Iraq – Kuwait relations as well as the CBI’s efforts to delete the zeros from the currency has dominated the headlines leaning towards a IQD Revaluation !!

The first quater of 2012 has been a very active time for dinar investors.

Iraq – Kuwait relations as well as the CBI’s efforts to delete the zeros from the currency has dominated the headlines.

Key factors such as seating of the entire Maliki cabinet, a complete release from Chapter VII sanctions, and certain laws and policy changes will reflect major strides in the RV progress.

In January of this year the the Iraqi Parliamentary Finance Committee announced the end of the first phase in the project to delete the zeros (January 2012).  This was quickly followed up with Deputy Governor Saleh indicating Iraq’s policy makers would have to ultimately approve the CBI Act for the project to be official and the new currency would be issues immediately upon approval (January 2012).

In February more details emerged and the CBI indicated the new currency would be issued in September 2012.  The new currency will be made up of paper and metal currency much like we see in other areas of the world.  The denominations will range from 50 to 200 dinars (paper) and 1 to 2 dinar (coins/fils). Furthermore the article indicates the existing currency and the new currency will be in circulation side-by-side for a period of 6-months to a 1 year until 2013 when the entire project is said to be complete.

Furthermore it was announced the 2013 budget year will recognize the new currency which is another indication the project of deleting the zeros will be full implemented by January 2013 or at least by the first few months of 2013.

Since the news broke about September 2012 being the release date for the new currency the newspapers have not stopped with economist opinions and editorials discussing the dropping of the zeros, for the most part all have been favorable.

Rumors within Iraq began to surface the actual process of issuing new currency was not in September but in fact May 2012.  However the CBI has dispelled this rumor.

Nevertheless it appears a major change is coming to the Iraqi currency before the September 2012.  Currently the Iraqi Finance Committee and the CBI has formed a joint committee to implement the new currency project and we are awaiting for the GOI’s final approval of the CBI act.

The most recent news is all about Iraq and Kuwait.  Maliki visited Kuwait on March 14th for a one day trip that apparently turned successful for both countries.  During his visit Maliki and the Amir of Kuwait agreed to settle all of the outstanding issued between the two countries in order to facilitate Iraq’s departure from Chapter VII sanctions.

However during the one day visit some outstanding issues were settled including all lawsuits and debts owed regarding the Iraqi Airways was dropped.  In turn Iraq will spend $200 million while Kuwait will spend $300 million to form a joint airline.  Furthermore it appears both countries have agreed to maintain the border between Iraq and Kuwait.  Details of this agreement have been vague but could mean the terms of demarcation as well as relocation of farmers.  These are important steps toward ending issues with Kuwait.

Maliki’s visit was not the end of Iraq-Kuwait sanctions but his visit marked something very instrumental that will lead iraq out of Chapter VII.  Both countries will meet in a joint commission in April 2012 to settle all of the outstanding issues between the two countries – Both leaders have given promises both are willing to seek a final resolution.

In June 2012 the United Nations Security Council is set to hear a discussion on Iraq-Kuwait relations. An exact date has yet to be released but if all issues between Iraq and Kuwait are settled then this event could mark the end of Chapter VII sanctions against Iraq.

Anticipate the UN Representative Kobler to be instrumental in facilitating negotiations between Iraq and Kuwait.  Kobler is expected to meet Kuwait officials in the coming days to discuss the agreements made between Maliki and Kuwait.

Once Iraq and Kuwait officially announce a partnership agreement then this can be brought before the UNSC permanent members.  The vote will be very similar to what we witnessed in December 2010…yes or no.  Based upon the outward support for Iraq it looks as though Iraq could favorably be released from Chapter VII.

While nothing significant has been released enough activity warrants some movement in the RV-O-Meter.  As events occur and more tangible items become apparent the RV-O-Meter will adjust accordingly.

Also… its apparent the CBI is in full swing to reform its currency.  According to the articles being released everything points toward a revaluation wherein the CBI will improve the exchange rate.  However there is always risk the unknown could preempt speculation.  These are exciting times but please stay grounded and take one day at a time.  NOBODY knows how this process will unfold.

Whats left and its status…. Key elements which remain include (completion of all or part of this list could result in the RV):

 

  • DFI Exit Strategy – In process.  Iraq,US,UN, and IMF are fortifying the exit strategy now preparing for June 30
  • Seating a complete government (Security Ministers) – This is currently under debate and could be settled in the National Meeting scheduled this Spring.
  • Vote on investment law – Recent  discussion by Maliki would suggest this is on the parliamentary session agenda
  • Vote on oil and gas law (HCL) – The areas of disagreement appear near resolution and possibly heading to parliament in the next session.
  • Changes in CBI Monetary Policy (presentation of laws, passage of law) – This appears to be under parliament discussion
  • Kuwait/Iraq resolve outstanding issues – This issue is under negotiation.  This may require UNSC intervention if diplomatic negotiations between the two countries fail.
  • Release from UNSC Chapter VII – Articles suggest this will happen sometime in June 2012.  Iraq has asked for assistance from international leaders to aid in its emergence from Chapter VII.  Iraq still is required to meet UN obligations.
  • Becoming a full member of the WTO (ascension) – Iraq is currently in process of seeking full membership.  This will likely occur  post Chapter VII release.
  • Enact Custom Tarrif Law (IMF agreement): Recent articles would suggest the law has been passed but will not be enforced until 2012 LINK
  • The unknown factor: This simply means there could be an element(s) which exist that are unknown

Key articles:

Source: The Currency News Hound Put this awesome Post on the address linked below together and I thought was worth sharing with the masses.Greta Job CNH…jp

Nature’s Healing Matrix
Iraq – Kuwait relations as well as the CBI’s efforts to delete the zeros from the currency has dominated the headlines leaning towards a IQD Revaluation !!
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