Below is Guru Enorrste's take on the June 2015 CBI article. This appears to be a very important article.
Gurus interpret this article differently so they don't all agree on exactly what it's saying but guru Enorrste outlines things very clearly the way he sees it which leaves room for your own thoughts and conclusions as well...comes to us via dinar alerts.
enjoy!
Blanche
Gurus interpret this article differently so they don't all agree on exactly what it's saying but guru Enorrste outlines things very clearly the way he sees it which leaves room for your own thoughts and conclusions as well...comes to us via dinar alerts.
enjoy!
Blanche
The central bank's "Tomorrow Press:" the project to delete the zeros will be applied beginning of the year 2017
This is an important article because it comes directly from the mouth of the head of the CBI.
Furthermore, he is stating that he "expects" the beginning of the removal of the large notes to begin in early 2017. By stating this in this way, Allaq has left the door open a little bit.
As investors we have come to learn that this is a process that will begin with the change in the exchange rate regime from a fixed rate to a floating rate for the currency. This is essential PRIOR to the beginning on the removal of the large notes. Therefore, we can look with confidence for a change in the exchange rate regime within the next several months, in my opinion. Then, according to the way I understand Allaq, he is allowing about a year or so for the value of the dinar to rise to a point at which the "beginning" of the removal of the large notes will take place.
Let's assume that they follow through with the introduction of the 50000 and 100000 dinar notes within the next month or so. Since the 100000 dinar note will be the largest note to be in circulation it will also be the first to be removed, ironically. Last in and first out. But if it will be issued with a value of $86 per note then its removal will have to occur shortly after the introduction of the new exchange rate regime. In other words, it will have to be removed by the time its value reaches, say, $250. That means that the dinar floating rate will have to get to about 400 to 1 after which the CBI will have to begin removing the 100000 note.
Allaq is allowing himself about 18 months for that to happen. This would mean, assuming that the exchange rate regime is changed within the next 60 days or so, that the rate would rise at about 40 dinars per month, or a little about 1.5 dinars per day. If he waits until the end of this year to change the exchange rate regime, then the rate would have to rise at about 2.4 dinars per day. This is not an outlandish prediction. In fact, it seems quite conservative to me. We have seen over 100 dinar movement in the other direction in a matter of a few weeks!
Therefore, I conclude that Allaq is being quite conservative with his "expectation" that the beginning of the removal of the large notes will occur in early 2017. I think that this is, then, an absolute "outside projection" on his part. It seems much more likely that the actual removal of the 100000 notes could begin sometime in 2016, possibly in the first half, if the dinar begins to appreciate at anything more than 2.4 dinars per day once it is allowed to float. Notice that 2.4 dinars per day is only .2% change per day, or a 1% change per week. That is next to nothing in the currency market, especially for a grossly undervalued currency.
I conclude, then, that Allaq has left himself a very wide window for change and that his date of "expectation" is not firm, but is instead his "outside window" date. In other words, I look for the introduction of the large notes beginning within 30 to 60 days, then the change in the exchange rate regime before the end of the year, and the removal of the largest note to begin by sometime next year (probably in the second half).
By early 2017 it will not surprise me to see the rate down to 100 or 200 to 1 for the dinar.
This is just food for thought.
This is an important article because it comes directly from the mouth of the head of the CBI.
Furthermore, he is stating that he "expects" the beginning of the removal of the large notes to begin in early 2017. By stating this in this way, Allaq has left the door open a little bit.
As investors we have come to learn that this is a process that will begin with the change in the exchange rate regime from a fixed rate to a floating rate for the currency. This is essential PRIOR to the beginning on the removal of the large notes. Therefore, we can look with confidence for a change in the exchange rate regime within the next several months, in my opinion. Then, according to the way I understand Allaq, he is allowing about a year or so for the value of the dinar to rise to a point at which the "beginning" of the removal of the large notes will take place.
Let's assume that they follow through with the introduction of the 50000 and 100000 dinar notes within the next month or so. Since the 100000 dinar note will be the largest note to be in circulation it will also be the first to be removed, ironically. Last in and first out. But if it will be issued with a value of $86 per note then its removal will have to occur shortly after the introduction of the new exchange rate regime. In other words, it will have to be removed by the time its value reaches, say, $250. That means that the dinar floating rate will have to get to about 400 to 1 after which the CBI will have to begin removing the 100000 note.
Allaq is allowing himself about 18 months for that to happen. This would mean, assuming that the exchange rate regime is changed within the next 60 days or so, that the rate would rise at about 40 dinars per month, or a little about 1.5 dinars per day. If he waits until the end of this year to change the exchange rate regime, then the rate would have to rise at about 2.4 dinars per day. This is not an outlandish prediction. In fact, it seems quite conservative to me. We have seen over 100 dinar movement in the other direction in a matter of a few weeks!
Therefore, I conclude that Allaq is being quite conservative with his "expectation" that the beginning of the removal of the large notes will occur in early 2017. I think that this is, then, an absolute "outside projection" on his part. It seems much more likely that the actual removal of the 100000 notes could begin sometime in 2016, possibly in the first half, if the dinar begins to appreciate at anything more than 2.4 dinars per day once it is allowed to float. Notice that 2.4 dinars per day is only .2% change per day, or a 1% change per week. That is next to nothing in the currency market, especially for a grossly undervalued currency.
I conclude, then, that Allaq has left himself a very wide window for change and that his date of "expectation" is not firm, but is instead his "outside window" date. In other words, I look for the introduction of the large notes beginning within 30 to 60 days, then the change in the exchange rate regime before the end of the year, and the removal of the largest note to begin by sometime next year (probably in the second half).
By early 2017 it will not surprise me to see the rate down to 100 or 200 to 1 for the dinar.
This is just food for thought.
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