IMF Iraq Float? I need to be educated!!

[circletrack15]

Hi all,

 

I hope everyone had a great! 4th of July!!   I have been invested for over 4 years now and have learned alot from not knowing anything about Iraq Dinar, RV, nothing. I would really like for somone to explain to me in a 10th grade mentallity!! of all this:

 

CBI article yesterday has said they are postponing the removal of the 3 zero,s indefinitely. I read that Iraq will NOT!! have an RV until they have lower notes out and I do understand why. I am reading that any of us who are waiting and exspecting a RV of 1.00-3.44 is wrong? Iam being told from my little circle and am now reading as well that Iraq has requested a Free Float of the Dinar and was submitted to the IMF.

 

I read that we should see an announcement from the CBI of this Free Float and a change in the "exchange rate regime" from a fixed rate (1166 to 1) to a Free Float. Also now getting talk and reading that Iraq is saying that the lower notes will not! be out until the end of the year!! and this free float would most likely by then make the Dinar about 1 USD. Reading that then, they will start removing the large notes out of circulation.

 

Ok, so I understand some of this but this last week with all the talk the next 48hrs!, This week!, Before the 7th!, ya da ya da ya da!! its very very confusing to me! LOL!!  What gets me (heres were I need someones help!!)  If this goes into this Free Float and there is no RV ,,,,, Iam seeing coments and reading that most are on the same page saying: 

 

When this Free Float is announced and under way that it would give us an opportunity to move quicker and closure on our investment??? How is that???   Please someone educate me!!! Iam just a simple family man who is trying to understand and the more I try the more confused I get with all this stuff. I dont expect a full semester of training just a simple crash course on what is a  Free Float and what this all means. Thank You and God Bless you all!!

 

 

[Amos9:13]

A floating exchange rate or fluctuating exchange rate is a type of exchange rate regime wherein a currency's value is allowed to fluctuate according to the foreign exchange market. A currency that uses a floating exchange rate is known as a floating currency. A floating currency is contrasted with a fixed currency.

In the modern world, the majority of the world's currencies are floating. Central banks often participate in the markets to attempt to influence exchange rates. Such currencies include the most widely traded currencies: the United States dollar, the euro, the Norwegian krone, the Japanese yen, the British pound, the Swiss franc and the Australian dollar. The Canadian dollar most closely resembles the ideal floating currency as the Canadian central bank has not interfered with its price since it officially stopped doing so in 1998. The US dollar runs a close second with very little change in its foreign reserves; by contrast, Japan and the United Kingdom intervene to a greater extent.

From 1946 to the early 1970s, the Bretton Woods system made fixed currencies the norm; however, in 1971, the United States government would no longer uphold the dollar exchange at 1/35th of an ounce of gold, so that the US dollar was no longer a fixed currency. After the 1973 Smithsonian Agreement, most of the world's currencies followed suit. Few countries fixed their currency with another currency, however, lately some of these countries are causing their economy to slow its growth. For example, most of the Gulf States had their currency fixed with the US Dollar, and by this strategy it resulted in dragging their currency value down with the US Dollar's declining value. A floating currency is one where targets other than the exchange rate itself are used to administer monetary policy. See open market operations.

[genx4me]

A floating exchange rate or fluctuating exchange rate is a type of exchange rate regime wherein a currency's value is allowed to fluctuate according to the foreign exchange market. A currency that uses a floating exchange rate is known as a floating currency. A floating currency is contrasted with a fixed currency.

In the modern world, the majority of the world's currencies are floating. Central banks often participate in the markets to attempt to influence exchange rates. Such currencies include the most widely traded currencies: the United States dollar, the euro, the Norwegian krone, the Japanese yen, the British pound, the Swiss franc and the Australian dollar. The Canadian dollar most closely resembles the ideal floating currency as the Canadian central bank has not interfered with its price since it officially stopped doing so in 1998. The US dollar runs a close second with very little change in its foreign reserves; by contrast, Japan and the United Kingdom intervene to a greater extent.

From 1946 to the early 1970s, the Bretton Woods system made fixed currencies the norm; however, in 1971, the United States government would no longer uphold the dollar exchange at 1/35th of an ounce of gold, so that the US dollar was no longer a fixed currency. After the 1973 Smithsonian Agreement, most of the world's currencies followed suit. Few countries fixed their currency with another currency, however, lately some of these countries are causing their economy to slow its growth. For example, most of the Gulf States had their currency fixed with the US Dollar, and by this strategy it resulted in dragging their currency value down with the US Dollar's declining value. A floating currency is one where targets other than the exchange rate itself are used to administer monetary policy. See open market operations.

Thank you for the info!

[Amos9:13]

Iraq right now Circle is under a "dirty float" which basically means it's being manipulated to be set low.  Their original reasoning was so the dinar didn't "deteriorate" further, but a lot of us will tell you that the statement made doesn't make sense.  Iraq has grown in the last 4 years in their GDP which this year was 10 percent which is UNHEARD of.  If you look at their currency it's barely changed a few pips.  Also...4 years back I believe there was an article stating that they had pulled some currency in (around 4-6 trillion I believe).  Yet...you didn't see ANY CHANGE in the currency value.  Anytime you reduce the money supply....the money that is left over gets exra value since there is "less" supply of it.  Think of it like a pizza....if you cut a pizza into 10th's it seems really small....but if you cut it in 1/4ths it looks HUGE.  The less the money supply...the higher the rate.  It's simple supply and demand.  You also heard that the Iraqis were more "confident" in recent articles regarding release from ch 7.  The street rate changed but not the rate you and I exchange it for (weird huh?).  So what does this all mean?

 

Well once Iraq gets to the point where they want to release the Peg to the dollar (which should be soon since it's declining) we will see the TRUE rate of what Iraq's currency is worth.  Which I can gurantee is more than what they have pegged now.  How do I know for sure? Easy....

 

1. Their infrastructure has picked up, cell phone towers, electricity, becoming westernized

2. Reduction in money supply (from articles we have seen, the behavioral economics of the people (using US dollars), How much though...we have no idea.  This will be key in the rate...

3.Previous articles indicate budget balanced...(wish this is something US would go back to doing) it gives investors more confidence which leads to currency being stronger.

4.GDP up 4 years in a row...including now it's up 10%

5.Investors from different countries coming in...helps the economy pickup...stronger economy improves currency stability

6.Banking sector getting stronger. (both banks have been audited...need to be audited again), Citibank coming in (huge) will help them run their money cheaper and more efficiently

7. Nasdaq to be added soon...will help other investors invest in Iraq

8. Last but not least what most people don't understand is that Oil is the future.  More countries are becoming more technologically advanced and dependent on oil.  Quite a few aren't rich in coal, and Hydropower like we are.  Look at the huge deals they've been signing and the pipelines going in.  It means MORE MONEY!!!  More income=stronger currency.

 

So when they get off their "baloney" rate...we'll find out what they are really worth.  Don't be discouraged if it starts out at 500/1.  Remember they are still a recovering country.  Now of course I don't know if they can afford more or not, I just like to be conservative.  For all we know it could be in the 2.00 range...who knows.  We just know that what they have up there right now is fake.  I'm thinking they'll hit a free float since their economy is doing so well and they have a great future ahead as long as investors keep coming in to strengthen the region.  Hope this helps!

Also forgot to mention how much they've added to their reserves!  That's huge as well.  Lots of great articles coming out!  Just pray and hope for the best! 

[dontlop]

ORGANISATION OF ISLAMIC COOPERATION STATISTICAL, ECONOMIC AND SOCIAL RESEARCH AND TRAINING CENTRE FOR ISLAMIC COUNTRIES

http://www.sesrtcic....article/445.pdf

Exchange Rate Regimes in

OIC Member Countries

 

Introduction

An exchange rate can be defined as a price of one country’s currency in terms of another currency. Exchange rate regime refers to the system through which this price is determined and it is one of the most important policy instruments of governments. The choice of exchange rate regime has considerable impact on trade in goods and services, capital flows, inflation, balance of payments and other macroeconomic variables. For this reason, the choice of an appropriate exchange rate regime is a principal component of economic management in maintaining growth and stability. However, there is no consensus on how to select an appropriate exchange rate regime andthere is not an ideal exchange rate regime suitable for all countries.

 

theres a link to scroll down thru it is loaded with info ..scroll thru and see if anything  interests you ..  http://www.sesrtcic.org/files/article/445.pdf

Specific country characteristics, policymakers’ preferences, credibility of institutions and policymakers can influence the choice of regime. Most important factors influencing the decision are size and openness of the country to trade and financial flows, stage of economic and financial development, structure of trade and production, inflation records and the type of shocks the country faces. Once the decision is taken, a supportive policy environment, which includes prudent macroeconomic policies, consistent monetary policies and credible institutions, is needed for the exchange rate regime to maintain a stable and competitive exchange rate. In the presence of inconsistent policies and fiscal imbalances, crisis would be inevitable under any exchange rate regime.

Edited July 6, 2013 by dontlop

[dontlop]

they got to get all their ducks in a row  first ... they dont just rv and then worry about  all the other policies in iraq

 

or  

 

In the presence of inconsistent policies and fiscal imbalances, crisis would be inevitable under any exchange rate regime.

 

this is why i believe they are taking so long ,., i believe we are going to see a change  ..

Edited July 6, 2013 by dontlop

[tenmillion]

"2. Reduction in money supply (from articles we have seen, the behavioral economics of the people (using US dollars), How much though...we have no idea.  This will be key in the rate..."

Amos9:13

 

I'm not sure if I'm understanding you correctly, but if you look on the CBI site....Iraq has 33,910,000,000,000 (that's trillion) IQD in circulation. (as of May)

January 2013 the amount was 30.8 Trillion IQD. So, I'm wondering where you got your information about a "reduction in money supply"? The CBI has added, on average, about 3 Trillion IQD per year to the money supply since 2004.

 

*All my information can be reviewed on the CBI website. 

[circletrack15]

Thank You!! Amos 9:13!!!! and Dontlop!!!! Finally, someone who can actually take the time to explain! Very very good info. I just learned a ton!!! Thank You very very much!!!!

[Amos9:13]

Tenmillion....I tried to find the article that came out about 3 years ago.  It was about the currency in street that was reduced from I believe 7 trillion (or 6) to 4 trillion.  It wasn't just a whole lot...I believe Saleh said it.  My point is, there are tid bits of pieces like this referring to reducing money supply.  Also the article about Iraqis not able to take out money for real estate doesn't make any sense.  You have all of these trillions of dinars and none in the bank?  Sorry I just don't believe the 33 trillion dinar...maybe they do have that many but I don't agree they are all "working supply".  I believe when they get close to RV they'll half it to reduce money supply.  Remember they don't have any major debts and the budget is backed by their reserves so what is the dinar backing exactly?

Also that's just not information they are going to come out and say either, not really news.  "So and so reduced money supply today of 100,000 dinars...." I mean we aren't going to hear that.  We just know Iraqis aren't using the dinar.  So where is the dinar going then?  We know that other countries including us might have 6 trillion.  Add another 12 trillion to working supply and you are around 18 trillion which is half.  Which would bring the rate around 500/1 like I've mentioned.  I could be wrong for sure, just saying while the CBI says "this" the citizens of Iraq, their budget, and their manipulated rate says something else.  Seems like to me if they wanted to stabilize the dinar they would have let it go to a float, but they didn't.  They are hiding it's value.

[sandfly]

THANKS YALL

[supergirl]

@amos u rock!

[dontlop]

someones using dinars in iraq or they wouldnt be able to have the currency auctions each month that add up to around 5 trillion dinars a month or around 60 trillion a year if not more

 

200 billion dinars a day 5 or 6 days a week

[rockfl9]

Tenmillion....I tried to find the article that came out about 3 years ago.  It was about the currency in street that was reduced from I believe 7 trillion (or 6) to 4 trillion.  It wasn't just a whole lot...I believe Saleh said it.

I think Amos is misinterpreting the article.. I think the 7 trillion refers to the number of individual notes , not the value. Considering it cost about the same 4-8 cents to print a note of any value the CBI would not be replacing the 50s and 100s but removing them and creating a substitute 500 or 1000 note. this reduces the number of notes in those classes by a factor of 10.

But the total value of currency in circulation remains the same.

[dontlop]

ya i remember that article rock ..

 

the cbi recycles all the dinars twice a year ,, ..

 

they say theres only 33 trillion outside of banks .. circulating .. so if the cbi buys back around 60 trillion a year .. they buy back all the dinars twice a year  and recycle them ..

Edited July 6, 2013 by dontlop

[dontlop]

the cbi has the ability to remove all the dinars very quickly and a slight increase in the rate they could remove them even faster ..they can dollarize  rv and de dollarize easily

ya raise the rate on the dollar  first .. they sell off all the dinars on the streets then you rv ..increase the rate of the dinar . and they sell off all the dollars on the streets for the new higher rate dinars

[rockfl9]

the cbi has the ability to remove all the dinars very quickly and a slight increase in the rate they could remove them even faster ..they can dollarize  rv and de dollarize easily

ya raise the rate on the dollar  first .. they sell off all the dinars on the streets then you rv ..increase the rate of the dinar . and they sell off all the dollars on the streets for the new higher rate dinars

NOT POSSIBLE1 What happens to all the dinar (about 50T ) that are stored in T-bills, Bank accounts and loans??

[dontlop]

thats not currency thats assets .. no gain ,,no loss

hopfully you dont think that if iraq revalues its currency that all iraqi assets rv also ..

 

if i have a home loan  for a 50 thousand dollar home or 50 million dinars todays value .. that if the currency in iraq is revalued that the house is worth 50 million dollars now ..

you will have to start all over in your thinking process if you believe that

[Amos9:13]

I understand they do have auctions with some dinar, I just don't believe they are "technically using 33 trillion" nope.   You can tell this from all of the uncirculated dinar that you can buy from the dinar dealers.  They just are using it, easier to use the dollar bill.  Do they have Tbills, and CDs and such...sure but I don't think it's trillions and trillions of dollars worth since we know their goal is to reduce money supply regardless if they LOP 0's or not, that's the goal.

[rockfl9]

No Dontlop you need to think.. The official unit of value in Iraq is the dinar! If I have a 50M dinar T-bill. It is an IOU from the MoF. When it matures say 6 months from now the MoF will have to pay me 50M of dinar on that day .. I will take those dinar and convert them to dollars at the then exchange rate . So if the rate becomes 1:1 , I should get $50M , just as good as currency.

[stealthwarrior]

We are all confused.they have us right where they want us.they DO NOT want us to know what really is going on.a free float makes no sense to me because if it comes out low and starts to rise then everyone will take notice and start buying Iraqi currency like crazy.this will cost them a lot more money and they sure don't want that.just mho.

[Amos9:13]

Actually Stealth coming out at a low rate for a float is the best option.  I say if it's even half the worth of the dollar the Iraqis will start using it thus dedollarizing Iraq.  The new demand will make it rise.  At the same time people like us will be turning it in for US dollars.  This will further reduce the money supply, handling the problem continuous, not LOP done.  Anytime you take shortcuts it usually bites you in the @$$. 

[dontlop]

No Dontlop you need to think.. The official unit of value in Iraq is the dinar! If I have a 50M dinar T-bill. It is an IOU from the MoF. When it matures say 6 months from now the MoF will have to pay me 50M of dinar on that day .. I will take those dinar and convert them to dollars at the then exchange rate . So if the rate becomes 1:1 , I should get $50M , just as good as currency.

lol thanks ..

 

at least i tried

 

i wonder what the exchange rate is for houses .

 

i wish i had a 50 trillion turkish lira t-bill  that mutured  after they restructured their currency ..geez turkey had 54 quadrillion  turkish lira ..so if my 50 trilion lira matured today .. i could cash it in .......... those turkish lira were about 1.5 million to one .. now they are 50 cents

Edited July 6, 2013 by dontlop

[dontlop]

im thinking this may be why citi bank went to iraq . to give out home loans for 100 million dinars "or 100"000 dollars"... so when it rvs to a dollar those iraqis will owe them 100 million dollars worth of dinars  for a hundered thousand dollar house

[doctor robbins]

lol thanks ..

 

at least i tried

 

i wonder what the exchange rate is for houses .

 

i wish i had a 50 trillion turkish lira t-bill  that mutured  after they restructured their currency ..geez turkey had 54 quadrillion  turkish lira ..so if my 50 trilion lira matured today .. i could cash it in .......... those turkish lira were about 1.5 million to one .. now they are 50 cents

 

You are mixing the concepts of revaluation and re-denomination.  When a currency re-denominates it affects all prices and values based on that currency.  If you had 50 billion lira in a t-bill prior to re-denomination it would have become worth 50 thousand of the new lira which would be worth around $33,000 after the currency change.  I doubt that you had enough money to hold 50 trillion of the old lira as it would have been worth about 50 million of the new lira or about $33 million. 

 

tenmillion is right.  There hasn't been any reduction of the money supply in Iraq.  The articles that have been mentioned as evidence that there has were just misinterpretations from gurus and pumpers.  If you look to the CBI website for the official value of the dinar you should also look to it for the official money supply. 

[dontlop]

 devalue .. revalue of currency ..doesnt change asset value of gold  or anything else.. only the exchange rate changes

home loans are just fictional money conjered up  on a promise to pay that loan .. theres no money .. just signed documents ..