CBI: CBI study entitled: Central Bank of Iraq and the evolution of monetary policy

[RVPleaseToday]

Why would the world want dinar?

Dinar will only be valuable to us because we paid so little for it. To anyone else, it will just be a dinar.

And I can't spend 'em at McDonalds.

[Tripphood]

This is old news, Kap and his team said 6-8 months ago that the CBI was going to free float the dinar. And each and everyone one of you thought he was off his rocker. In fact, he is correct. So how many of you will now give my friend credit? I bet very few. lol

It may be old news but this is a new article that he uncovered within the last few days.

Buy can you revalue into a free float? Ie: RV to say .50 and then float it

....as I said earlier, come out with a staging rate high enough to encourage action from either Dinar or Dollar holders.

[keepmwlknfny]

Apparently, you know more than the experts that have been planning and preparing for Iraq to do a float? lmbo

Apparently you didnt read what I wrote correctly.....

First line as follows....

"Until they can get the market value to pass the official CBI rate, a free float will not work......."

And just FYI.....your buddy is far from the first to suggest a float....but in its present state, and the present state of Iraqs economy being solely dependent on oil, its not a smart move and will not take place.....

Thanks for stopping by!

[BelievingInTheBest]

But its also based on Iraqs market economy.....if their own people wont pay the CBIs rate, if their own people dont want the dinar, then who else will?? If you cant get the people in your own back yard to show demand, it loses its appeal elsewhere....it means it wont take off....

Its almost like music....you have tons of people trying to make it into the industry....you know what the record companies look at above all else?? How well they do in their own back yard. You can have the next great sound but if you cant get the people in your area to want it, and for your local radio stations to play it, they wont touch you....

Please don’t get too upset at me for getting off topic here. But, keepms comments here might sound good but do not always hold true. Remember, Jesus’ own people did not value what He was holding very highly either. But, much of the rest of the world considered what He had to be priceless. I think Christianity took off quite well.

Edited January 23, 2013 by BelievingInTheBest

[Darin]

By what mechanism do you RV a free floating currency?

The value revalues on a consistent basis. It is no big revalue, its just the value is changing based upon market conditions.

The market value is lower than the current CBI rates.

But its also based on Iraqs market economy.....if their own people wont pay the CBIs rate, if their own people dont want the dinar, then who else will?? If you cant get the people in your own back yard to show demand, it loses its appeal elsewhere....it means it wont take off....

Its almost like music....you have tons of people trying to make it into the industry....you know what the record companies look at above all else?? How well they do in their own back yard. You can have the next great sound but if you cant get the people in your area to want it, and for your local radio stations to play it, they wont touch you....

Why would the Iraqi people buy dinar from the CBI? The cost is higher than the market rate. Sort of a double-edged sword. If the CBI matches the true value it may drop confidence, but, it will also make it easier to some to acquire dinars because the value is on par w/ the market. People will get more dinars for their foreign currency.

[Darin]

Apparently you didnt read what I wrote correctly.....

First line as follows....

"Until they can get the market value to pass the official CBI rate, a free float will not work......."

And just FYI.....your buddy is far from the first to suggest a float....but in its present state, and the present state of Iraqs economy being solely dependent on oil, its not a smart move and will not take place.....

Thanks for stopping by!

Could be a catch-22 situation... Its hard to predict, unless an extensive study has been done.

If the market value is 1320 and the CBI rate is 1166, there is a difference for what the market values the currency and the CBI values the currency.

The people won't buy dinars from the CBI, because they will appear more expensive than what the market values them at.

Lets say you had a bunch of Canadian currency... Like $300 CAD, knowing that the market value is roughly on par w/ the dollar, if you went to a money exchanger to use the central bank rates to exchange and you got $0.80 or so on the dollar, would you desire to make that change? No, because trying to buy dollars back from a money exchanger would net you $240. Why is that? Because if a bank set a value higher against a foreign currency, your going to get less of it in return. Because supposedly that $0.80 can buy the same as $1 Canadian. In reality, the market doesn't agree. If the market can't respect the banks rate, how can confidence be built?

But, in my Canada/USD example: If anything, I would want to take $240 USD and turn it into $300 Canadian and purchase goods or services of $300 of value. Could the disparity of the two values be drawing in dinars from the street to reduce the circulation? Could be why foreign currency is a preferred use.

[keepmwlknfny]

The value revalues on a consistent basis. It is no big revalue, its just the value is changing based upon market conditions.

The market value is lower than the current CBI rates.

Why would the Iraqi people buy dinar from the CBI? The cost is higher than the market rate. Sort of a double-edged sword. If the CBI matches the true value it may drop confidence, but, it will also make it easier to some to acquire dinars because the value is on par w/ the market. People will get more dinars for their foreign currency.

Sorry, i didnt mean literally buying dinar from the CBI.....just what the people value.their own money at....

[Darin]

Sorry, i didnt mean literally buying dinar from the CBI.....just what the people value.their own money at....

I see, but the point is how a free float system would work to benefit the citizens. Right now, if anything, they're likely reducing the circulation of IQD because people are selling them for dollars.

My CAD/USD example would required either country to have dollarization as an issue. Now we see the effects of how dollarization works within the country of Iraq, and how it can be damaging.

[nemesis760]

Apparently, you know more than the experts that have been planning and preparing for Iraq to do a float? lmbo

Is it possible for Iraq to force the official currency to be the Dinar, and enforce its use only? Could this create the confidence required?

[doctor robbins]

wrong, google "flexible exchange rate stystem orbit" youll get your answer Doctor. It doesnt mean a managed float it explains how it is a free float. The only thing the central bank can do is control the pace Not how high or when it ccan stop they can only control the pace by selling liquidity

Help me out here, easy. I googled it and couldn't find anything backing up what you said. All I found was Kap's stuff. Is there any site on economics or currency that say it means a free float?

[dontlop]

iraq can do anything it wants .. whether they are successful or not ,, is what maintains the value of its currency .. they can rv to a dolar ,, and if they cant pay their debts for those dinars ... it loses value because there credit rating is destroyed which makes their interet rates go up .. .. the us is paying 40 cents out of every dollar for our debts .. , how much can iraq sustain ?,, you would have to audit iraq to know that ..

[yota691]

Well here my The in country rate and the out of country cash exchange will not be the same unless we see a float with some specifics attached to it.

[keepmwlknfny]

Well here my :twocents:/> The in country rate and the out of country cash exchange will not be the same unless we see a float with some specifics attached to it.

Why would they have two different rates? And what would you be expecting those rates to be?

[yota691]

Why would they have two different rates? And what would you be expecting those rates to be?

Just my MO, I don't do Rates..even the CBI gets a spread on the dollar!!

[Darin]

Why would they have two different rates? And what would you be expecting those rates to be?

I believe he was referencing the CBI rates and the going rate on the streets.