In January, CBI announced the begining of Phase two of the currency reform. There have been several opinions about the content of Phase two. My opinion is that Phase two is nothing more than the lifting or raising of the zeros of the Local currency. This is the sterilizaton that we were watching for over one year ago. Essentially, CBI has been buying IQD, thus removing it from local circulation. This pattern of sterilization can be seen by following the Forex charts. Last nights auctions, for example, were conducted entirely below the CBI listed purchaserate.
Since late January,CBI has been removing (raising the zeros) of approximately one trillion IQD weekly. Based upon my own estimate of the amount of in-country IQD, I believed that the sterilization would be complete as early as mid August, slightly behind the stated six month schedule. Last week Dr. Shabibi mentioned that the local currency was three trillion IQD. Taking his comment at face value (and he has never lied to us)and considering the current push to raise the zeros, CBI should reach the point of diminishing returns on the sterilization phase within TWO WEEKS. At which time they will be free to initiate Phase three that will end with the introduction of the newest low denominations in six months. What does Phase three begin with? RV!!
Baring major political problems we should see it within three weeks. BE HAPPY AND HANG TIGHT!