FROM JUNI...
This is VERY plausible, Hoggey-- I am very inclined to agree with you. I shared a theory on here a while back that they could do a "within program" (Art. XIV) RV of say, one dollar to one dinar (1:1) and at some point thereafter move from Art. XIV to the international scene under Art. VIII at say a $3 RV. It is interesting that this is what is mentioned in the report you shared. Thanks.
It makes utmost sense for them to do an in-country LOP and exchange 90% of the triple zero notes in circulation for the new currency. As some articles stated elsewhere, a LOP is generally a REVENUE NEUTRAL (first) step (does not affect the exchange rate). Remember also that another article mentioned it was a TWO STEP PROCESS they were looking to do. The second step would be an RV, probably within the program rate they are currently under in Art. XIV ($1 for example). This would provide more purchasing power IN COUNTRY but would not make all the Iraqi citizens instant millionaires. At that point an Iraqi citizen just went from a 25,000 dinar note worth $21.37 US to a 25 dinar note worth $25 US (if the initial RV is only at $1). Not a lot of increase, but an increase nonetheless. If they decide to go to $3 right off the bat, but still within the program rate, then the Iraqi citizen went from a note worth $21.37 to a new note worth $75. A big step in purchasing power, and pulling in 90% of the triple zero notes at the same time.
The point is that they CAN do an RV while still under Art. XIV, and if they accompany it with an in-country LOP, it may entail our having to wait a tad longer for them to come out as an international currency under Art. VIII, in which case, the dinars would be honored at face value. How long is anybody's guess. Perhaps as short as 60 days or 90 days (there is no 90 day limit on fluctuation if they are moving out of one exchange rate regime into another, so they could theoretically come out with the international rate as early as 30 days later..... or as long as a year later). I am betting that we will not get the benefit of "no lop" until they come out under Art. VIII, otherwise, if they treated foreign investors cash-in differently than in-country cash-in, you would have attempts by some within the country to make an end run around it to cash out from outside Iraq. I don't see that happening. So it seems to me that the in-country LOP must be accompanied by an RV while still under their current program rate, and that way Shabibi can very easily MANAGE the fluctuation and pull in most of the notes right off the bat, without even looking at us yet.
There are some gurus saying they must RV by June 30th in order to become admitted as a full member in the WTO. NOT true. I seriously doubt they will make the mistake again of putting WTO ACCESSION DAYS on their tentative calendar (lol) as it was widely distributed among dinar sites and *could* be a giveaway as to when the IQD comes out internationally, making the move to Art. VIII. However, I believe just by keeping a check on their tentative calender we can see when it will NOT be, by just noting what days have other things scheduled, and by reading b/w the lines, we can at least be watching on dates that are open. Here's their tentative calendar:http://www.wto.org/m...lic/meets_e.pdf Notice they have something scheduled for June 30/July 1 so I will make an educated guess that Iraq will NOT be making accession as a full member of the WTO on those days.
All IMHO, of course.
Hi Juni. I like your post and I know you know this, but that kind of crazy lop talk can get you in hot water around here!
I have seen mobs formed in seconds and entire threads shut down over it... Even though your lop theory (or Hogey's) is far more friendly to us dinarians, because in essense only the poor Iraqi's get 'lopped'. We would still get our RV.
For the record, I agree this is a possibility. I believe all the articles that came out last week and over the weekend stating (in no uncertain terms) that the zero's will go away; that the 25k dinar will become 25 dinar; that the value will not go up; will have no effect on value, etc., are not spin, pointed at us Americans on the Dinar forums, but rather the truth. They are the CBI's intentions, plainly stated.
However, these plans and statements are not directed to us, but to Iraq. They are not posting news articles for the benefit of America. They are informing their country what THEY plan to do. And the effects will be that in Iraq, the currency value will NOT go up. The zero's will simply fall away. Of course, when this happens, the prices will need to be adjusted equally, making one dinar go much further.
Is that what you are saying? If so, I agree.
Rich in TX
Almost...
I am saying they likely will RV it while under the managed program (protected) rate regime they are currently under for the benefit of the Iraqi citizens. Remember I said in a post several weeks ago that to make the adjustment to the change easier for the average Iraqi citizen to understand, then the dinar needs to be on parity with the dollar. They are used to dealing in dollars, as they have used them for years. If the go from a 25,000 note to exchange for a 25 note, and then are told their dinar is worth THE SAME as the US dollar, then that is a slight adjustment UP in purchasing power already. And guess what? No real major headache in changing prices, as the prices that merchants had on items were always priced in dinars AND DOLLARS and all they simply have to do is say the price is the same, BUT NOW IT IS THAT AMOUNT IN DOLLARS OR DINARS. For example: A rug costs $100 US dollars and today's price in dinars is 117,000. Both prices are currently on that rug ($100 US dollars OR 117,000 dinars). All the merchant need do is leave the $100 number on there and say they can now pay in Dollars OR DINARS. This is an immediate understanding of the value of their currency for average iraqi consumers and merchants-- and no great headache to merchants about price-- as well as buffering attempts by some otherwise unscrupulous merchants to take advantage of consumers who can't do the math on a more cumbersome (higher) exchange rate. I mean, look guys... even we have to pull out a calculator to figure what the pay off might be depending on what the RV might be. I may be wrong, but I am willing to bet the average Iraqi citizen has only a basic education. They will most likely make an EASY FIRST STEP for them to understand, and follow it later with the move to the international scene at a higher rate.
Underdog, they are currently under the managed program, specifically IMF Art. XIV. This is the "transitional arrangement" they have been under all this time. Remember when the dinar was initially valued at what? 4000 dinars per US dollar? Then it was MANAGED in a move upward to the rate it is right now: 1170 per US dollar. This is within the managed transitional program rate they are under right now. This is why I said they *could* do this yet again, and move it up to parity with the dollar while STILL under IMF Art. XIV. This could be done with the in-country LOP and anyone who gives up and cashes in-- well, you will have just made a serious mistake, imho.
At some point thereafter, AFTER, most likely, they pull in the 90% of 25K notes IN COUNTRY, THEN they will move to IMF Art. VIII on the international scene (and they must at that point, honor the currency we exchange at face value---NO LOP).
SO bottom line: whatever happens, hold on to your dinar until they finally come out under IMF Art. VIII. And yes, this could entail a bit longer of a wait. I would say though, it would only be as long as it takes to pull in the in-country zero notes. How does a 60 to at most, 90 day wait sound?
Don't get discouraged guys. I have purposely stayed out of the fray on this because it is just almost pointless to argue it until they actually do it. Lopsters have some points, and non-lopsters have points as well. Only when I saw Hoggey's post and the report he shared did it finally click that this solves both issues and is likely what they will do.
