rockfl9

Fractional banking only works for collateral backed loans. The exchange of currencies is an over the counter retail transaction. The bank only makes a small service fee to make the transaction. The IQD then becomes a reduction in working capital until disposed of . Potentially a loss. The bank will get rid of the currency ASAP . Your article is a total fabrication.

Yes Chess, you have been lied to for 10 years. The 1:1 rate NEVER WAS POSSIBLE.

Yes it is pegged to the USD. To justify a ONE CENT RV, the reserves would need to be $1T !!!! It would take at least 20 years to reach that amount even if oil got to $200/bbl.!!! Now some gurus say they could just get off of the peg. That is unlikely. Without the peg , even if only kept loosely, Iraq could not have a working budget.

I should point out that the CBI has not made public an annual report since 2015. Now I am sure the IMF had been given reports for those years but they may not been fully audited and published. So the IMF has the numbers , but they probably are confidential so they cannot include them in their published reports. Also the January 2022 report is the last one on the website.

That means that there MUST be an amount of HARD CURRENCY to support the amount of IQD in circulation AT the PEG RATIO (the exchange rate). NOW let us look at where Iraq is ! As of 1/31/2022 according to the CBI website there were 120 Trillion IQD in M1 . That included 91.5 in printed dinar, and 28,5 IQD in checking , savings ,debit card accounts and bank reserves. You have to dig through the CBI spread sheet to get that data but it is there . The CBI also reports the equivalent of approximately $74B USD in gold , US Treasury notes and about $2 B in cash at various banks around the world as the hard currency reserves, BUT taking the current exchange rate of .00068 times the 120T IQD we get the value of $ 81.6B USD. They are $7.6 B USD short in the reserves reserves. If they can't make up that deficit they may have to devalue again. My point is that going back to the 1190 rate is IMPOSSIBLE.

I am afraid you are right again. US has more than 300 "capped" wells , $100 should be incentive to get them online. I guess it takes a little more effort than just opening a valve.

The CBI avoided Bankruptcy when it got a $12B investment from the GOI. If the CBI were to just change the rate back to 1190 It would go back into potential Bankruptcy again. The currency of a Bankrupt central bank is technically WORTHLES. that is what a FLOAT IS ! Al-Kazimi's MOF and CBI governor worked together to save the bank. Mohamid Salih the so-called advisor could explain that to the incoming MPs so that they learn the consequences of playing with the exchange rate for political purposes. Oil revenues will rise in 2022 will allow for some improvement in finances but tweaking the rate should not be .

A major difference between our FED and the CBI is that the FED issues to buy US credit instruments , the dollars ,mostly electronic are used by money centered banks to fund private projects that are intended to enhance our economy. Those banks borrow from the FED at 1-2% and loan it at 4-6% . There is no such market in Iraq . I will admit the current WORLDWIDE ( not just our current administration) inflation problem is complex and has many roots. Some parts of it are here to stay, but not all. We had relatively low inflation for several years and the pressure built. There is not just one solution. First we need to get people back to work even if they don't want to.

SD . The most important function of the CBI is to be sure there is ample dinar in circulation IN IRAQ. The merchants can't sell or make change if there is not enough . When dinar is stored in a shoebox or a mattress it is not available. This forces the CBI to print more and that is an unnecessary expense. It costs about $1K to issue 1 million dinar and delivery could be months. It is very likely that shoebox dinar will not be returned but the CBI must account for it UNTIL it is officially demonetized ( a redenomination)

My point is by Iraqi regulation Iraqis can't take out more than 100K dinar ( pocket change). Non Iraqis can't leave with more than they entered with. There must be a law . They probably can't retain non Iraqis but the money will be confiscated. So the dealers can't get fresh IQD. They can only sell what is already here. Of course DVers think that means we are close! ..

LOOKS like the MOF has solved this ! The MOF just GAVE the CBI $12Bn to ADD to the CBI reserves. That will stabilize the CURRENT rate . It is a little more than needed so it could even drop it a few pips. This is a legitimate move, but just taking the money from one pocket to another doesn't make the root problem go away.

Hi SOCAL. If you CAN't take out MORE than you brought in, WHERE can the dealers get more dinar.? If you try to take out more by hiding it that is SMUGGLING , a CRIME (in most countries). Keep those "yard goats " rolling . we need the stuff.

It is illegal for anyone to transport IQD out of Iraq. It must be smuggled out and that is a form of corruption. Why would anyone take the risk to move a pile of small notes when it would be easier to hide a smaller number of large ones. Then there is the added cost to pack and ship to a dealer. I also suspect that the CBI hasnt been wasting the money to keep up the supply of LDs so few of the preferred uncirculated note are not available in Iraq,.

The last day to change the rate to close the books would be the 29th. Of course IQD is not really an International currency and they dont have to follow BIS rules at this time. I suggest the NEW rate should be 1600-1650. Another 10% devaluation, let us see what they do!

Iraq lives on petrodollars. They cant buy more stuff unless they improve the rate to the dollar. They changed the rate to take pressure off of the CBI..