It looks like the Central Bank of Iraq (CBI) has finally turned a corner here in Baghdad. They have implemented something that they have been wanting to do for the last several years but were unable to due to hyper-inflation.
Today, the Central Bank of Iraq completed their daily auction and closed with approximately 12.9 million dollars. This amount is significantly lower than it has been in the past. We’ve seen it reach peaks of over 100 million daily, just trying to keep the Iraqi economy from collapsing. Currently in Iraq, the typical Iraqi citizen has been using more U.S. dollars than their own country currency and now all that is about to change with the help of the Central Bank of Iraq. The CBI has implemented a new program that is encouraging or quite possibly forcing, the banking system to use Iraqi dinar currency instead of U.S. dollars. This tactic makes purchasing foreign currency very expensive. Don’t get me wrong, It is still being allowed, but it will just cost a little more than it has in past foreign currency transactions. In addition, the CBI has started a tax on all foreign currency transactions. I know this all to be factual because I, personally have access to these formal documents and hold in my hand a copy of the CBI memo that was issued to the Iraqi banking sector. It is evident that the CBI is doing everything in it’s power to make the dinar stronger against the us dollar by instituting this tax. This may explain why you see the foreign currency at 12.9 million dollars daily and will for quite sometime. This action by the CBI has taken a lot of Iraqi businessmen here by surprise as well as the banking industry.
In my last post on 2 May, I mentioned that the Re-denomination Revaluation report has been completed and is ready to be delivered to Prime Minister, Nuri Maliki at his request. This information is true. As crazy as this may sound to some, the CBI has to actually wait for PM Maliki to request this report and make the time to review it. The only question is “when”, as this man has a tendency to procrastinate and drag his feet. I am not going to speculate as to when this will all be, but this week I will be getting a head’s -up from my business contacts in the banking sector and some confirmation from other Iraqi business contacts.
Since I’ve been inundated with emails asking me this one question I’d like to address it in my newsletter today. There are many out there who claim to have contacts within or associated with the CBI that give them information about what is going on here in Iraq. Just for the record, here in Iraq, there are no Iraqi’s that will give you anything until he/she has either met you personally and/or conducted some type of interaction in business. So, when you hear people say or write that they have a CBI contact treat this with a grain of salt, especially when they are not here in Baghdad.
Very few people currently hold the knowledge of the rate projections of the iraqi dinar that is currency being reported from the CBI. This is closed file, guarded information. Not to mention, the reports were just recently published from the CBI. I have the names of these reports and they are; Central Bank of Iraq Annual Report 2009 and Monetary Policy Central Bank of Iraq Annual Report 2009. Both reports are chalk full of information and do give projections of the Iraqi dinar currency rate straight from the CBI. These reports are solely for Banking and Ministry officials. I was able to obtain them due to my close contacts with banking officials. Please don’t let the mention of the year 2009 fool you because this is the last year the CBI reported anything, they are currently just completing the reports for 2010. Eventually, the CBI will get to 2011 and 2012. I have scanned the cover of both reports today and have included them in this newsletter.
For several years now, people have given inaccurate dates and rates in regards to the Iraqi dinar and ALL have been 100% wrong each and every time. I, can honestly say, that I have knowledge in regards to the projected dinar currency rate as stated in the 2009 Monetary Policy report. This information comes straight from the source. I have no idea if it will all come true to fruition, but that is why they are called projections. It’s nice to know what the future CBI plan is for the Iraqi dinar currency. That’s all that I can disclose at this current time. The dinar currency transition period is expected to be for only 12 months. I will reveal more of what is being reported in the monetary policy reports in upcoming American Contractor newsletters to my email subscribers.
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