Dinar News Three zeroes on Iraqi currency won't be removed: source

[scottiraq04]

Agreed, I hope it does, but my bet is we will see a new quote within the next 2 weeks about "deleting 3 zeros from the currency". It keeps going back and fourth and back again. Perhaps this time they will STOP!

I have to agree with you on this one...

What I also find strange is the amount of people on this site that have stated the "LOP" articles were ONLY subterfuge. Well, from an Intelligence/Counter Intelligence stand point (even in the relm of economics), reversing this action before a supposed RV makes no since at all. Not to mention the same logic that says the "LOP" articles could be subterfuge can also be applied to the "anti-LOP" articles (but for slightly different reasons). I am not stating all of this to show that a person should lean one way or the other (RV or LOP), on the contrary, I simply want people to understand that this issue is not a clear cut case of "yes" or "no"...there is a lot of gray in there.

As for the "inflation" references/talk that members are asking about in these articles...I again have to agree with you Kent:

"Some of the things they want to do to stimulate the economy also have an inflationary effect (eg: they have indicated they wanted to encourage banks to do more private lending). Likewise, an increase in value of the currency increases money supply and is inflationary - so they are doing the managed float ... The more they talk about inflationary concern the worse it is for us! On the other hand, they have been so inconsistent on their statements I don't think we have a clue what they will do."

I will also add a concept that I noted in a recent post in reference to the "LOP" articles themselfs..."Chronic Inflation"...this is in reference to the "LOP" related articles ONLY!

"Chronic inflation occurs when a country experiences high inflation for a prolonged period of time (several years or decades) due to undue expansion or increase of the money supply. In countries with chronic inflation,

inflation expectations become 'built-in'

, and it becomes extremely difficult to reduce the inflation rate"

http://en.wikipedia.org/wiki/Chronic_inflation

This, in a nut shell, is the reason why the Iraqi Dinar is in circulation in the trillions and not the billions. A simpler way of putting it is this is why the highest Dinar note is 25,000 and not 500...and the reference of Iraq prior to the 1990 sanctions having billions of Dinar and now trillions of Dinars is noted in several "LOP" related articles.

If you have the disire to understand Chronic Inflation a little better then try this:

"Inflation stabilization in chronic inflation countries: The empirical evidence"

http://mpra.ub.uni-muenchen.de/13689/1/MPRA_paper_13689.pdf

You can also try any of the NUMEROUS papers on this site:

"JEL Classification: E31 - Price Level; Inflation; Deflation"

http://mpra.ub.uni-muenchen.de/view/subjects/E31.html

I don't usually do this, but here is my personal opion about this new "anti-LOP" article. I think it is simply saying that the CBI has determined that a Redenomination at this time would not be good. The CBI is not saying that it will never happen...just that it won't happen now. That opinion based on the face value of all the "LOP", and "anti-LOP", articles put together...again, face value only...assuming that there is no subterfuge. As a LOP'er I take this as good news...I would much prefer the CBI to find a way out of chronic inflation without a LOP than the CBI having to LOP the currency to get on par with the USD.

[Kent]

Well if it were to L** we would see it coming because Economic Conditions and Legislation would apply. They would only have to do this if they absolutely have too. No country does this because they want to and apparently, they don't want to. I'm happy with this because the news comes from an authoritative source, Central Bank of Iraq.

Quad, my friend you have said it a number of times. I just don't think you are correct in thinking that a redenomination would require legislation any more than I think an RV would require legislation. Either would be a huge decision about monetary policy and neither requires a "law" any more than our Fed requires a law to change interest rates or our currency. Monetary policy is in the hands of the CBI and indirectly the IMF. They can do whatever they think is best whenever they want on exchange rates, money supply, printing money, interest rates, etc. Separation of the Central Bank from the political arm is very important. That is what keeps governments (or discouraging them) from printing their way out of budget problems. God help us if our Fed is ever controlled by our "spend happy" congress that has already raided Social Security trust funds and every other honey hole they can find to pay for an out-of-control budget.

[drox]

Folks... they will re-denominate the currency down the line out of necessity, but this article tells me they are preparing for an RV first. Clearly the CBI is changing their stance because I believe they wanted to do the RV and Re-denomination simultaneously. I think the IMF pressure, elections debacle, as well as potential lifting of chap 7 soon... have pressed CBI to announce an RV sooner than they wanted. For the currency to re-denominate you would see a massive PR campaign to prepare the Iraqi's "without fanfare and to obtain absolute quiet (peace and stability)" as quoted in past articles. They are clearly stating they are pushing the re-denomination back in my eyes. Notice they say removing the 3 zeroes from the currency... that does not mean they won't remove the 3 zeroes from the exchange rate. I think that is exactly the plan and it will be soon.

[TrishaMarie]

Just happy to hear they will not be removing the three zeros!!!!!

[Kent]

Folks... they will re-denominate the currency down the line out of necessity, but this article tells me they are preparing for an RV first. Clearly the CBI is changing their stance because I believe they wanted to do the RV and Re-denomination simultaneously. I think the IMF pressure, elections debacle, as well as potential lifting of chap 7 soon... have pressed CBI to announce an RV sooner than they wanted. For the currency to re-denominate you would see a massive PR campaign to prepare the Iraqi's "without fanfare and to obtain absolute quiet (peace and stability)" as quoted in past articles. They are clearly stating they are pushing the re-denomination back in my eyes. Notice they say removing the 3 zeroes from the currency... that does not mean they won't remove the 3 zeroes from the exchange rate. I think that is exactly the plan and it will be soon.

I agree with most of what you said drox. This does look like pushing back a redenomination. On the other hand, I am not sure it means an RV either. Did you notice the IMF statement http://dinarvets.com/forums/showthread.php?16509-IMF-Favorable-Medium-Term-Outlook-For-Iraqi-Economy ?

Notice "the IMF supported Iraq's central bank for seeking to keep core inflation at single-digit rates and called on authorities to remove remaining exchange-rate restrictions."

They could be planning to float it a while based on the encouragement of the IMF. I would see that as a positive step. Perhaps we could get a little ride out of that.

[War Eagle]

That is definitively one of ther projections!!!

[Christo1972]

Waiting continues...

[luckylucy]

Ok so no lop for sure. They keep talking about inflation but I thought it was pretty low there? As usual, confused. And who misused what money? Have we heard reports about that? What else could they do control inflation? Managed float? Isn't that what they have already been doing?

Regarding banking problems ... Iraq still cleaning up some old stuff....

From IMF Letter of intent http://www.imf.org/external/np/loi/2010/irq/020810.pdf

22. The banking sector is in urgent need of reform to foster financial intermediation and

enable banks to contribute to the development of a strong private sector. With the help of the

World Bank and other international agencies, we have developed a banking sector reform

strategy. The first important step will be to finalize the restructuring of Rafidain and Rasheed

banks, based on their completed financial and operational audits. In this regard, the foreign

liabilities incurred by Rafidain and Rasheed on behalf of the previous regime and the large

suspense accounts will need be removed from these banks’ balance sheets. We aim to

complete the restructuring of the balance sheets of Rafidain and Rasheed by June 30, 2010.

Once their balance sheets are cleaned up and restructured, based on the decision already

made by the Economic Committee, the capital of Rafidain and Rasheed will be raised to

ID500 billion and ID400 billion, respectively. We are also strengthening their internal audit

capacity, developing legal arrangements within the banks, and working towards providing

missing data identified in the audit reports. The BSA has also completed the financial and

operational audits for the three specialized state-owned banks and has proposed an individual

strategy for each bank that was discussed by the Restructuring Oversight Committee (ROC).

The three banks have set up a restructuring committee which includes BSA members to

implement the recommendations from the proposed strategy.

[drox]

I agree with most of what you said drox. This does look like pushing back a redenomination. On the other hand, I am not sure it means an RV either. Did you notice the IMF statement http://dinarvets.com/forums/showthread.php?16509-IMF-Favorable-Medium-Term-Outlook-For-Iraqi-Economy ?

Notice "the IMF supported Iraq's central bank for seeking to keep core inflation at single-digit rates and called on authorities to remove remaining exchange-rate restrictions."

They could be planning to float it a while based on the encouragement of the IMF. I would see that as a positive step. Perhaps we could get a little ride out of that.

Kent... that link to the article you posted is a regurgitation of some old articles just cut and pasted. We have known all of those things for sometime. I believe it is all part of the smoke and mirrors articles they put out. I still believe they are going to RV to 1000 IQD to $1US dollar. Then after a short period of time will knock those 3 zeroes off and then will either trade on the international market or will marry into the Gulf Currency. You have to remember that the GCC Gulf Community Council is proceeding forward with plans for a Gulf Currency. How the heck is Iraq supposed to be a part of that at 1170IQD when everyone else in the group is $2-$3 and higher? They will have no choice IMO.

[scottiraq04]

Kent... that link to the article you posted is a regurgitation of some old articles just cut and pasted. We have known all of those things for sometime. I believe it is all part of the smoke and mirrors articles they put out. I still believe they are going to RV to 1000 IQD to $1US dollar. Then after a short period of time will knock those 3 zeroes off and then will either trade on the international market or will marry into the Gulf Currency. You have to remember that the GCC Gulf Community Council is proceeding forward with plans for a Gulf Currency. How the heck is Iraq supposed to be a part of that at 1170IQD when everyone else in the group is $2-$3 and higher? They will have no choice IMO.

drox, help me to understand your point, of RV then LOP later, a little better...using your logic stated above, if they are capable of RVing and then LOPing later down the road then why wouldn't they just LOP and RV at the same time? this would bring them to the GCC level all in one shot. This would also not cost them near as much as RVing and then LOPing later on...and this is only assuming they are financially capable of doing any of this.

[Kent]

Kent... that link to the article you posted is a regurgitation of some old articles just cut and pasted. We have known all of those things for sometime. I believe it is all part of the smoke and mirrors articles they put out. I still believe they are going to RV to 1000 IQD to $1US dollar. Then after a short period of time will knock those 3 zeroes off and then will either trade on the international market or will marry into the Gulf Currency. You have to remember that the GCC Gulf Community Council is proceeding forward with plans for a Gulf Currency. How the heck is Iraq supposed to be a part of that at 1170IQD when everyone else in the group is $2-$3 and higher? They will have no choice IMO.

I, like you could still see the 15% or even a 115% RV to get them to some clean numbers and then do a redenomination (giving you 1:1 or 2:1). Regarding GCC, wouldn't Saudi Arabia be joining with a .27 cent rial - or did they bail on that deal? With the current troubles in the EU (look at Greece vs. Germany now) and the way it ties the monitary policy hands of the members, I sometimes wonder if it would really be a great idea for Iraq to even join the GCC. Having the EU gave Greece and Spain really low bond rates they didn't deserve, low interest loans and fueled huge leverage that has put them both on the brink of disaster. Now Germany is literally talking about throwing Greece out. It also seems that those deals are really hard to put together. As time has gone by and I have done a little more reading, I am not quite as jazzed about GCC in Iraq's near future. - just an opinion but taking it out of the picture changes the priority for what the currency value needs to be. As Saudi Arabia proves, you don't have to have a currency worth more than the US in order to be credible or be an oil exporter or do international trade. Many in this forum make emotional statements about what can't be done with toiletpaper money. I think we sometimes overstate the case.

[inmemoryofrob]

What's with all the flying Pigs?

[Kent]

What's with all the flying Pigs?

A lighthearted spoof. Self deprecating humor in a way. I guess you've never heard the colloquialism "when pigs fly". It is normally a reference to not believing something can happen. Since I am one of the few that thinks a large RV is unlikely it seemed to fit. On the other hand, I still have hope - thus the "maybe pigs CAN fly".

Who is the kid? Great pic. I hope he isn't the rob you are in memory of. That would be a tragic loss.

[quadraph0nic]

Kent,

I really do appreciate your response.

I'm basing my opinion off of turkey which passed a law perhaps their govt was printing money? maybe I'm mistaken?

http://www.allaboutturkey.com/ytllaw.htm

I'm also basing this on netinfo's interpretation of an article. Remember?

http://dinarvets.com/forums/showthread.php?14051-deputy-central-bank-governor-denies-lifting-of-the-zeroes-of-the-Iraqi-currency&highlight=netinfo

I'm quoting netinfo's translation: "The Central Bank of Iraq has not issued up to now any official decision for the deletion of three zeros from the Iraqi currency that is traded in the markets, and has not legislated even a law for the deletion of zeros."

Also there has to be some way for the authority making this decision to LOP to communicate to the masses that a LOP would come. Making it a law keeps order. What they definitely can't do is just LOP overnight without any notice and not expect any repruccussions from the masses. One way or another, because they have to notify the masses, I believe we would spot that thing coming. At this time this is not an issue, the inflation is low...

What I'm happy about is the intent expressed by cbi in the article in the begining of this thread. If its a lie then so be it but if they knew an RV was futile why the drawn out "study" by cbi? I wont accept the idea that it was just to get to us to buy worthless dinar. Like it was just a big con. This is their money too and this is the world they are dealing with, not just the U.S.

I believe they have a plan and if they fail to implement it, then and only then they will LOP because they won't have a choice.

Quad, my friend you have said it a number of times. I just don't think you are correct in thinking that a redenomination would require legislation any more than I think an RV would require legislation. Either would be a huge decision about monetary policy and neither requires a "law" any more than our Fed requires a law to change interest rates or our currency. Monetary policy is in the hands of the CBI and indirectly the IMF. They can do whatever they think is best whenever they want on exchange rates, money supply, printing money, interest rates, etc. Separation of the Central Bank from the political arm is very important. That is what keeps governments (or discouraging them) from printing their way out of budget problems. God help us if our Fed is ever controlled by our "spend happy" congress that has already raided Social Security trust funds and every other honey hole they can find to pay for an out-of-control budget.

[Kent]

Kent,

I really do appreciate your response.

I'm basing my opinion off of turkey which passed a law perhaps their govt was printing money? maybe I'm mistaken?

http://www.allaboutturkey.com/ytllaw.htm

I'm also basing this on netinfo's interpretation of an article. Remember?

http://dinarvets.com/forums/showthread.php?14051-deputy-central-bank-governor-denies-lifting-of-the-zeroes-of-the-Iraqi-currency&highlight=netinfo

I'm quoting netinfo's translation: "The Central Bank of Iraq has not issued up to now any official decision for the deletion of three zeros from the Iraqi currency that is traded in the markets, and has not legislated even a law for the deletion of zeros."

Also there has to be some way for the authority making this decision to LOP to communicate to the masses that a LOP would come. Making it a law keeps order. What they definitely can't do is just LOP overnight without any notice and not expect any repercussions from the masses. One way or another, because they have to notify the masses, I believe we would spot that thing coming. At this time this is not an issue, the inflation is low...

What I'm happy about is the intent expressed by cbi in the article in the beginning of this thread. If its a lie then so be it but if they knew an RV was futile why the drawn out "study" by cbi? I wont accept the idea that it was just to get to us to buy worthless dinar. Like it was just a big con. This is their money too and this is the world they are dealing with, not just the U.S.

I believe they have a plan and if they fail to implement it, then and only then they will LOP because they won't have a choice.

Very interesting. Good post. Thanks for taking the time to respond. I get your point. I have also thought that a LOP would be done with a lot of advance notice and publication. Frankly, that is one reason I assumed they released all the "delete zero's" statements - precursors to formal plans being announced. On an RV on the other hand, 'mum's the word'.

I don't think the statement in this thread is a lie, just look at the "at this time" part at face value and think it doesn't mean "put a fork in the lop" like k98 (with all due respect to the king of information resource around here). Thanks again for taking the time to respond. You've set me thinking.

[drox]

drox, help me to understand your point, of RV then LOP later, a little better...using your logic stated above, if they are capable of RVing and then LOPing later down the road then why wouldn't they just LOP and RV at the same time? this would bring them to the GCC level all in one shot. This would also not cost them near as much as RVing and then LOPing later on...and this is only assuming they are financially capable of doing any of this.

Thanks scottiraq04.... I have a feeling you have been invested a lot longer than I have been and you may have been to or currently are in Iraq. So.. I want to precede cautiously and humbly.. haha. I posted a long diatribe in the back of someone else's thread in early March that explains it. I think I might stick it in Rumors section and let people tear it up for fun. Anyway, my basic premise is that in order for an RV and LOP to simultaneously occur, their would have to be a large PR campaign to educate the Iraqis (citizens, bankers, and merchants) beforehand. Obviously we haven't seen anything like that yet. Previously the CBI and some of their cronies put out information that a re-denomination would be "fully introduced" by the end of the year or in early 2011. All of action as of late seems to be making an RV seem likely very soon (IMO the next 4 months). So I think an RV will occur before the Re-denomination.

I think the IMF and other conditions are forcing the CBI's hand to make an RV happen sooner than later. Today is a huge day IMO because it is the day the GOI is (or did) present the "Action Plan" to the IAMB to discuss their plan for takeover of the Development Fund of Iraq (DFI). If my theory is correct we may hear that they would either move the managed exchange float today to 1000 IQD or they may help fund it by offering up the T-Bill bonds to help pay for it. Maybe they won't reveal the plan to the media at all... who knows. Either way it is progress towards a release of DFI and Chapter 7 sanctions. They can't be fully released because they still do not have a fully represented government in place. Section 20 and 21 of Resolution 1483 points that out. But.. the action plan is just a plan of attack (not a due date) to get out of DFI. The first quarterly meeting or progress report is June 15th or sooner if GOI requests it. I think they will ask for release whenever that 1st quarterly meeting takes place and it will reveal the RV somehow. I think the RV plan was actually secretively agreed to around FEB 28th but slightly leaked through candidates of the election. I believe an RV will occur before troop reduction in August so the RV must occur between now and July IMO.

If the big plan is to join the GCC then maybe they won't want to re-denominate at all because it would be unnecessary and expensive. Still a lot needs to be revealed. My personal belief it that CBI intends to trade internationally to find its true market price before any agreements with the GCC though. I feel the GCC is pushing hard now to help influence or lobby the number that CBI and IMF choose to RV at.

[drox]

I, like you could still see the 15% or even a 115% RV to get them to some clean numbers and then do a redenomination (giving you 1:1 or 2:1). Regarding GCC, wouldn't Saudi Arabia be joining with a .27 cent rial - or did they bail on that deal? With the current troubles in the EU (look at Greece vs. Germany now) and the way it ties the monitary policy hands of the members, I sometimes wonder if it would really be a great idea for Iraq to even join the GCC. Having the EU gave Greece and Spain really low bond rates they didn't deserve, low interest loans and fueled huge leverage that has put them both on the brink of disaster. Now Germany is literally talking about throwing Greece out. It also seems that those deals are really hard to put together. As time has gone by and I have done a little more reading, I am not quite as jazzed about GCC in Iraq's near future. - just an opinion but taking it out of the picture changes the priority for what the currency value needs to be. As Saudi Arabia proves, you don't have to have a currency worth more than the US in order to be credible or be an oil exporter or do international trade. Many in this forum make emotional statements about what can't be done with toiletpaper money. I think we sometimes overstate the case.

Agree completely Kent. I think Italy can be lumped into that mix as well right? I honestly don't know what Saudi Arabia's is. I remember one of E's posts revealed it was the Bahrainian dinar at it was at $2.65. I really don't know. I would defer to you or others for that information. Is it the Rial at .27? You tell me friend.

[gbrlgms]

"Removing the zeros from the currency will reduce the level of the Iraqi dinar in accordance with the American dollar."

I love it! greatttttttttttttt post woody

[avenger380]

I have a friend on the ground in Balad who told me, just today, that they refer to dropping three zeros off of the dinar, so, .000865 would really be .865 per dollar. Is it possible that we all have been looking at this from the wrong standpoint?

[retirementafterrv]

Three zeroes on Iraqi currency won't be removed: source

Thursday, April 1st 2010

Baghdad, Iraq's central bank denied on Thursday the reports that talked about its decision to cancel three zeroes from the Iraqi currency.

"The central bank will not cancel three zeroes from the Iraqi currency at this time to reduce inflation suffered by the Iraqi economy .... Canceling the zeroes will make things more complicated and would cost the state large sums of money and enormous economic cadres to implement this project. " The head of the Central Bank Sinan Al-Shabibi told the Independent National News Agency of Kurdistan.

"This won't be applied at our current time. The central bank and Finance ministry will adopt rational solutions to reduce inflation that Iraq is suffering from currently because some important governmental institutions misused the money," Al-Shabibi added.

"Removing the zeros from the currency will reduce the level of the Iraqi dinar in accordance with the American dollar."

Many members of the parliamentary Economic Commission urged the Central Bank and the Finance Ministry to address the Iraqi decreasing funds by remiving the three zeroes from the Iraqi currency.

http://articlesofinterest-kelley.blogspot.com/2010/04/central-bank-sinan-al-shabibi-three.html

[Earnest T Bass]

Yea, just try and find the inflation. Good luck! This article just more BS disinfo that we all expect.

[quadraph0nic]

Just be happy!

[wess144]

Iraq let's go RV!!!

[whassell]

there's a few mispelled words,,,is this a real article,,,curious??

[terr]

Its gonna be hard to know what articles are real and what articles are not, as we near an RV.