesday due to the Christmas holiday.
I need to address one more important article today titled “THE ROAD AHEAD FOR IRAQ’S UNDERDEVELOPED STOCK MARKET”. In the article it tells us that
Iraq’s stock market (ISX) is considered a vital pillar. Oh… that’s the Pillars of Financial Reform again. Oh…. I get it…. Do you?
Also, in this article it talks about channeling savings into investments and it remains underdeveloped and overshadowed by regional counterparts. Authorities are striving to revitalize the market to attract investors and promote economic diversification, however, challenges such as political instability, limited industrial and agricultural sectors, and bureaucratic hurdles continue to impede it’s progress. In other words there is still work to be done and the capital flow into the ISX is not at satisfactory levels. Can this drag on the implementation of the RV? I will ask my CBI contact over the weekend but I think the RV would only facilitate more investors to go the ISX. So the RV would be a positive event.
You might want to also take a look at the article titled “PARLIAMENTARY COMMITTEE: IRAQ IS HEADING TOWARDS A MAJOR INVESTMENT AND ECONOMIC BOOM” It says and I quote “that Iraq is heading towards a major investment and economic boom during the next stage.” Then also “”The stability achieved at the political, security and governmental levels will lead to important and large investment opportunities during the next phase and this will generate great prosperity at the economic level”
The author adds “The Iraqi government has achieved successes in the investment file and strengthening the economic and financial conditions, and these successes have been positively reflected in the services, reconstruction and development file, and the next stage will show these successes more clearly through investment and economic prosperity at various levels.”
