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phlip

Is the CBI’s IQD/USD Exchange Rate the key to the HCL?

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IMO, with a reported 40 Trillion IQD in circulation backed up by a reported 39 Billion USD Reserve the CBI could potentially declare an “actual” IQD/USD exchange rate of 1025.64 IQD per 1 USD.

That would extrapolate to $0.000975 USD per 1 IQD or to $975 USD per 1 Million IQD ~ if a private bank or a speculator buys directly from the CBI.

 

Using its “Fiat Currency” prerogative it appears as though the CBI is choosing to minimize its current USD Reserve exposure by keeping the IQD pegged to the USD at an artificial “Fiat” rate.

IMO, this fiscal policy makes sense, especially if you figure that one of the CBI’s chartered mandates is to protect the currency and also take into account that the IMF committees keeping a close watch during the current SBA would expect the CBI to be doing just that ~ protecting the currency.

 

Currently, the CBI buys USD’s with IQD at the rate of 1180 IQD per 1 USD.

At the same time, the CBI also sells USD’s for IQD at the rate of 1190 IQD per 1 USD.

 

This means that a private bank, or a currency dealer or a private speculator has to pay $0.0008474576 USD for 1 IQD or $847.46 USD for 1 Million IQD ~ if they buy directly from the CBI at one of its auctions.

On the other hand, if a private bank or currency dealer or private speculator wants to sell 1 Million IQD back to the CBI in exchange for USD’s; then the CBI would only pay out $840.34 USD for it.

That’s a CBI profit margin spread of $7.12 USD per 1 Million IQD.

 

If the CBI ever implements its very publically declared (but so far postponed) Re-Denomination (RD) plan for the IQD; and as per that plan, actually manages to reduce the currently exposed 40 Trillion IQD in circulation down to 40 Billion IQD in circulation; then perhaps some cash can actually start flowing inside and to and from Iraq.

 

IMO, if the pressure of keeping up with the ever expanding IQD in circulation is taken off the CBI’s Reserve of 39 Billion USD and the cost of fighting ISIS is brought under control and the sometimes predicted uptick in the future price of oil per barrel happens, then the CBI may finally have the means and the opportunity to be of real service to Iraq by selling CD’s, Bank Cards, Letters of Credit, etc. to the private sector.

 

If the currency ratio actually becomes 40 Billion IQD in circulation backed by that same 39 Billion USD Reserve, then IMO, the CBI’s IQD/USD exchange rate could accurately be declared at 1.025641 IQD per 1 USD.

Conversely, that would be $0.975 USD per 1 IQD.

 

In any case, an RD is not a LOP; especially since the CBI’s RD plan specifically calls for a very public neutral event whereby no Iraqi citizen holding current IQD bank notes or electronic bank accounts will be financially harmed in the currency exchange process.

Specifically, the USD value of the IQD banknotes (both new and old) and the USD value of all electronic accounts will remain the same before and after the exchange process.

 

Once the CBI’s new (Post-RD) IQD/USD exchange rate is made clear, then IMO the CBI could easily declare a “Fiat” rate with the IQD pegged to the USD at one to one.

 

With the IQD and the USD on par in Iraq, all oil, gas and mineral quotes could be made in either IQD or USD ~ at least inside Iraq.

 

I can’t help but wonder if IQD currency reform ~ however it plays out ~ has to happen before the Iraqi’s and the Kurds, and the rest of the world’s International Corporations invested in Iraqi oil can finally agree on a comprehensive and acceptable long term HCL that benefits all concerned.

 

If the CBI’s IQD/USD exchange rate remained pegged at one to one after a successful RD, then natural recourses prices could be quoted in either IQD or USD and that would have to include all imported or exported goods.

 

IMO, an “on par” IQD/USD currency exchange rate should cause cash to flow much more freely between Iraq and the US and also the rest of the world exposed to the USD.

IMO, freely flowing cash to and from and within Iraq (whether it be IQD or USD) could be mostly managed electronically with ATM style cards and pre-paid cards and wire transfers. 

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I've been saying all along that it makes perfect sense to go to a one to one ratio on the IQD to the dollar. This would simplify everything.  And I think the reserves could support this.

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Sounds great, but I think they could make more starting low and increasing it slowing. making profits as people cash in and then buy more.

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Wouldn't they cash in for mainly electronic IQD. Negates the buying back for more problem. Especially if they are wanting more people to open and use the banking system. A 1:1 would be decent enough to draw people in. Just say you have a shortage of physical notes and start a bank account but we will give you a 1:1 so the people are happy to exchange it. 

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Thanks phlip...IMO, raising the value of the dinar equal to the USD is what will get the 'chunky-cash' into thee banks...Who in their right mind would want to walk around in Iraq after the RV/RI/RD with hard cash...After, whatever they want to call it, happens...then inside Iraq( which is all the CBI is concerned with [ associated with the Paris Agreement]) the citizens in all actuality should use debt cards...which in turn builds the core fabric of the banking system.....

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I’m glad that y'all feel that this post raises your spirits about IQD speculation; but just so you understand that the CBI Redenomination plan I mention is well known to be a 2 year plan ~ and it hasn’t even started yet.

 

 

The CBI plans to make a very public recall of all the big denomination IQD banknotes (with 3 zeros) now in circulation and trade them out for smaller denomination notes (without the 3 zeros) ~ which would bring the 40 Trillion IQD in circulation down to 40 Billion IQD.

The 2 years allows ample time for all Iraqis to get rid of their current banknotes and accept either smaller denomination notes or ATM cards loaded with an equal value amount in IQD. Not USD.

 

 

Once that is accomplished and the ratio between the IQD in circulation and the USD in reserve is approximately 40 Billion IQD against $39 - $40 Billion USD in reserve then the CBI will be able to declare a “pegged to the USD” Fiat exchange rate of one IQD to one USD.

 

 

I have never been sure where a foreign speculator possessing millions of IQD in large denomination banknotes (with 3 zeros) fits into that scenario nor has it been adequately explained on this site or any other.

Once the CBI plan is implemented and the large denomination notes are officially in recall does a foreign speculator try to turn his banknotes in for the smaller denomination versions and then wait some more to trade for USD's?

We can be sure that the CBI will not be trading large denomination notes coming from Iraqis for USD’s. Instead, it’ll be IQD for IQD until the exchange ratio approaches one to one. Then the CBI will consider trading smaller denomination IQD notes for USD’s and it will mostly take place by way of ATM machines.    

Edited by phlip
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3 hours ago, Michymateo2001 said:

So is this meaning that we would not be able to exchange ours until after the 2 years?

 

 

That's what I was wondering 

 

I hope not!! 

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It is my understanding that once the CBI implements this 2 year IQD Redenomination plan the Iraqis will have only those 2 years to turn in their large denomination banknotes. According to the plan, after the 2 years is up all large denomination IQD banknotes would become null and void as currency ~ and would no longer be accepted anywhere in Iraq to pay for anything.

They would become souvenirs only.  

 

The same thing happened in 2004 when the Coalition Provisional Authority sent Paul Bremer to Iraq as the person in charge. He brought with him the charter for the newly established CBI as well as several C130 Hercules plane loads full of both IQD and USD cash shrink wrapped to pallets to be transported to banks around Iraq ~ in order to stimulate a collapsed economy.

 

I saw some of those shrink wrapped pallets with my own eyes and I personally witnessed the US Army delivering bank sacks full of USD cash to Forward Operating Bases from the back of open ended Humvees. It was an eye opening experience even in an active war zone. Kind of like the wild wild west ~ only different.

I still own a set of the old Saddam faced currency as a war souvenir.

  

In 2004, the CPA announced that all Iraqis had only 90 days to turn in their Saddam faced currency (without the extra 3 zeros) in exchange for the large denomination IQD banknotes ~ which could then be exchanged for USD when the need arose.

It was my experience even back then that the Iraqis who worked for the CPA to do work on the FOBs preferred to be paid in USD’s and not the new large denomination with the added 3 zeros. A matter of trust, I suppose.

 

As I said in my post, it’s never been adequately explained (to me) where a foreign speculator with a wad of large denomination IQD will fit into a CBI Redenomination plan. After the proposed 2 year exchange period is up any large denomination IQD notes will become souvenirs only ~ no exceptions.

 

That fact seems to lend itself to the idea that once the CBI Redenomination plan is announced and implemented in Iraq, a foreign speculator with a wad of large denomination IQD might want to trade in his banknotes for the new ones being issued as soon as possible. But how?

 

If a person is actually able to trade in his large denomination IQD for low denomination IQD during that 2 year period, what then?

IMO, a speculator would still have to trade in that newly legitimate IQD for USD to do himself any good ~ no matter what country he lived in.

 

Then there is the question of value. Even if the newly issued IQD trades at one to one with USD is there a profit in it?   

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17 hours ago, Michymateo2001 said:

So is this meaning that we would not be able to exchange ours until after the 2 years?

michy ,   no  that  2 year  thing  , is what the central bank would put out to all who carry dinar ,  (  swap your large notes for  cards or small cash notes ,   you have  now until  ...   2 years from that first post of  trade in ...   like they did with the 50 dinar note ,  gave the  folks time to get the 50 into an exchange area and  supposedly  did away with the 50 dinar note  )    if  the  large note swap  kicks in ,   it  would be  kind of tough on those who  are a long way away from  any  dinar  dealer  I suppose  :(    (   nice   selfie  by the way  :) 

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15 hours ago, phlip said:

That fact seems to lend itself to the idea that once the CBI Redenomination plan is announced and implemented in Iraq, a foreign speculator with a wad of large denomination IQD might want to trade in his banknotes for the new ones being issued as soon as possible. But how?

More then likely the same way one acquired them. Nobody gonna have to travel overseas...

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18 hours ago, phlip said:

It is my understanding that once the CBI implements this 2 year IQD Redenomination plan the Iraqis will have only those 2 years to turn in their large denomination banknotes. According to the plan, after the 2 years is up all large denomination IQD banknotes would become null and void as currency ~ and would no longer be accepted anywhere in Iraq to pay for anything.

 

They would become souvenirs only.  

 

 

 

The same thing happened in 2004 when the Coalition Provisional Authority sent Paul Bremer to Iraq as the person in charge. He brought with him the charter for the newly established CBI as well as several C130 Hercules plane loads full of both IQD and USD cash shrink wrapped to pallets to be transported to banks around Iraq ~ in order to stimulate a collapsed economy.

 

 

 

I saw some of those shrink wrapped pallets with my own eyes and I personally witnessed the US Army delivering bank sacks full of USD cash to Forward Operating Bases from the back of open ended Humvees. It was an eye opening experience even in an active war zone. Kind of like the wild wild west ~ only different.

 

I still own a set of the old Saddam faced currency as a war souvenir.

 

  

 

In 2004, the CPA announced that all Iraqis had only 90 days to turn in their Saddam faced currency (without the extra 3 zeros) in exchange for the large denomination IQD banknotes ~ which could then be exchanged for USD when the need arose.

 

It was my experience even back then that the Iraqis who worked for the CPA to do work on the FOBs preferred to be paid in USD’s and not the new large denomination with the added 3 zeros. A matter of trust, I suppose.

 

 

 

As I said in my post, it’s never been adequately explained (to me) where a foreign speculator with a wad of large denomination IQD will fit into a CBI Redenomination plan. After the proposed 2 year exchange period is up any large denomination IQD notes will become souvenirs only ~ no exceptions.

 

 

 

That fact seems to lend itself to the idea that once the CBI Redenomination plan is announced and implemented in Iraq, a foreign speculator with a wad of large denomination IQD might want to trade in his banknotes for the new ones being issued as soon as possible. But how?

 

 

 

If a person is actually able to trade in his large denomination IQD for low denomination IQD during that 2 year period, what then?

 

IMO, a speculator would still have to trade in that newly legitimate IQD for USD to do himself any good ~ no matter what country he lived in.

 

 

 

Then there is the question of value. Even if the newly issued IQD trades at one to one with USD is there a profit in it?   

 

 

phlip, don't know how long you been in this Dinar speculation but would suggest you go back an read many of the articles that Yota has posted on this subject. What you will find is the new LD's will coexist with the notes we have for 10 years. 

I'll explain how us foreign spectators will make a profit if Iraq changes the exchange rate. With my wad of Dinars I bought the 10 years I worked in Iraq an Afghanistan for approximately 700 US per million, when they change the rate to say 1-1 I will take my wad of Dinars to my local bank an exchange to 1 million US Dollars minus fees. That's the way we make a profit. Oh, an I won't need 2 years to do this, 2 days max...

Last thing your concerns about trading in large bills for the LD's when they come out, why in the world would that even cross your mind. Take your large bills to the bank an exchange them for US Dollars. 

Hope this cleared up a few of your concerns about the Dinar but don't take my word for it, read, read an read some more....

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Thank you DoD! I'm fairly new to this and , quite frankly, some of it is over my head. I'm hoping that I can take the large dinar denominations to a bank to exchange it for USD. The broker I bought mine from no longer lives in my area. 

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On 12/29/2017 at 5:06 AM, jeepguy said:

michy ,   no  that  2 year  thing  , is what the central bank would put out to all who carry dinar ,  (  swap your large notes for  cards or small cash notes ,   you have  now until  ...   2 years from that first post of  trade in ...   like they did with the 50 dinar note ,  gave the  folks time to get the 50 into an exchange area and  supposedly  did away with the 50 dinar note  )    if  the  large note swap  kicks in ,   it  would be  kind of tough on those who  are a long way away from  any  dinar  dealer  I suppose  :(    (   nice   selfie  by the way  :) 

Well idc how they do it as long as it happens. Since the ATMs are live and running, what is the hold up now?? And tyyyy bout the selfie!!

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Any currency is tantamount to a legal contract ,for whatever that  means  .  I still think it will higher than Kuwat . Why would anyone buy their oil        if they can get their oil  so much cheaper in Iraq ? Why would Kuwait sign off on so much stuff only to clobber themselves ,possibly ruining their oil business ?

 

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