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OLD - Meryl Lynch On Iraq Rate Increase From America Contractor


gregp
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Merrill Lynch indicated that a revaluation of the Iraqi

dinar is unlikely to take place until after the country

substantially increase oil production over the coming 5 to

7 years, adding that the planned redenomination of the

currency is not a prelude to the dinar's revaluation. It

said the Central Bank of Iraq's plan to drop three zeros

from the dinar reflects successful macroeconomic

stabilization and will not alter the value of the currency

or of that of Iraqi assets, but aims to make daily

accounting and cash transactions easier. It noted that the

redenimination will increase confidence in the local

currency, will send a strong signal that the economy has

normalized, and could effectively decrease the

dollarization rate in the economy.

Merrill Lynch said that Iraq has managed over the past few

years to improve its macro fundamentals in line with the

requirements for successful currency redenomination, as

authorities reduced inflation to low single digits,

rendered fiscal policy more credible, and secured Paris

Club Debt relief, which reduced external debt from 348% of

GDP in 2005 to about 50% of GDP currently. It added that

oil revenues have allowed Iraq to build up foreign currency

savings, as the country's foreign reserve stood at $55bn at

end June 2011 and represented 150% of total external debt.

Merrill Lynch considered that a large currency revaluation

would cripple fiscal revenues, unless oil production

increases massively. It said the large dependence on oil

for government revenues, the elevated fiscal breakeven

price of $100 per oil barrel, and the need for large

domestic spending on reconstruction and infrastructure make

revaluation an unlikely scenario in the short term. It

ruled out substantial appreciation pressures on the

currency over the near term; and added that the dinar may

appreciate 3% to 5% at best annually from 2012 onwards if

reserves continue to rise and inflationary pressure emerge.

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Phew. Thanks Cap. I was a little concerned there for a bit. But looking at this article it makes a difference between a revaluation and a redenomination in paragraph 1.

 

Merrill Lynch indicated that a revaluation of the Iraqi
dinar is unlikely to take place until after the country
substantially increase oil production over the coming 5 to
7 years, adding that the planned redenomination of the
currency is not a prelude to the dinar's revaluation. It
said the Central Bank of Iraq's plan to drop three zeros
from the dinar reflects successful macroeconomic
stabilization and will not alter the value of the currency
or of that of Iraqi assets, but aims to make daily
accounting and cash transactions easier. It noted that the
redenimination will increase confidence in the local
currency, will send a strong signal that the economy has
normalized, and could effectively decrease the
dollarization rate in the economy.


If I am reading this correctly, the IQD may redenominate first which is not a prelude to the country's revaluation of the IQD, with their defining a revaluation as a 3 zero lop. Also that the revaluation of the IQD will not alter the value of said redenominated IQD or Iraq's assets at the time of the "revaluation" . Now, if this is correct, and what I have learned about  a redenomination is correct then, they will/could peg the IQD redenom at $3. plus and go up from there? Eh, I could live with that and I pray they redenominate in Jan 2015 right after they pass the approved 2015 budget.
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it some point , the dinar , will do something ---- either ,  go too  above 1 penny , go too 1 to 1   or  in the range  of 1.13 or which it is suppose too be ,  OR,   it will  just  creep up , at a  value  that will eventually  just make our money back , with a small loss !    but  the friends we have  made  during this ride ---------  P R I C E L E S S        :peace:                                wow  meryl streep   has  great  boob friction  ----- how  does she stay in place  :lol:     

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