What would I do?

[roger01]

What would I do?

Okay, so don't hate on me! Of course, I want a higher rate! But, what would I do is...

Back when Iraq was in the 3.21 exchange rate, their currency was denomonated in bills no higher than 250 dinars (until 2002). Currently they are denomonated in 1000 fils, Since hyperinflation is not a concern (being at around 3% or under) and redonomonation would cause a lack of interest/ loss of confidence in the IQD investment. I believe they may issue smaller bills such as: 1 dinar, 5 dinar, 10 dinar, 25 dinar concurrently with a revaluation or shortly prior to. I believe they will revalue at a 1 to 1-1.13 ( as the ministry of planning has been planning contracts, and has stated it should be based on for at least three years) foreign exchange rate in order to collect up all of the 000s. While giving confidence to the dinar that it is equivelent to the dollar or greater to, thus no need to use the dollar anymore, as I see them having slight trouble eleminating it completely right now, though their trying to pay in IQD. They can control foreign exchange value through a managed-fixed float, keeping it steady for a long time. Saying that they can't afford to go that low of a revalue is irrelavant at that point. As they can hold out for 10-30 years unless a major crisis happens upon them, easily while making imports cheaper and maintaining inflation rates. Going to a 1.13 USD equivelent will show face for the iraqi people being higher than the dollar. Will this be lower than thier neighbors, of course, but only temporarily until most of the 000s are out of cirrculation. Then with just the small denomontations in play they will RV again back up to the old 3.00 range. They can then use thier currency reserves to cover most of the initial RV costs. What about foreign countries or rich people buying up the dinar? Well, think about it. Only really wealthy people can afford to pay say a 1.15 (.02 spread) per dinar (in really large amounts)and they're going to wait three years or longer for an RV to a higher rate? And if everyday citizens, by the truck load start to buy dinars ,which they can afford 1.15 then thats more investment money for the central bank. Probably likely, as they expectthe RV to happen again! But they'll wait again until they're producing that 10-20 mbpd. Otherwise they would have already been on board when it was really cheap, like now. With the mass influx of millionaires, and joe shmo money, they will distribute the small denominations, as everyone expects the large 000s to go away! They will be waiting for a few more years say 2017-2020? Most will lose interest or plan to invest in other things for a quicker return. Then the Iraqi people can get imports cheaper from most countries, satisfy thier investors (US), and keep the new investors going for awhile looking for that next RV, and so they can keep investing it in their infastructure. Buying them time. Until they have a much large reserve to pay out that 3.00 plus rate. Again, like us, most will lose faith or interests! Its ground-hog day all over again!

I found an interesting article...check it out!

http://www.iraqdinares.com/showthread.php?t=25994

[fnbplanet]

I just can't believe that they would come in under $2.00, maybe $2.50. Emotion has nothing to do with it.

If China is willing to pick up OUR DEBT, with our failing credit, why wouldn't they step in and buy the entire country of Iraq if the currency rate was cheap enough?

It sure would solve their energy crisis, wouldn't it? Sure would give them a strategic foothold in the middle east, wouldn't it?

Iraq needs to look into their future and estimate just where their currency will actually be in the next few years, NOT what it's worth NOW.

IMO, THAT'S why I believe that we won't see a pantywaste number like $.85.

[roger01]

The only problem with that is that the exchange rate is not traded like a stock. Its about they're currently worth not futures... The rate is really irrelevant, it could be higher or lower, noone knows! As for China, I think their's a global respect issue in regards to the future of a country, a line you just dont cross! As war would surely break out! No major countries other than in commodities and in oil etc... Currency is a different beast! All the major nations know that, doing so could cause a callapse in the market again. Plus, if it was thier nation rebuilding...That's why I think theres a respect issue at play. In addition to that, if they did that high of a rate, we're now dealing in 25,000 dinars versus back in the 80s of a 25 dinar. Unless they LOP, which defeats the purpose, when all avenues could be managed/ covered under my thought process.

Edited February 8, 2011 by roger01

[roger01]

I will leave you with this...public settiment is not out completely. Our currency is a fiat currency, only a portion of our fractional-reserve currency is backed by gold or other resources. Faith has a play in this, not total play, but some. They have to have faith in their currency both foreign and nationally. Their currency is backed by gold and oil. They need foreigners to believe they will get that oil out of the ground, otherwise they lose faith in what is 95% of their GDP, that would be a total loss of confidence in Iraq.

Edited February 8, 2011 by roger01

[tonloc20]

First time poster

3.00.........7.50..........1.13...........0.50

Right now any RV would excite me! Even if the rate comes back at 0.50, I can pay off all my debt and start over! College money for kids even! Yeah, I would love the rate to be rediculously high, but I will take what I can get. If the plan for Iraq is to RV low at first and then high at a later date, I still cash in at lower rate.( with the option of re-investing of coarse) ;-)

GO RV!!!!!!!!!!!

[roger01]

Okay so after reading Scooters thoughts on the HCL and DFI, I wanted to add to my thoughts in addition to my original post. BTW, I think his post was very well written! Good luck to you Scooter!

Okay, so onto my thoughts on the HCL...One I would agree that something needs to be formally written but...if they pass this new proposal with the 15,000 dinar per Iraqi Citizen, wouldn't that cover the Iraqi portion of the distribution of wealth through oil profits? Especially if they RV? This is more of something just to think about....

So my thoughts on the DFI, I think they will do something before or at the Arab Summit in regards to the RV, they will want the DFI transfered to support an RV and to protect their assets right? So I think that about covers my thoughts on those to things.

In addition to that, the WTO... I believe with their acceptance they will have to have an established foriegn currency, because its trade...what's it worth for you, whats it worth for me? I think that the RV will happen right before the acceptance, which I think will be during the summit or right after.

Personnally, I think the Arab summit will be the key to these announcments! What a better platform for this announcment and after they come to agreements on trade.

[hurricanewayne]

This all goes into you have your opinion and I have mine. But look at it this way possitive thinking could help with every one, if you think like a small person you are a small person, but if you think like a big person well every one looks up to you as a big person. Why do you think the rich people are rich because they thought they were rich and guess what now they are. If you think your poor than you end up broke and living on the street.

I am not bashing just giving my opinion here.

I will say this we all want an RV to happen soon and I think we could get one when we're not looking for it, so lets have fun with each other and be friends because rich people hang out with rich people and I want to hang out with my rich friends.

Take care all and lets pray we get everything we want out of this RV.

[mrsonnyr]

DITTO--Hurricanewayne!!!