We all know the dinar is pegged to the dollar…
[Wouldn’t Iraq have to/want to be in Article VIII compliance before they unpegged?]
I can only speculate based on the IMF docs that I have read.
But I would assume so…because the raising of the value of the dinar is directly related to investment in the market economy.
And without Article VIII, there is no foreign investment.
Remember, the key to this is the activation of the CBI’s Capital Account which is the pipeline of sorts for money flowing in and out of Iraq.
Once in Article VIII, foreign investors/ investment will begin to participate in rebuilding and privatizing Iraq.
Money will be deposited into bank accounts, flow through the CBI’s Capital Account and if the dinar is not pegged, will begin to move upwards to offset inflationary pressure created by the influx of economic activity (thus the Balassa-Samuelson effect)…
There are no shortcuts.
The CBI needs to get in compliance with the IMF so they can transition out of Article XIV.
They need deposit insurance.
Once that happens, we should see things begin to move fast.
