CBI Policy (3/25/13)

One of the better known gurus talks about watching the policies coming out of Iraq, and states that we know what they’re going to do by watching those policies.  He talks about laws being passed and business deals being made, but for some reasons he never mentions their policy of exchange rate stability.  Well here’s the stated policy in an IMF document from 2010.

“The Central Bank of Iraq has been conducting foreign exchange auction on a daily basis since October 4, 2003. The central bank followed a policy of exchange rate stability which has translated in a de facto peg of the exchange rate since early 2004. However, from November 2006 until end 2008, the CBI allowed the exchange rate to gradually appreciate. As a result, the exchange rate arrangement of Iraq was reclassified to the category of crawling peg effective November 1, 2006. Since the start of 2009, the CBI returned to its earlier policy of maintaining a stable dinar. Consequently, the exchange rate arrangement of Iraq was reclassified effective January 1 2009 as a stabilized arrangement.”


(Look under ANNEX I. IRAQ: RELATIONS WITH THE FUND AS OF DECEMBER 31, 2009 and scroll down to IX. Exchange rate arrangement)

Then there are the videos of Shabibi when he was in Washington, D.C. in 2011 talking about CBI policy.  Watch these videos and see if you can count the times he used the words “stable”, “stability”, and “stabilization”.



There’s your policy right there, folks.  Stability.  Wondering what the holdup is for the RV?  Well now you know.  It’s not Maliki.  It’s not “Chapter 7”.  It’s not the HCL.  It’s not Erbil.  It’s not the Kurds.  It’s not Kuwait.  It’s not Obama.  It’s not Talibani, Barzani, al-Sadr, Allawi, Lagarde, Madame Wu, the “Powers That Be” or anybody else.  It’s the CBI’s policy.  They don’t want to raise the value unless they have to.  It’s that simple.  Since early 2009 the official value of the dinar has indeed remained quite stable, experiencing only one small increase in value in January of 2012.  So I submit to you that based on their stated policy and their actions since 2009 we can confidently predict what they will do in the future.  They’ll most likely do the same thing they’ve been doing – maintaining a stable dinar.  Anybody who tells you that their policy is anything else should be able to provide a document or two to support their claim like I just did.  If they can’t then they’re probably just a lying, scamming con artist.