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SWFloridaGuy (7/9)

SWFloridaGuy

By SWFloridaGuy,
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SWFloridaGuy Newbie

SWFloridaGuy

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7-9-2012 SWFloridaGuy: I believe a RV is coming but not due to numbers referenced in their budget. Iraq does not need to RV to open the budget as some claim. Budget increases are partially due to Increased oil revenues that have allowed Iraq to add around $9 billion to its 2012 budget. Power projects, ration baskets, defense spending and compensation to Kuwait are all major contributors to spending. Iraq has earned $45.3 billion from oil sales and the 2012 oil revenues are expected to exceed last year's which were $82.9 billion. None of this points to a definitive or required, new IQD rate. In fact, they don't have to meet their budget at all and have survived for 9 years with the IQD at a tenth of a cent, using the USD as their primary currency (although that will change and a convertible currency is necessary for Iraq to join the WTO). Certain countries who are WTO members do use the USD but Iraq's goal is for their primary currency to be the IQD and eventually dedollarize. We also believe this is an obligatory stipulation for accession where they are concerned. When the time comes, Iraq will lay out all their economic and trade policies that relate to WTO agreements, submit a memorandum and a panel will consider the application. When the principles and policies are in place, additional negotiations will commence between Iraq and member countries. The terms will be finalized and submitted to the General Council. If 2/3 of the members vote in favor, than Iraq may accede to the WTO. I'm not saying Iraq is about to RV for that reason, I'm simply laying out the process.

Now every year we hear that the RV is in the budget, a rate of 3+ is required and it must be a revaluation. I only see 2 ways Iraq could get to a rate higher than the USD. Multiple revaluations, with incremental adjustments as a managed float in compliance with IMF oversight or a RD (which of course I don't believe will be the case). In my opinion Iraq will RV just less than the USD (as referenced by the SIGR report and countless 1 to 1 articles from the CBI and Finance Committee) or just slightly over, at the most. When I say "referenced" by the formerly mentioned, I am of course only pointing to a rate, as those sources do not mention the mechanisms that will get us to it. (No RV mentioned for obvious reasons). Lets put this in perspective, China was the largest RV in history at 30%. For Iraq to RV on par with the USD would be a 1,000% increase. That presents a ton of problems logistically. Even though much of it will be electronic, it still has to have a large part backed by hard currency and will have to be widely accepted around the world as a form of payment for goods and services. The IQD will have to remain relatively stable, be introduced into and remain highly liquid in the forex market and the country itself will have remains politically and economically stable. The other option would of course be a RD where they remove 3 zeros and change the rate from 1 IQD = US$0.00086 to 1 IQD = US$0.86. From there it could revalue from 86 cents to 1 Dollar, a 16% increase and more comparable to China and other RV's. That is NOT what I believe will happen, nor would it be the historic change we all signed up for. Many will say, "what about Kuwait, they RVd just like we want the IQD to." That's just not true. Kuwait never revalued their currency. The central bank did not change the rate. Saddam outlawed the Kuwaiti dinar and it fell in value. He told people to trade in their Kuwaiti dinar for Iraqi dinar before Oct. 6, 1990. When the U.S. stepped in, the value did again rise. This was not due to the bank changing the rate but rather the black market, similar to what Saddam did with the dinar in the late 80s. The Kuwait Central Bank never adjusted the rate below 3 dollars. They were occupied by Iraq and business was halted. Seven months later when Kuwait was back on their feet, they redenominated with the previous exchange rate. Actually, this was neither a RI or RD, by the true definition. This was a unique circumstance due to the invasion. Their currency was not adjusted due to sanctions like Iraq.

Having said that, I do believe that Iraq will revalue. Will I ever be able to prove this? Of course not. If I was able to provide such luminous evidence of a RV that would eliminate all other possibilities, there would be a serious glitch in the process. I DO NOT believe in this constant barrage of "second to second" hype with ridiculously high rates, but if Shabibi's goal is to establish credibility, eventually be respected as a borrower and prime location for private investment in the eyes of global capital markets, then I would expect a RV at some level. The powerful governments, corporations and central banks that have invested so heavily in Iraq's reconstruction, debt forgiveness, technology sharing and bank revitalization, would have never done this unless they planned on being heavily compensated. We all know the value in the IQD is still there. Iraq's wealth has only increased with the discovery of large amounts of gold and oil & mineral deposits since their currency was devalued due to a war strategy. We will never have a complete understanding of the plan but we do think political stability and inflation are key factors. The IMF and World Bank has continued to instruct the CBI on how to improve economic efficiency, correct abuses, implement policies and enter the next phase of their currency reform project. (Which we also hope to profit from). Although there are still many areas in need of improvement, Iraq has come a long way. When we have announcements of the Strategic Council, HCL and full Erbil implementation, the political environment may be stable enough to ensure the success of the project and the CBI will make their move. These of course are no more than my opinions, which may or may not be correct.

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GasCan Newbie

GasCan

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Yawn

not to hide behind a button but i am the one that gave you a neg. dude you have to find some joy in life. i haven't seen anything positive from you ever. in my opinion you could be bring more to the table or comments like that should be kept to yourself.

Edited by GasCan
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dhardage Newbie

dhardage

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not to hide behind a button but i am the one that gave you a neg. dude you have to find some joy in life. i haven't seen anything positive from you ever. in my opinion you could be bring more to the table or comments like that should be kept to yourself.

coleman's tired!! He needs a NAP!

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SWFloridaGuy Newbie

SWFloridaGuy

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That was actually a decent post....lol.....

I know you have more of these type in ya!

Haha oh my God it's a miracle!! Hey if there's the possiblity of you I getting along on this blog, then anything is possible and maybe there's still hope for this RV after all. Thanks man and lets just hope one way or another (Lop or RV) this crap is over by January. I think we're all ready to put this behind us. Cheers. :)

Edited by SWFloridaGuy
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caz1104 Newbie

caz1104

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Haha oh my God it's a miracle!! Hey if there's the possiblity of you I getting along on this blog, then anything is possible and maybe there's still hope for this RV after all. Thanks man and lets just hope one way or another (Lop or RV) this crap is over by January. I think we're all ready to put this behind us. Cheers. smile.gif

Keep & SWFG at peace!!!!!!!!! as Fred Sanford use to say"lizabeth,this is the big one i'm comin to join ya"emot-LMAO.gif

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DocDinar. Newbie

DocDinar.

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The SIGIR Report didn't say RV to just under a dollar. It said currency reform to remove three zeros. That's a lop.

He didn't say the SIGR report said RV. Read what he said. What he said is: "In my opinion Iraq will RV just less than the USD (as referenced by the SIGR report and countless 1 to 1 articles from the CBI and Finance Committee) or just slightly over, at the most. When I say "referenced" by the formerly mentioned, I am of course only pointing to a rate, as those sources do not mention the mechanisms that will get us to it. (No RV mentioned for obvious reasons)."

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