Doc and his prognosis -- It will be a low rate and maybe next year

10-28-2013 Newshound Guru Doc We are closing out October with much the same status as we started. The news has focused on some progress specifically passage of the Economic Reform Law by the CoM. This is indeed great to see. We still must exercise patience in that it is not law as of now. It still must go through parliament which we believe will not addressed until December. The HCL has been in the news but again most likely will not be addressed until December. With this the key infrastructure will not be in place "at any moment" and therefore our opinion remains that currency reform will not occur in the short term. These laws are not official until you see them in the Gazette period.
 
We are also encouraged by the recent visits of Maliki and such to various governments especially the USA. Before we go further we must say here that Maliki does not need an RV for this visit. We have to remember just a few short months ago the US was publicly denouncing support for Maliki. We believe this to be due to his friendliness with Iran and his dragging his feet around implementation of the Strategic Framework agreement. We have to also remember he is running for reelection and needs all the friends he can get. His visit to the US is simply to give a status report around implementation of the framework and to get reassurance of US support going forward. However, this we believe is very good. It should help accelerate the timeline toward currency reform. With the election in April we are hopeful the initial float will have begun before then.
 
When considering the date and rate one must keep the overall goal in mind. First the goal is for a stable currency over the long term. Secondly it needs to be fundamentally strong. The first goal is accomplished by having infrastructure laws in place and functioning. They include those dealing with banking, tariffs, investment, etc. They include the Economic Reform Act and HCl. Without these any currency reform would fail. Secondly, to be strong, it must be implemented within proven macroeconomic principles. This is why the rumored high rates are preposterous. They would destroy Iraq economically.
 
This is why it is most probable reform will come in the form of some type of float to allow the currency to appreciate as the economic output of the country increases over time. We do not rule out some type of RV first but anticipate it to be in the order of a few cents or 10s of cents and not $3+ or higher. Overall progress continues. The rumored high rates and immediate implementation are false. There is no credible public or private sources to support it. Supported information indicates late this year into next year at the earliest. However, things are progressing forward. We report, you decide.
 
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