Iraq's Central Bank moved the IQD to 1,500 on Wednesday. Read that cut as the end of the story and you miss what Iraq is doing.
It is the first move in a sequence. Lower the rate. Replace the currency. Raise the rate.
Step one
On Thursday night Prime Minister Ali al-Zaidi sat down with the leaders of parliament in Baghdad and told them why. The oil could not get out, and the state has to find 10 trillion IQD every month. “We had three options,” he said: mandatory savings, salaries every 45 days, or more borrowing. His government took none of them and backed the new rate instead. He called the closed strait “an undeclared siege.”
What Iraq has already built
Most people have forgotten how much of the rest is already in place.
- New notes — lawmakers disclosed in August that the Central Bank had finalized designs for a new series: 7.5 billion notes, with printers in France, Germany, Britain and Australia.
- Smaller notes — a finance committee member said the bank intends to issue a note below 250 dinars.
- Coins — the Prime Minister's financial adviser raised them himself on television in July.
- Gold — the Central Bank holds 175.6 tonnes, third among Arab states.
- The border — electronic customs is live at all 22 federal crossings.
- Oil — the Oil Ministry puts October exports at 2.7 million barrels a day, against nearly 3.4 million before the war.
- The street — Thursday closed at 165,700 IQD for $100 in Baghdad, the first lower close since the cut.
- Washington — the yield on 10-year US government debt reached 5.34% on October 1, its highest since 2002. Washington's debt has passed $40 trillion.
The question
None of that is preparation for a dinar that stays at 1,500. So what is left, and how long is the wait?
Credit: Written by Reset Intelligence — David E. Atterton, author of Head of the Snake (@EXIT_FIAT). More at resetintelligence.com.
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