Kaperoni says There is much to be done yet before we can hope for an increase in the value of the dinar.

5-9-2014 Newshound Guru Kaperoni Article: "Decline in central bank sales of dollar at the end of the auction week" We will have to wait and see if they remain low. It makes no sense when these banks are currently nothing more than money exchangers so commissions are important to them. We can guess that the issuance of new dinar may have curbed some desire to use dollars in the market. But the Iraqi economy still needed dollars for imports. Why they are low is anyone's guess but these auctions are important to maintain the exchange rate and...to reduce the spread from Official Rate to Market Rate. If anything, I was expecting the number of banks and money exchangers participating to increase over the coming weeks - not decrease.



...thinking a reduction in auction sales means they are about to raise the value of the dinar. Wrong! The CBI is not compliant with the IMF. Until they prove they can do what is asked of them (via the Article IV Consultation) the CBI is not moving to Article VIII nor a new exchange regime. The recent statement that said "mid year" or June does not imply a change in value of the dinar, but compliance with the IMF. Nothing more. If the CBI meets that goal of mid year or June, we still need laws to be passed for economic and banking reform. There is much to be done yet before we can hope for an increase in the value of the dinar.

I have a lot of respect for Kap, but I have never agreed with him on a key component of his thinking here. Article IV governs exchange arrangements, you comply with it, not move from it. Nor is Article VIII is not something you move to, it is a set of general rules you agree to comply with, nothing more, and nothing less. You do not move from Article IV to Article VIII, you ascend from observer status to full membership, when the working committee determines you are in compliance with all the requirements of the IMF and are recommended and approved by the full membership for ascension. 

I also do not agree that ascension is what we are waiting and looking for, it would be good news yes, but it is not the trigger. Any change of value will come when Iraq is ready to make the move, in the way and timing THEY judge it to be in their best interests.