For about a week one theory has circulated in the dinar community: Iraq lowers the IQD first, deletes the zeros, and only then raises the rate.
This morning the first step happened. Iraq's Council of Ministers approved a new rate and the Central Bank adopted it: 1,500 IQD to the dollar buying from the Finance Ministry, 1,510 selling to the banks and 1,520 selling to the public.
One statement
Safaa al-Jabiri sits on parliament's economy committee. Late on Monday he said: “There is a proposal from the finance minister to adjust the official exchange rate to 150,000 dinars for every $100, but there is no final decision so far.” By the next day it was a decision. In the same statement he said that changing Iraq's currency, and possibly deleting the zeros, is under serious discussion inside the Prime Minister's office and the Central Bank.
Everything else that moved
- The budget — after parliament's Finance Committee met Finance Minister Faleh al-Sari, the draft's figures came out: 217 trillion IQD in spending, a 50 trillion deficit, oil at $58 a barrel and 1,500 IQD to the dollar. A committee member said the rate “is subject to change.” The cabinet approved it the same day.
- The oil line — an Iraqi oil expert called the budget's 4 million barrels a day of exports “impossible” while the Strait of Hormuz is shut.
- The law — the Central Bank's governor said in September that new banknotes fall under the bank's own authority, while deleting zeros needs a law passed by parliament.
- The street — the dollar closed Tuesday above 163,000 IQD per $100 in Baghdad, before the decision. The bank's price to the banks moves from 131,000 to 151,000.
- The weapons — Prime Minister Ali al-Zaidi told tribal sheikhs that 5 armed factions have agreed to hand over their weapons and 3 already have.
- Tehran — Trump said “nobody knows” who is running Iran. A tanker was hit in the Strait of Hormuz and Oman evacuated 10 of its crew.
The question
Is the step down the first move of a bigger plan, or only a finance ministry short of cash? Nothing in the decision mentions the zeros or a higher rate to follow.
Credit: Written by Reset Intelligence — David E. Atterton, author of Head of the Snake (@EXIT_FIAT). More at resetintelligence.com.
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