Originally Posted by
Wm.Knowles
I would like to respond to a question I received as a PM. What is your idea about the RV rate and do they (CBI) know about all of us that have invested in dinar?
In thinking about these questions I remembered that while in the securities business I witnessed many bankers selling their bonds with only slight increases in appreciation. I learned that economic behavior changes at different price levels. What this means to us is the fact that the CBI is caught between two forces. Pressure to increase the purchasing power of the dinar for the Iraqi people and still be able to purchase dinar from the economy (especially outside of Iraq) and retire as much of the outsanding dinar as possible as cheaply as possible. I think we might want to adjust our thinking about what a reevaluation truly is. Up until now many of us have been considering a reevaluation as singular event. Lets start the discussion that an RV is a process. A process where the CBI (who knows their is an abundance of currency outside of Iraq) will attempt an initial RV that will satisfy both the increase in purchasing power, but low enough to retreive/remove as much currency from the outside investors as possible. If I was the President of the CBI, Why would I instantly RV at double digits when I can pobably remove a "big bunch" of dinar and only pay a single digit figure? As the President, I can always raise the exchange rate figure. So, how many of you would sell a million dinar if the initial RV was only .05 cents? Why should I pay more? While I think the future for this investment is exceptional, I think we are obligated to explore the possibilities so as to be prepared. Once there is an RV, expect them to turn their attention to the investors on the outside and remove as much of that pool of currency as cheaply as possible. Hate to sound cynical, but bankers are not social workers and their perception is strickly on the money.