There is a lot of discussion in dinar world about the 2%. Some gurus claim Iraq must maintain 2% spread for 90 days. None of this applies in this case because Iraq having a program rate (made up rate), and being an article fourteen currency is not under the same rules as an article VIII currency.
They must demonstrate to the IMF that they can control the currency…but they are not required while under fourteen to do this long term. By changing the rate they are now qualified to go to article eight as the rules do not require them to get there and hold for a quarter but rather be there to qualify.
Article fourteen does not require them to be at 2% at all as demonstrated over the last two years. Iraq is now prepared to monetarily make a change at least in the short term. The money vendors will make adjustments quickly and the street rate will follow the CBI rate if they let this drift.
Whether or not they pull the trigger quickly or are just putting their toe in the water to test depends on many things and their thoughts on timing.
Sometime in 2016 not specifying early or late 2016. The IMF indicated that early in 2016 Iraq would open their economy. I think the two, monetary reform and open economy will happen within days of each other. They are intertwined like taxes and tariffs and monetary change.
“You can’t have one without the other”, as demonstrated by the protests the last time they tried to implement them and their subsequent cancellation and postponement of them. Iraq for some reason now wants to attend the next OPEC meeting to discuss applying quotas for all members including Iraq, dropping OPEC production 1.5 million bpd. Very interesting coming from a cash starved country fighting a major war against terrorism with millions of refugees and a major liquidity problem. The forex’s are suddenly bouncing around after years of stagnation.
Something is happening like it has never done before. ISIS is being decimated in Iraq and Mosel is in the process of being reclaimed. The parliament is dead set on getting the budget done this year and will forsake working on any new laws to finish it. 2016 is certainly starting to look like a strong bet. I believe earlier rather than late.
It’s getting exciting again. We are seeing so much happening all at once. This investment sure looks like it might finally be ready to come to fruition very soon. IMO the positives way out weigh the little bad press over the last few months. A time to get excited.