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rockfl9
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Things are getting crazy.  Maybe it is a side effect of cabin fever. people areloosing their sense of logic.

The gold standard was a failure. Check Wikipedia. Certainly would not be any different today.

IQD part of CBI reserves ??? That's not logical . If a central bank could count it's own currency as a reserve it would just issue a big bond put it in the reserve and call it even it would declare any value it wanted.  Just a numbers game. There would be no change in real value in the world market. Only BIS and IMF can state what can be used as a reserve currency.

The possibility that a RV of the dinar  would solve Iraqs problems is impossible .  The only thing that would is a massive increase in oil revenues and that is not likely.

The idea that a RV of any amount would cause banks to want to buy dinar is Guru pupu. Banks will buy (i.e. broker) dinar ONLY when they have a customer for it .. WHO would that be ???  The only people who  want dinar would be those who would have to believe there would be profit to be made that is better and less risky than some other investment .. Many more would want to SELL than buy.

 

 

 

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The belief that the IQD is purposly UNDERvalued is FALSE.  The CBI has issued more dinar and the reserves have been depleted by at least 20 Bn USD.  They also may have sold some gold.  We wont know until the CBI issues the annual report for 2019. 

They are talking about raiding the reserves again to cover COVID19 stimulus.  

The street price is up to 1280:$.  Sort of proves the autoins have been proping it  up for a long time. It will be interesting to see the value when they open the auctions .

.   

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  • 3 weeks later...

Iraqs goose (oil income) is cooked.  CBI/MOF policy has been to stabilize the exchange rate using CBI reserves. A ploy to keep the citizens happy and the elite business men rich was wasteful. i.e. corrupt.  It should have been stopped years ago .  Now the fix , if possible , will be painful.  Cutting salaries and removing subsidies Is essential. 

I can suggest one quick  solution . Simply double the exchange rate to 2400:1  and release more dinar.  Prices of everything imported will gradually double but will give the GOI some time to work on the solution. 

I am surprised to not see any reports of the death rate in Iraq !!!  I dont know if it is censorship or they dont have an organized system to report the dead.

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THINK !

The GOIs problem is that it is not getting enough dollars to convert to dinar .... Their payroll is not getting smaller.  .

SO Reducing the exchange rate to less than the current 1190 will NOT solve that problem.. They  need to increase the rate to say 2500:1 or Cut the payroll in half. Can they just lay off half the people ?  I dont think they have unemployment so they would have increase in welfare.

OR actually cut salaries in half. 

Both would cause more civil strife.  

They already have cancelled all public projects , so that means most contractors are out of work.  .

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  • 7 months later...

The IQD is a PEGGED currency and the CBI wants to keep it that way.  But it is what is known as a DEFACTO PEG. The CBI maintains that rate in transactions with customers to give the economy the appearance of stability.  When times are bad it antes up some of the reserves .   Now times have been bad for so long the reserves have been depleted to a dangerous level and it may not  be able to keep doing that. It must admit that the peg is unattainable. 

It is near year end and the CBI must balance the books . Every dinar is a liability .  Assets (reserves) minus liabilities must balance or the CBI is bankrupt.  IF the CBI is talking to the BIS THAT could be the reason.! The BIS does not like failing central banks .

The only way the CBI can be saved would be to REDUCE the value of its liabilities , a DEVALUATION.   

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  • 11 months later...

Would any central bank announce or merely indicate that it might change the exchange rate , either way ?  NOOO

They will just do it , instantly. Any delay would give rise to currency manipulation. Example, was there any advance news of the Devaluation last December . NOO.   Did Shabibi warn when he changed the rate back in 2008? NOO.

A devaluation would cause a panic.

So forget the idea that the CBI is educating the Iraqi's in prep for a RV. That's a rumor courtesy of your friendly liars .

The Kurds are better educated than your typical Iraqi. They are right a 1:1 rate IS IMPOSSIBLE. YOU should know that . Although even a TENTH of a cent is IMPOSSIBLE today.  Ypu should know that too!

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  • 3 weeks later...

At least Iraq not like the US as far as Debt, and the US dollar still claim to have purchasing power. I believe the debt is more then what showing below....

 

 

United States National Debt:

28,119,481,514,813
$ DollarsClick and drag in the plot area to zoom in US National Debt01/01/17906/30/192301/01/180301/01/181601/01/182901/01/184207/01/185407/01/186707/01/188007/01/18937/1/19037/1/19107/1/19166/29/19296/30/19366/30/19426/30/19496/30/19616/30/19749/30/19879/30/20009/30/201305T10T15T20T25T

US Debt Clock - sources and methods

The U.S. Department of the Treasury, Bureau of the Public Debt on its TreasuryDirect website, Debt to the Penny section, publishes - every business day by 3 PM - the Public Debt amount that was outstanding at the end of the previous business day. The system relies on reporting entities (for example, Federal Reserve Banks) that report a variety of Treasury security information at the end of each business day.

Worldometer has developed an algorithm which calculates the current estimated rate of change of the amount of debt outstanding in between the daily US Treasury updates. The formula components are recalculated daily as the latest official US National Debt data is published, so that the algorithm continuously adjusts itself accordingly. The magnitude and even direction of the daily changes can be erratic and unpredictable. For example, even though on a yearly or monthly basis the US debt might be overall increasing (as it is the case now), there are days when the US debt will decrease with respect to the previous day, only because on that particular day there happened to be more redemptions of Treasury securities than there were issues. During these limited time intervals, unless the change in direction and magnitude is in any way representative of a trend, the US debt clock will not show a decreasing debt, as it clearly would not provide an accurate representation of the current trend, but it will instead show the debt increasing at the current average rate, and eventually re-adjusting suddenly to a lower level.

U.S. National Debt - what is it?

Simplifying, every year the United States Government collects revenue from taxes and spends it on its public programs and agencies. If in any given year it spends more than it earns, its yearly budget will result in a deficit. To cover the deficit, the U.S. Treasury will have to borrow money (by selling securities like Treasury bills, notes, bonds and savings bonds to the public), just like an individual who spends more than what he earns will have to borrow the missing amount from a credit card. The accumulated deficits year after year form the outstanding US national debt.

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  • 2 weeks later...

Iraq DOES have a lot of debt. Over $100Bn. Now they want to float a new IQD bond issue !  Given the ease that the CBI can DEVALUE the dinar an investor could value in these bonds. The last devalue wiped out 21% of any IQD bonds. No one should  take that risk!.

The CBI needs to close the books for 2021 by the end of the year. Although they talk of a "comfortable " level of reserves there are 130 Trillion IQD in M1 and that requires $72Bn in reserves. The question is HOW can they end the year and not show a NEGATIVE balance?  

 

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On 12/21/2021 at 3:03 PM, rockfl9 said:

Iraq DOES have a lot of debt. Over $100Bn. Now they want to float a new IQD bond issue !  Given the ease that the CBI can DEVALUE the dinar an investor could value in these bonds. The last devalue wiped out 21% of any IQD bonds. No one should  take that risk!.

The CBI needs to close the books for 2021 by the end of the year. Although they talk of a "comfortable " level of reserves there are 130 Trillion IQD in M1 and that requires $72Bn in reserves. The question is HOW can they end the year and not show a NEGATIVE balance?  

 

LOOKS like the MOF has solved this !  The MOF just GAVE the CBI $12Bn to ADD to the CBI reserves. That will stabilize the CURRENT rate . It is a little more than needed so it could even drop it a few pips. 

This is a legitimate move, but just taking the money from one pocket to another doesn't make the root problem go away.

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  • 3 weeks later...
On 11/19/2021 at 3:24 PM, rockfl9 said:

Would any central bank announce or merely indicate that it might change the exchange rate , either way ?  NOOO

They will just do it , instantly. Any delay would give rise to currency manipulation. Example, was there any advance news of the Devaluation last December . NOO.   Did Shabibi warn when he changed the rate back in 2008? NOO.

A devaluation would cause a panic.

So forget the idea that the CBI is educating the Iraqi's in prep for a RV. That's a rumor courtesy of your friendly liars .

The Kurds are better educated than your typical Iraqi. They are right a 1:1 rate IS IMPOSSIBLE. YOU should know that . Although even a TENTH of a cent is IMPOSSIBLE today.  Ypu should know that too!

 The CBI avoided Bankruptcy when it got a $12B investment from the GOI. If the CBI were to just change the rate back to 1190 It would go back into potential Bankruptcy again.  The currency of a Bankrupt central bank is technically WORTHLES. that is what a FLOAT IS !  Al-Kazimi's MOF and CBI governor worked together to save the bank.

Mohamid Salih the so-called advisor could explain that to the incoming MPs so that they learn the consequences of playing with the exchange rate for political purposes. 

Oil revenues will rise in 2022 will allow  for some improvement in finances but tweaking the rate should not be .

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