,
DINARESGURUS.BLOGSPOT.COM_________________ _______

Saturday, April 19, 2014

DINAR GURUS UPDATE, 19 APRIL

4-19-2014   Newshound Guru wmawhite  I am of the opinion that the CBI is moving forward with the eventual change in status of the IQD. In other words, the 2014 budget needs the change in the IQD...but, the CBI does not need the budget.

4-19-2014   Intel Guru TNT Tony
   Hearing that good things are still in store for the weekend. We wait to see.

4-19-2014   Newshound Guru Kaperoni
  Article:   "Ahrar bloc describes 3rd term for Maliki as 'Dreams' "  Maliki may not be able to form a coalition to stay, but he will delay.  An article was posted earlier...said it could take a year to form a new government.  Let's hope not.

4-19-2014   Newshound Guru Millionday
   Article:  "Baghdad: launched in Baghdad on Thursday, the first Arab conference for accounting and auditing in cooperation with the Arab League"  so this is the advancement that will take place with the administration reform and also the economic reform.  [So how long...do u think it will take from here to get into wto? Days weeks months?]  the wto accession to active membership will be after their reality rate is set so i hope very soon -- with the news about the tarriff and customs meeting concerning the wto accession today it seems to look as though not long for their accession.

4-19-2014   Intel Guru DC
   
I believe Iraq is immensely ready. I believe they are getting ready for celebrations and frankly have been on the edge of ready celebrations for many days now, at least the 15th if not before.  A lot of the banks continue to distribute the lower denominations...There are some parts of the country that do not have them so it’s really confusing.  All the banks that we know and talk to are very ready and are on call and are ready to go.  The delays now are being measured in very short periods of time and they’re also getting harder and harder to justify, to get it done...we’re talking hour to hour, a few hours at a time...when they’re talking about the delays...not days.   I am very optimistic about the next few days and I think everybody else is. 

4-19-2014   Newshound Guru Kaperoni
   Article:   "Iraq is preparing for negotiations for joining the World Trade Organization in third round"   Unlikely they will get accession until the laws are in place and the currency is convertible.  These are basic requirements. Wishful thinking on Iraq's part to think they could gain accession without these.  Makes no sense...Parliament has to pass them laws and the GOI (Maliki) needs to stay out of the CBI for monetary reform to get done.  We shall see.

4-19-2014   Intel Guru TNT Tony   [via Adpet1]  I do expect us to see his between now and Monday, if not before. It could come in the next hours or days.  Iraq is telling their people the time to do currency reform is now... everyone is pushing for it, even the US.  They are ready for it to go as soon as the last detail is completed. There have been definite delays, not for personal gain, but because if it had gone through, it would have had a negative effect on us all.  I believe that this is over.  They are talking about it in the past tense.  We are just waiting for the announcement...I do think it could happen this weekend
 There are people at the call and exchange centers right now on Good Friday and Easter weekend.

THE STAR ONLINE POST: " IMF ADDS PRESSURE ON SOUTH KOREA TO LET WON RISE", 19 APRIL

IMF adds pressure on S. Korea to let won rise.

SEOUL: South Korea came under fresh pressure on Friday to let the won rise faster, when the International Monetary Fund said it was carrying an abnormally big current account surplus and that more dollar purchases would do more harm than good.

The IMF said in a report based on its late 2013 annual policy review that the won was estimated to be as much as 8 percent undervalued, while saying South Korea appeared to have been intervening actively to resist the currency's appreciation.

The US Treasury Department also called on South Korea in a scheduled report early this week to limit foreign exchange intervention to exceptional circumstances and not use regulatory measures to curb appreciation pressures.

"Staff, therefore, continue to assess that the exchange rate remains moderately undervalued in the range of 2%-8%, with the upper end of the range seeming more plausible in light of the recent widening of the current account surplus," the IMF said.

The won has gained 1.8% against the dollar so far this year and was trading close to a near six-year high set last week.

The IMF said South Korea's current account surplus was estimated to be around 3% to 4% more than the norm. South Korea's current account surplus shot up to 6.1% of annual gross domestic product in 2013 from 4.2% in 2012.

"Over the medium term, greater exchange rate appreciation would encourage reallocation of resources to the non-tradable sector, thereby further supporting rebalancing," the IMF said, adding further dollar-buying intervention is also costly.

South Korea's economy, the fourth-largest in Asia, relies heavily on exports for growth, and the country has repeatedly denied it was intervening in the currency market with the aim of keeping the won cheaper than the fair value.

"(South Korean authorities) disagreed with staff's assessment that the won is moderately undervalued, noting its appreciation since 2012," the IMF also said in the report. "They stressed that smoothing operations are restricted to alleviating excessive exchange rate volatility in the face of market herding."

The report was published based on the IMF's annual policy consultations with South Korea held in late 2013 and on a staff report prepared early this year, it said.

It added inflation in South Korea was expected to return to the country's target, which is set by the central bank at between 2.5% and 3.5%.

Inflation has stayed below the lower end of the target for months. – Reuters

Article Link

STRYKER POST: " CBI WANTS TO RAISE THE DINAR VALUE", 19 APRIL

4-19-14 Stryker: Central Bank of Iraq Wants to Raise the Dinar Value.Let’s take a look at the future value of the Iraqi dinar by connecting the dots when it comes to the Gold Ingot Sells, Gold Reserves, Dollarization and Money Supply (M1).Gold Ingot SellsThe Central Bank of Iraq wants to strengthen the value of the dinar by selling Gold to the Iraqi citizens. They first announced this through this press release:( press release ) valuable light of the decision of the Board of Directors of the Iraqi Central Bank to diversify the means of saving for the public has been contracted with a major population global companies to manufacture ingots of pure gold weights (5 g to 1000 g) to be sold to the public
  • 04/02/2014 (note: date formations are not consistent on the CBI website)
  • March 2, 2014
How does selling Gold ingots to the Iraqi citizens help to raise the value of the dinar?To answer this question we must look at the whole picture but first you must know that the Iraqis have been buying up U.S. Dollars as a tool of investment, why? Because the dollar is stable, has more value, it’s not restricted in growth nor does it fluctuate like the dinar does in the local market. 

The more the Iraqis buy the USD, the worse it is for the value of the dinar.Note: With a passport, Iraqis can buy up to $5,000 USD per month according to CBI’s monetary policy.By the way, the purchase of the U.S. Dollars by Iraqis has caused what they are describing as a dollarization phenomenon experienced by the economy. More on the dollarization topic in a moment.

Gold Reserves

Secondly, to help raise the value of the dinar in the future, the CBI announced that the total Gold reserves reached 90 tons, 60 tons were bought just in the last 2 months. Another sign that they are getting ready to make a change. This announcement came in the form of another press release just a day after their announcement of selling Gold ingots to the public.( press release ) reserves stood at the Iraqi Central Bank of the limits of pure gold (90 tons), after he bought 60 tons during the past two months,
  • 03/04/2014  (note: date formations are not consistent on the CBI website)
  • March 3, 2014

Dollarization 


Thirdly, it is important to know exactly what dollarization of a country means to know how all this fits together.Definition of 'Dollarization'A situation where the citizens of a country officially or unofficially use a foreign country's currency as legal tender for conducting transactions. The main reason for dollarization is because of greater stability in the value of the foreign currency over domestic currency. 

The downside of dollarization is that the country gives up its right to influence its own monetary policy by adjusting the money supply.Now that last sentence is very important to understand when it comes to Iraq, they have given up their right to influence Iraq’s monetary system by adjusting their money supply. 

Once again proving that their money supply has nothing to do with the real value of the dinar right now.So what have they done to control monetary policy?Well first Dr. Shabibi fixed the official rate in 2003 to the dollar and to artificially keep it that way the CBI grows the money supply equally with the growth of their GDP. More on this as we look at their money supply and what it is made of.The real influence they have and the only thing they really care about right now is their market rate and keeping it stable. 

They do this by influencing the sale of the dollar through the daily auctions because they are not internationally traded, so the local rate is the driving force behind their data numbers, like their inflation numbers and such.See dollarization works to grow their money supply to balance out the growth of their GDP, artificially keeping the value of the dinar fixed low to the USD and influences their parallel market rate through the daily auctions.

 Dr. Shabibi is a very wise man IMO.In the case of Iraq, the CBI has increased the money supply by the mere fact that the United States first stabilized the Iraqi economy in 2003 and 2004 with $40 billion U.S. dollars of Iraqis own frozen assets.Consequently each dollar put into the Iraqi economy since then through dollarization counts in their money supply and why the number grows as fast as their GDP does.

Investopedia explains 'Dollarization'For example, the citizens of a country with an economy undergoing rampant inflation may choose to use a historically stable currency (like the U.S. dollar) to conduct day-to-day transactions, because inflation will cause their domestic currency to have reduced buying power in a relatively short amount of time.Dollarization does not always involve the U.S. dollar as the adopted foreign currency. The euro has also been adopted by non-EU members as its domestic currency.

Iraq has no inflationary issues so why does the dinar not have more purchasing power? Because there is much USD (dollarization) in Iraq and these Gold Ingot sales are just the beginning to de-dollarizing Iraq and that in itself will make the value (purchasing power) go up in the market place which will help the CBI change its monetary policy all together.OK, let’s look at what makes up their money supply so you know I am not pulling a rabbit out of my hat and my/our facts are based off what the CBI states their money supply is.Money Supply (M1)(This is courtesy of Zul at Dinar Vets)Zul, thanks for helping get my thoughts across!CBI definition of Money Supply (M1):  represents money outside banks plus current deposits in national and foreign currency for economic sectors (except for central government sector) with commercial banks.

You can find that on page 9 of the document: http://www.cbi.iq/do...nnual_2011f.pdf

Here's a clearer definitions of M1 by CBI. (From diff year annual reports)

Money Supply (M1): represents money in circulation with the public adding to it current deposits in national and foreign currency for the private sector and public governmental institutions excluding central government.

OK, now that we all know how all that works, it is easy to understand that as the CBI sells Gold Ingots to the citizens, it will draw in all those USD’s that the Iraqis have invested in.QUOTE: said a central bank to activate the monetary policy tools and the willingness to sell gold to the public would be granted dinar greater strength as well as it reduces the dollarization phenomenon experienced by the economy.


In conclusion, we all know now that Iraq has given up their influence of monetary policy when it comes to their money supply by the mere presence of dollarization.We know that the CBI accounts for the dollar in their money supply (M1), thus the dollarization phenomenon they speak of. Which if you think about it, the money supply has no real relevance to the true value of the Iraqi dinar since it is a de facto peg. The only value that the CBI is concerned with is the market rate and the 2% the IMF has targeted for them on this until they go international but that too will change once they do go global.

 De-dollarize and the true value of the dinar will come shining to the top based on facts.The sale of Gold Ingots is the start of this process according to these facts, along with the high Gold Reserves and the fact that Iraq will have their frozen wealth returned to them gives me hope that we will see a real monetary change very soon.That’s all I have for now.
Have a great Easter weekend and may God continue to lift us all up

TONY TWEET, 19 APRIL

TNT Tony ‏@THE_TNT_TEAM 1m
Good day TNT. Hearing that good things are still in store for the weekend. We wait to see.

TONY POST VIA ADEPT1 FROM TNT FORUM, 19 APRIL

4-19-2014   Intel Guru TNT Tony   [via Adpet1]  I do expect us to see his between now and Monday, if not before. It could come in the next hours or days.  Iraq is telling their people the time to do currency reform is now... everyone is pushing for it, even the US.  They are ready for it to go as soon as the last detail is completed. There have been definite delays, not for personal gain, but because if it had gone through, it would have had a negative effect on us all.  I believe that this is over.  They are talking about it in the past tense.  We are just waiting for the announcement...I do think it could happen this weekend.  There are people at the call and exchange centers right now on Good Friday and Easter weekend.

KAPERONI POST, 19 APRIL

4-19-14 Kaperoni: Article: "Iraq is preparing for negotiations for joining the World Trade Organization in third roundUnlikely they will get accession until the laws are in place and the currency is convertible. These are basic requirements. Wishful thinking on Iraq's part to think they could gain accession without these.  Makes no sense ... Parliament has to pass them laws and the GOI (Maliki) needs to stay out of the CBI for monetary reform to get done.  We shall see

JOHN MACHAFFIE UPDATE, 19 APRIL

THE REPUBLIC IS ACTIVE AND AWAITING THE RV. BEST ADVICE ON THE STREET IS RV THIS WEEKEND AND PUBLIC EXCHANGING MONDAY OR TUESDAY.
NEW REPUBLIC TREASURY WHICH IS GOLD BACKED IS NOW ALIVE. LOOK FOR NEW TREASURY BILLS AT THE BANK MONDAY. THE OLD FEDERAL RESERVE NOTES SHALL HAVE A HUGE DEPRECIATION IN THE NEAR FUTURE. CORRUPT FED UST PERSONNEL HAVE BEEN TAGGED AND SHALL BE REMOVED.

DC POST FROM FRIDAY CC FROM TNT FORUM, 19 APRIL

DC: So, here is what I got, guys. Bottom line, I believe Iraq is immensely ready. I believe they are getting ready for celebrations and frankly have been on the edge of ready celebrations for many days now, at least the 15th if not before.

In terms of things like being physically leaked (???) those kinds of things, like ready. A lot of the banks continue to distribute the lower denominations and/or a… those have been pushed out throughout most of the country right now.

There are some parts of the country, they do not have it still and so it’s really confusing for the poor guys out there, causing regular trouble.

They are mainly preparing for their elections. Remember, their elections are kind of a rolling cycle and those elections are starting to occur and the really big ones are starting to crank up tomorrow and through the 30th, and those again, moving on and being successfully monitored by everybody out there.

 All the politicians, not just Maliki, but all the other politicians want this as well, except one specific guy and the folks that follow him, very much want to get this done now because they believe it will reinforce the status quo.
....
It’s just like here in the US, or for those international, everybody wants to look as good as he/she can right before the election so this is a good time for that, and they’re very much striving for that.

My understanding is that a great deal of paperwork has been submitted to all the right amount of people that put everybody on pretty much definite watch where they’re getting… there’s not a lot of wiggle room, let’s put it that way.

There are people here in the US that are working on Good Friday. Regardless of your religious preferences, we typically don’t work on a day like today and they’re not doing it because they want to. They’re doing it because they believe… the high level believe that this should be going on.

 I would believe that a weekend is a very nice place -- and we’ve talked about in the past and I’ll bring it up again – a lot of senior politicians, especially if they’re real strategists, have always wanted this to occur on a weekend because all the initial rush and all the initial crazy during a time when there is very light news coverage,
and the lines (???) and all that kinds of stuff can be easily confused, they won’t be on there.

All the banks that we know and talk to are very ready and are on call and are very ready to go.

My personal opinion, kinda extract from the level of details is that the … is that they were supposed to go down the last couple of nights, but there were deals to buy a little more time – we’re talking like hours, with a maximum of 24 hours at a time of these last-minute deals and movement occurring almost every night.

Puts us a couple of days, again, which is a good thing. If we’re getting down to where you’re playing for hours, in essence that’s what it is, if you’re playing for hours, there’s not a hell lot of time left on the clock, it’s just not, to get that done.

So, I strongly think that we’re very much ready and ready to go. 

I think the rest of the world is pushing toward this harder than the US, but the US doesn’t have any more timeouts left and we’re trying to get this done right now, and are prepared to do so. So, I kind of think that’s where we’re at, guys.

DC: I was just saying the delay, we’re talking hour to hour, a few hours at a time. I’m not saying, “Hey, we’re within an hour.” I’m saying when they’re talking about the delays, they’re talking about the hour timeline, not days.

Q: My big question was, seeing Okie with this thing and some of the other folks talking about the IMF and the US coming to terms, was that basically the hold-up or was it something else and they’re just using that as an excuse?

DC: So, the IMF and this agreement that came about… the agreement has to be ratified by Congress, so… just nothing is really done until it’s ratify by Congress. How this affects the actual revaluation? It is a little more complicated, a little different than what everybody is expecting.

In terms of does it help, does it assist, does it play into this? The answer is, yes, absolutely it does. But it’s, at least all my people, and also when it fully *** situation, this was nice to have not a must have. This is a “Hey, while we’re here, let’s get it done.

We got everybody meeting and this is basically a wonderful thing on there.” It wasn’t the IMF is holding this over the US head and vice versa. They were in the middle of trying to do this.

The other things we can talk about were the must-haves and those have already occurred. And this meeting, they can help proceed and help push things along. But, again, I believe they can modify and adjust, because the US isn’t going to give up a veto vote, but they can be a lot more flexible, they can be a lot more easy to work with than maybe we have in the past.

Q: So, on 13303, if that expires on May 22nd, is that correct? (DC: Correct.) So, if we go past that day, does the RV automatically just kicks in?

DC: No. So, 13303 is mainly for – and I say mainly because some parts of 13303 are classified and are held confidential – but, the other part that we’re reading basically said a US citizen can operate just like Iraqi citizen when it comes to the Iraqi currency.

And so, it’s just for US citizens for the ability to invest in, send money in, do whatever we want to with the currency. If we, God forbid, for some unknown reason go past that, then … and they don’t renew it – which they always renewed it every time – basically we could have some complications with buying and selling dinar, mainly buying from currency dealers.

But, if you’re already have it, then it’s yours, it’s theirs.

The way this has to go is Iraq basically has to ask, or has to request of the BIS and the IMF, “hey, we’re ready, let’s go.” And they have to accept that, and once it’s accepted, they go around to make sure everybody is okay with the acceptance of the rate.

And they believe, yes, Iraq can justify a $3-whatever rate, then everything is fine. That is determined based on the homework the central bank has done, as well as the prime minister of the country saying, “yes, we’re okay,” or the central bank director saying, “yes, we can work this. We’re ready to go.” That’s how that process works; they’re independent of each other.

DC: When people get to 13303, there are many different pieces of it, and the important piece that Tony mentioned was the DFI fund. That was basically the reconstruction money for the country. We bombed them to hell, so now they’re trying to rebuild all their infrastructure, all their electricity, sewer, water, everything else.

And so, that was the $190 billion 1.5 weeks ago, and that was actually released and what the DFI fund did was it basically said, “Listen, I’m going to protect these funds against the creditors of Iraq.” Like, people would try to sue Iraq or contracts that don’t go through because somebody disagrees with it, and they try to sue the country for it, etc.

Those are protected from everybody because they’re development funds and they’re part of the UN and part of… a few other agencies have their fingers in it. Those are protected from any creditors, etc. Then we’re releasing it, it’s a major win, cuz it’s saying, “you’re grown enough to start rebuilding your own country. You’re grown up enough to stand on your own and defend against your own liabilities that you might created or might not created.”

Guys, ff the RV was not happening, if we’re not this close, it would have not been released last week, I promise you that.

Iraq actually wants to keep that, like anybody, “Hey, I can keep my money super protected until I want to use it.” Obviously they’re going to keep it well protected. They have asked for and got permission from the DFI funds which again triggers a lot of part of the DFI funds.

And part of the release of the DFI fund, remember, it was online, anybody can look into it if they want to is that it has to have the revaluation of the Iraqi dinar.

Q: Taxes. I’ve done some extensive research and I have an accounting background and from all evidence, you’re talking about people being able to use this as capital gains and if they were a business that would have been true, otherwise this would be considered ordinary income. I would just like your thoughts on that.

DC: I know that there are still proposals in the different taxing committees that they are waiting on. They are continually debating and going back and forth, to put in writing, this bill or whatever. It’s very much in play right now.

Frankly, I don’t believe it’s settled at all. I believe there are some specific exchanges due to who the last buyer is, those exchanges will maybe be held under foreign income, credits and those kinds of those things; they have specifically stated. But I think most of the tax situation is not solved.

So, all I can really tell you is what I’m going to do and that is set aside 50% for taxes until they figure it out.

C: Was just curious. Spent about 3 months investigating this. So, unless they change this and put it in halfway plain English, it’s going to be very difficult for anybody including tax preparers to be able to muddle through it halfway knowledgeable.

DC: Agree. It is not clear at all.

C: The tax codes are not clear to begin with.

DC: Guys, things again look quite good. Apologize again for not being on much. My normal work schedule has been way too burdensome and I apologize for not being on here. I hope everybody is doing great.

Bottom line, there have been some agreements that they agreed to that put things on a very, very tight timeline. If you want to go to the pessimistic side and say, “what does it take to get those agreements mess up?” It takes a lot to screw these agreements up. It takes a whole lot for something to go wrong on this.

The delays now are being measured in very short periods of time and they’re also getting harder and harder to justify, to get it done.

Why do we go to the negative? Because they had so many delays that’s why this make this different than the time before.

But I am very optimistic about the next few days and I think everybody else is. I also believe that the education process will be less scary and more helpful to the banks than we had originally were worried about, that’s a wonderful thing.

And we understand that we’ll be here to help further along than maybe we would have in the past. So, good luck and keep the positive thoughts and prayers going.