Guest views are now limited to 12 pages. If you get an "Error" message, just sign in! If you need to create an account, click here.

Jump to content
Enorrste

Dinar Rumor You are not going to believe this!

Recommended Posts

Thank you for your post. As always very provoking.......Just a thought: The word "Re-evaluate" means IMO, that the currant rate is inadequate and that they are re-evaluating it with the intention of raising the rate, hence the RV. Side note: I really appreciate your posts and your patience with rude people that attack you for your opinion. Its people like you that give us a handle on what's happening. Keep up the good work we appreciate it.....

Sorry for the uber-pithy post, but I've got to get to work in a minute. Just a quick point before I go: Enorrste says, "As far as I know this is the first time that Maliki has made a direct statement on the possible revaluation of the dinar."

This article doesn't say anything about a revaluation. It does say "Re-evaluate" as in, re-analyze.

I can see how we can hope that a growth in the value of the IQD could mean an RV. I hope for it too. But the IQD grew in value from 3000:1 USD after the first gulf war to its current value of 1170, it accomplished this growth with no RV. So growth in value of IQD doesn't necessarily mean an RV. Hopefully it does, though.

FP

Share this post


Link to post
Share on other sites
Kent, well done in using my own phrase against me! In the case of this announcement we have two issues. The first is the problem in translating from Arabic to English. Hopefully I will be vindicated by netinfo in my assumption that my "translation" is accurate.

The second issue, more to your point, is the subtle nature of the statement. In my opinion Shabibi was quite direct, in Arabic, and his statement was understood as it was stated. You need to understand that for the local Iraqi the rate is not really material. Take the dollar, for instance. Do you know or even care it if will buy 1.49 Euros, or .95 Euros? Of course not. From within a country the foreign exchange rate is not relevant (until imports become cheaper). So there is really no reason for Shabibi to give a number, which would probably be meaningless to most Iraqis anyway. What IS meaningful, is to state clearly that the "new" exchange rate will be "strong" and will be "supported" by adequate reserves. Here we see the "ego statement", and that hits home for the Iraqis.

Steve

First, understand that I have a lot of respect for the amount of grey matter God gave you. You have an amazing ability to collect and analyze information from different sources, look at all the statements and synthesize information. When I said I really appreciate your posts I really mean it. Hats off to ya. :bow:

That still doesn't mean I think you always get it right. The above statement illustrates the point IMO. Generally, a poor Iraqi couldn't do much speculating over a change in rate... but everyone in the country holding any dollars would rush down to their local currency vendor for a trade to dinar if a public announcement was made that was popularly understood to be an advance announcement of a big RV. Although it has been declining, there is still a lot of foreign currency used in Iraq. IMO a run on the vendors and banks for a speculative exchange due to an advance "tip" of an RV would be very poor politics. Sometimes I think we over-analyze. You probably think that is what I am doing in this post. Thanks again for all your work.

Kent

Share this post


Link to post
Share on other sites

Kent, thanks for taking the time to respond. The point that I was trying to make is that when an exchange rate changes there is little reaction from within a country. For example, in the last couple of years the dollar lost about 40% of its value, as I understand it. Yet there was no rush by Americans to go to the banks and convert their dollars to Euros. Within a country the money is just the money. Nothing changes initially. There would be a change if the RV is 1000 times or more, but the change would be to exchange large notes for small ones. Market activity (buying groceries) would not change. Finally, the move away from dollars is a lot farther along than you might suspect, according to sources that I have in Iraq.

Steve

Share this post


Link to post
Share on other sites
Kent, thanks for taking the time to respond. The point that I was trying to make is that when an exchange rate changes there is little reaction from within a country. For example, in the last couple of years the dollar lost about 40% of its value, as I understand it. Yet there was no rush by Americans to go to the banks and convert their dollars to Euros. Within a country the money is just the money. Nothing changes initially. There would be a change if the RV is 1000 times or more, but the change would be to exchange large notes for small ones. Market activity (buying groceries) would not change. Finally, the move away from dollars is a lot farther along than you might suspect, according to sources that I have in Iraq.

Steve

Yea, but I'm still not agreeing with you on this one. My point (your example) is that buying habits would change if they announced IN ADVANCE that the dollar was going to drop 40% in the month of June and further, if stores accepted foreign currency. Even the regular guy on the street would would exchange currency... and currency is easily exchanged in Iraq as I understand it. They are still weaning off the dollar so there is a lot of it out there. If you announce in advance that there will be a big change and people CAN profit from it they will. In Iraq, the dollar is out there on the street to dump. In the US there is not an alternative currency widely accepted and our loss in valuation was gradual and speculative - not announced for a specific month.

Share this post


Link to post
Share on other sites
Yea, but I'm still not agreeing with you on this one. My point (your example) is that buying habits would change if they announced IN ADVANCE that the dollar was going to drop 40% in the month of June and further, if stores accepted foreign currency. Even the regular guy on the street would would exchange currency... and currency is easily exchanged in Iraq as I understand it. They are still weaning off the dollar so there is a lot of it out there. If you announce in advance that there will be a big change and people CAN profit from it they will. In Iraq, the dollar is out there on the street to dump. In the US there is not an alternative currency widely accepted and our loss in valuation was gradual and speculative - not announced for a specific month.

I have to side with Kent on this one. If i had advanced notice that currency would drop in value I would be exchanging in currency. Look at the situation we are in now, we heard that the dinar would go up in value and we all jumped on board. I also see Enorrste's point that it wouldn't make a difference within an economy and I agree if there was no advanced notice that is. It seems you two are talking about slightly different situations.

Share this post


Link to post
Share on other sites

The article that mentioned the month of June was bogus and was denied by the CBI directly.

With respect to the upcoming RV, my statements are all based on the statements in documents of the intention of the CBI to RV and then redenominate over the next several months. This has been published. Then 3 days ago Maliki obliquely referred to it. Then 2 days ago Shabibi himself talked about it. Therefore the information is now out. Yet we do not see people running to the local currency vendor to exchange their money. Therefore, I believe that the argument you make doesn't stand up given the fact that the entire world already knows the intention of the CBI is to RV this year. Maybe I'm missing your point, but without any evidence of "panic" buying or selling on the streets of Iraq even after the announcement of intent has been given several times, I just don't see it.

Share this post


Link to post
Share on other sites
The article that mentioned the month of June was bogus and was denied by the CBI directly.

With respect to the upcoming RV, my statements are all based on the statements in documents of the intention of the CBI to RV and then redenominate over the next several months. This has been published. Then 3 days ago Maliki obliquely referred to it. Then 2 days ago Shabibi himself talked about it. Therefore the information is now out. Yet we do not see people running to the local currency vendor to exchange their money. Therefore, I believe that the argument you make doesn't stand up given the fact that the entire world already knows the intention of the CBI is to RV this year. Maybe I'm missing your point, but without any evidence of "panic" buying or selling on the streets of Iraq even after the announcement of intent has been given several times, I just don't see it.

I am sorry guys, (and Jmoney thanks for jumping in). Perhaps my example of June confused the point I am trying to make. I wasn't referring to that (withdrawn) article, just picking a month out of the air. I believe, Steve that you are making the point that Shabibi's statement (which mentions reserves adequate to maintain the current rate and the managed float - neither of which are positive to an RV at face value) have to be considered as a clarifying statement to Maliki's statement and that reconciling the 2 gentlemen (with a few small word changes/clarifications), you see an announcement of an RV.

My point is that an RV will never be publicly announced in advance which leads me to go back and read the statements at their face value. An advance announcement of a major change in value causes a major opportunistic behavior change which is destructive. I agree that the behavior change is relative to the amount of foreign currency circulating in Iraq. Prior understanding from posts from some who are in-country make me believe there are a lot of dollars still changing hands in daily life. People still use dollars to buy stuff in the market. If there was an announcement of an RV before it happens that would be disruptive. Anyone who has dollars would dump them to gain from the announced future RV. Conversely, a redenomination is best done with plenty of advance warning because they want to assure the public that there is no change in value in the process.

When I look back over the past month, all these references to "deleting 3 zeros from the currency" don't say "retire the denominations with 3 zeros" and they don't say "delete 3 zeros from the exchange rate". Many in this forum reinterpret the statements that way, even in statements where CBI has given examples of other countries that redenominated. Steve, "even after the announcement of intent has been given several times" is exactly my point. None of them were RV announcements at face value. Let me illustrate: Look at the 2nd and 3rd blog responses to this article in early Feb:

http://translate.google.com/translate?hl=en&u=http://www.darabeen.com/index.asp%3Ffname%3D/2010/02/02-05/2010-2-5-22-54-42.htm%26dismode%3Dx%26ts%3D05/02/2010%252010:58:21%2520%25E3&prev=/language_tools&rurl=translate.google.com&twu=1

Notice that Aballah Khaled and Engineer Zaid's blog response to that "3 zero" announcement doesn't make it seem that they see this as an improvement in value, but they like it anyway? They only see it as an announcement of a redenomination. So did XE. So did Reuters. (referring of course to this whole thing and the Reuters article that prompted it: http://www.xe.com/currency/iqd-iraqi-dinar).

Your point about not seeing behavior change actually reinforces my point that none of the statements were understood to be an RV. I think dinar investors are the only ones that are reading all these announcements as an RV rather than a redenomination and I think it would be imprudent for a government to announce an RV in advance.

I hate to sound bull-headed and still hope for better, but don't believe we are reading these statements correctly and hope I am wrong.

Share this post


Link to post
Share on other sites

Of all the folks that post on this site I really look forward for those from Enoreste and Fi3ry P.

Unfortunately, Enor. has on more than one occassion made a date and rate prediction that failed to materialise. This is the one thing that has often scewered my confidence in his post. Fi3ry on the other hand has always stopped just short of stating a date and rate... this, to me, keeps his credibility in tact. Equally, I know that this is a Rumor site but it is sometimes very difficult for some of us lesser beings to see this after we read the quality of your post, the well thought out analysis and the general professional layout of your respective arguments.

Notwithstanding the above, I really do appreciate the input of these two gentlemen. Be blessed my brothers

Share this post


Link to post
Share on other sites

With all this hype about "it's gonna happen..... RIGHT NOW!", I seem to remember Maliki saying "The Central Bank of Iraq (CBI) is currently entrusted with drawing up a study on the whole issue and would give its decision soon."

Sooo, doesn't this mean that we'll hear something about the results of a study before hearing about an RV?

And, soon doesn't necessarily mean a day or two. It could be a week or two; a month or two.

One thing's for sure: They're starting to talk about it, and based upon the news of the redenomination, it seems like it'll all begin to happen this year.

Trust me, I have been one to get my hopes up. If it RV's at anything close to $3, I'll be a very happy man; but we're talking bureaucracy. I know that M has been pushing things through, but things only move so fast when you're talking about government, economics, policy, etc. And something of this magnitude is not to be handled flippantly.

Share this post


Link to post
Share on other sites
Guest
This topic is now closed to further replies.

  • Recently Browsing   0 members

    No registered users viewing this page.



×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.