Thread: Zubaidi's reference to "deleted 3 zeros"

Here is a thought. Let's compare the two articles. Both of them released on Friday, the 29th on November.

Here is a statement from Friday's article released on the Dow Jones newswire:

Dow Jones Newswires: Global Financial news and commentary

"The Central Bank will take a decision in three months time from now, taking off three zeros from the current Iraqi dinar value," Bayan Jabor said in an exclusive interview with Dow Jones Newswires in Amman."

Here is the statement from Friday's article released by the Amman-Constitution to a Jordanian audience:

"...stressing that every effort will focus on Iraqi deleted 3 zeroes of the value of the Iraqi dinar, leading to ID one for every dollar ...

If they were talking about a lop I would think they would use the word denomination. But they say value which would refer to the exchange rate. Would it not?

Originally Posted by dealorbuydinar

Here is a thought. Let's compare the two articles. Both of them released on Friday, the 29th on November.

Here is a statement from Friday's article released on the Dow Jones newswire:

Dow Jones Newswires: Global Financial news and commentary

"The Central Bank will take a decision in three months time from now, taking off three zeros from the current Iraqi dinar value," Bayan Jabor said in an exclusive interview with Dow Jones Newswires in Amman."

Here is the statement from Friday's article released by the Amman-Constitution to a Jordanian audience:

"...stressing that every effort will focus on Iraqi deleted 3 zeroes of the value of the Iraqi dinar, leading to ID one for every dollar ...

If they were talking about a lop I would think they would use the word denomination. But they say value which would refer to the exchange rate. Would it not?

Hello everyone.

IMHO if Iraq or any country was planning to do a country wide currency exchange to replace existing currency with newer, maybe lower denominations, with NO resulting change in relative value, then they would announce the exchange in advance so as to complete the process quickly. Since there would be no real change in exchange value, then there would be no need to reduce speculation or no need to be secret about the plan. A "lopp" just to replace the higher denoms woth lower ones would need to be acomplished as soon as possible and would be conducted out in the open with much advanced notice so as to alert the population and remove the old notes. IMHO, this is not the case for Iraq. If they intended to conduct a "lopp" i.e. exchange, then they would not be reducing the rate as they have and would not be removing dinar from inside and outside of Iraq in such a dramatic, almost frantic rate and amount. They would simply have announced the exchange and made plans to acomplish the plan. Now if they intend to raise the value of the current currency by removing zeros from the existing value, then the dynamics are completely different. The second option is more consistent with their behavior over the past year. The only miscalculation we have made was to underestimate how long it was going to take to reduce the debt and how much money was actually out there, which resulted in inflation and a much longer time to reduce the base money supply. Since inflation by many accounts ranges from 11.5 to 16 percent, currently, in economic terms this equals an overnight intervention. Remarkable. So we have not been wrong in our evaluation of the process as to what the CBI was doing, we only underestimated the time and the size of the problems they were having to solve. There were reliable reports last summer that their foreign currency reserves were at 28B. A recent article reports them at 22B. Still a respectable amount. This might imply that they have been using their reserves to remove additional dinar. Which is what I feel they have done/are doing and is exactly what you would expect a Central Bank to do under the Inflationary circumstances of last summer with a 77% infaltionary rate, who has theforeign currency reserves to act. Many in economic understand how to reduce inflation but few countries have the reserves to intervene. Since 7/23 they are approaching around 6B in removing foreign transfers. This week almost all of the auctions has been from outside. Good! However, this process is winding down. There is only a finite amount of money out there and they can only continue this process for so long. IMHO not much longer. So its all good for us and as my friend Socata 850 says, "the more they take the more we make". Thank You

Originally Posted by Wm.Knowles

Hello everyone.

IMHO if Iraq or any country was planning to do a country wide currency exchange to replace existing currency with newer, maybe lower denominations, with NO resulting change in relative value, then they would announce the exchange in advance so as to complete the process quickly. Since there would be no real change in exchange value, then there would be no need to reduce speculation or no need to be secret about the plan. A "lopp" just to replace the higher denoms woth lower ones would need to be acomplished as soon as possible and would be conducted out in the open with much advanced notice so as to alert the population and remove the old notes. IMHO, this is not the case for Iraq. If they intended to conduct a "lopp" i.e. exchange, then they would not be reducing the rate as they have and would not be removing dinar from inside and outside of Iraq in such a dramatic, almost frantic rate and amount. They would simply have announced the exchange and made plans to acomplish the plan. Now if they intend to raise the value of the current currency by removing zeros from the existing value, then the dynamics are completely different. The second option is more consistent with their behavior over the past year. The only miscalculation we have made was to underestimate how long it was going to take to reduce the debt and how much money was actually out there, which resulted in inflation and a much longer time to reduce the base money supply. Since inflation by many accounts ranges from 11.5 to 16 percent, currently, in economic terms this equals an overnight intervention. Remarkable. So we have not been wrong in our evaluation of the process as to what the CBI was doing, we only underestimated the time and the size of the problems they were having to solve. There were reliable reports last summer that their foreign currency reserves were at 28B. A recent article reports them at 22B. Still a respectable amount. This might imply that they have been using their reserves to remove additional dinar. Which is what I feel they have done/are doing and is exactly what you would expect a Central Bank to do under the Inflationary circumstances of last summer with a 77% infaltionary rate, who has theforeign currency reserves to act. Many in economic understand how to reduce inflation but few countries have the reserves to intervene. Since 7/23 they are approaching around 6B in removing foreign transfers. This week almost all of the auctions has been from outside. Good! However, this process is winding down. There is only a finite amount of money out there and they can only continue this process for so long. IMHO not much longer. So its all good for us and as my friend Socata 850 says, "the more they take the more we make". Thank You

Wm. Wm. Wm.....

Once again, thank you for your reasoned, logical analysis of this news, and the current state of monetary policy over there. I must admit though, with my dinar-addled brain, you almost lost me at "Hello". I DO understand what you're saying, and do agree that some of our past thoughts were based on estimations, as we certainly are not privy to the facts regarding M2, etc.

While any one piece of news, or any one post does not bring that excited feeling as they did a year ago, enlightened posts such as yours.. keep me damn interested.. Thank you Wm.

Wm...you HAD me at hello!!!! Good to 'see' you again!