CBI Auction 16 Oct 2011

[Dalite]

Dalite

if as u said there are many possibilities.....

if iraq increase the rate of 10% as an RV

i wonder what will people (who hold the iraq dinar) do?

people will continue to hold them or sell them....interesting.....

Well, first and foremost, these are just my interpretations, and there is information that I don't know, so don't base any decisions on them.

If the inflation goes above 10% the plan to ReDenominate probably comes off the table. It is unlikely Shabibi would try to follow through with it during double digit inflation.

If the IMF, World Bank and IMF hold Iraq's feet to the fire and make strong suggestions that they continue to back the exchange rate 100%, increases will not be as large as most expect.

If the CBI does only go 10%, it will be a slow ride up, but it will continue to rise with increase in production, stability or security.

Shabibi has suggested increasing the Foreign Reserves to the 70 billion dollar mark, so he either plans on having to expand the cash supply or give higher value to what is in print.

There still is the possibility that the CBI will do an RV to the expectations of most here. How they will pay for it is undefined.

You will notice that I started most sentences with the word "if". Anything is possible. Some things seem more probable than others, but all we can do is try to act on what we know and there are still many unknowns.

As far as what folks here would do if it only went up 10%, I don't know. I would imagine that would be met with mixed reactions; some of them dark and some of them tragic.

All in all, the discussions just fill in the hours in waiting. Iraq will eventually decide what to do, and we all will have to decide to get off the roller coaster, or continue the ride while we hold out for a better deal.

While my comments may not be the most cheerful, I try to keep an element of hope in them. Sooner or later, they will be forced to take measures to increase the value. I am sure we all would vote for sooner, rather than later, and the bigger, the better.

If the CBI and GOI weren't at odds with each other, and there was a strong desire to greatly increase the value of the dinar, possibly leveraging the funds being recovered from the seized assets under EO13315 could give them additional backing. The numbers have been unclear, but some feel may be as high as 250 billion. At approximately 215 trillion dinar conversion, the rate could go between three to five times higher than it could with the 58 billion they currently hold in Foreign Reserves.

If it were my decision to make, and a large increase was what was required to save the country from civil war, that is where I would look first.