Article quote: “…the sale process of the dollar means the withdrawal of the dinar from the local market, which will help the bank to curb money supply and reduce the resort to printing more currency.”
This is consistent with the CBI stated goal of reducing the money supply. As the money supply drops the value of the dinar will rise, over time. The introduction of the 50000 dinar notes does not affect this process…because the introduction is an “even exchange” in which two 25000 notes are replaced with one 50000 note. Thus the introduction itself has no effect on the money supply.
Quote: “He said that the reduction option easy, but it does not help in the reform of the structural problems, and the local currency is good for exporting countries cut to stimulate exports. He added that “Iraq importing country, and to reduce the currency hurt the purchasing power of citizens with limited income.”
Here we see that the CBI is specifically rejecting the suggestion to devalue the currency, even though it may appear on the surface to be an “easy fix” in terms of bringing more money to the GOI.
The fact that the suggestion is rejected is very positive for our investment. It shows that the CBI is not about to go one step backward prior to moving forward.
It also confirms, again, that the CBI longer term strategy is to reduce the total money supply and raise the value of the dinar. Unfortunately…the lack of political will seems to turn this into a snail’s pace operation. We can only wait.
I am heartened that the goal is still in place, though, and I personally believe that we will see movement either by the end of this year or early next year.