I see that there is so much concern about the latest news about how the CBI is now setting the old dinar rate of 1190 (about 84 cents) to 1450 (about 69 cents). What is the CBI doing? I know we all expected the program rate to get closer 1.00 from the 84 cents prior to the project to delete the zeros. So, what happened and why is the CBI doing this and doing it now? By doing this the CBI is cutting out the spread that is made in the currency auctions and money exchangers. …by having done this it is hurting the banks and their profit margins and the money laundering going to Iran. Next, it is forcing the banks to invest in other profitable ventures and not get so dependent on the currency auction revenues, which are going to end soon.
Next, what was more amazing is at the same time the CBI also announced they are doubling the amount of US dollars for circulation. The CBI is using the principle of supply and demand. If this works, and it should, the value of dinar will rise against the dollar as the US dollar drops. Remember the dinar is on a de facto peg to the US dollar. In short, the CBI is manipulating the US dollar to get the dinar to rise. The citizens will then want to take the US dollars and exchange them back to dinars since the dinar will be worth more. The CBI is using the speculators of the US dollar to their advantage. This switch back to dinar is going to happen suddenly and without notice much like the devaluation just happened. This is when they will issue the lower denominations and the fun begins. It’s all in the timing. Then the fun begins. I feel we will see the rate get better than the 1190 (84 cents) and closer to 1.00. This will happen all of a sudden almost with amazement and shock.