The IMF made it clear in 2012..move to a more liberal exchange rate regime…That is a float…but this is not some random act…the reasons are clear…the CBI needs a mechanism to counter inflationary pressure…the float is the mechanism.
[If they send a request to be put in Article 8 will that be known publicly?]
The IMF should publish that yes but…I believe the best chance for that would be at the same time as when they have their Article IV Consultation…sorta give the CBI a rubber stamp of approval…usually those are in March, but a few years ago they had one in June…
So I am expecting it soon… I do expect the CBI to accept Article VIII soon though… Enorrste thinks anytime and they won’t wait for the GOI, I not so sure…CBI got to be antsy… risky if falls out of compliance.
If I was a Lop guy it would be different but with a float, its the same result just slower… dont know how fast it rise…[What does “Deleting the 000” mean to you?] it mean two things 1. a LOP 2. raise the value and the zeros go away …with 60 trillion + dinar in circulation we better hope they decide to raise the value gradually via float because the alternative is a LOP.
I am not saying they will, in fact I believe they won’t but there cannot be a RV or RI with that much dinar on the streets and those who say they are reducing it are wrong…you cannot reduce the money supply when the CBI has currency auctions…they can remove the paper, but the money supply has to remain…the auctions are a balance of dinar to dollars. drawing one or the other in creates demand which would throw the spread out of wack. So until the auction end they cannot reduce the money supply substantially.
[Many…say that the CBI has said “NO FLOAT”…] A float solves that issue…here is the problem with that “no float” comment…the CBI has stated on at least 10 times they will float…my view is that the CBI was simply saying they could not float at the time…which makes sense…they were out of compliance and not ready… if the CBI expects (and they do) large investors investment coming to Iraq it will create pressure on the financial system…
A peg must go…there is only one alternative…a float…and the IMF made it clear…move to a more liberal exchange rate regime… it will rise fast then… put the words liberal exchange rate regime in google…those are the IMF words not mine…answer…floating or flexible exchange rate.