Good explanation. I have often thought that bringing in investors was just an excuse to raise the value, but necessary for the long term economic development of Iraq. We know they have a schedule for events.
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[You must be registered and logged in to see this link.] wrote:I believe the below statement indicates that implementation would start at a point when it would not draw down the CBI's balance of dollars. This would occur when investors rush in to purchase dinars with dollars. Any other ideas?
He stressed that "the launching of a currency so does not affect the balance of the Iraqi currency against the dollar and foreign," noting that "that affects the balance of the Iraqi currency is a strong economy in general
Well my thought as I mentioned before, the perspective is from inside looking out dispelling the idea that new smaller notes will require a bag to cart them to the store to buy what large note bought prior to the revalue. That is what they mean "not affecting the balance"ie buying power and that term really means not affect the balance in a negative way.
The CBI controls the circulation and this is a planned event thus a coordinated one with the banking system. Once instituted the note count is automatically balanced with the required demand as was the day before.
There won't be a rush to buy dinar until foreign investment demands it in country and I mean business development, which happens after the revalue, enabling the CBI [and the banking system] to manage the demand for dinar/ calculations easier. Between economic demand and oil revenue, transaction fees the CBI will become flush with dollars ... enabling a easy balance in the management of the economy through its monetary policy.
In this case and strictly my opinion that the investment law and formal HCL will not become law before the revalue is realized. It may even get approved in the Parliament but as we saw with the budget it's not effective until it appears in the Gazette... Both of those laws represent triggers for investment and the bulk of the investment will hold back until the rules for conduct are official.
Ok that's my thoughts, my opinion...
We can see that the delete the zeros project is being preceded by reducing the money supply through reduced dollar sales and electronic remittances. However, this is also causing inflation.
Keep in mind, as inflation rises, it drains more dinar out of the money supply. Inflation is helping the process, but hurting the people. At what point is enough? Only the Iraqis know the answer. I can see it happening when inflation pressure becomes unbearable for the Iraqis. The people will demand the government to take action.
Last edited by Proven on Tue 14 Apr 2015, 12:12 pm; edited 1 time in total