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Shabibi stated months ago he had completed 70% of the process. What we now know is that meant removing the 25,000, 10,000, 5,000, 1,000 from the banks throughout the country and returning them to the CBI.

In recent days, we also now know that Shabibi is removing the 25,000, 10,000, 5,000, 1,000 notes from the streets of Iraq over the past 60 days leaving only the smaller notes of 500, 250 and 50. This event is causing the people to become frustrated with the lack of buying power and awkwardness of having to use these with a current exchange rate of 1170 to 1.

We can see the plan and the reason behind removing the larger notes (3 zeros) leaving the remaining notes as 1st phase or transition prior to the actual RV. The purpose to do so is to reduce the overall value of currency in circulation as well as get them out of potential dangerous hands post RV. Minimizing the value of the notes on the streets of Iraq only makes sense as leaving such notes would or could be disastrous in many regards.

Shabibi has made it clear his position. He knows the advancement of Iraq will not succeed unless this is a well timed event that has the full support of the marketplace as well as a government that is fully supportive, operational, and complete.

The Parliament appears to be voting next week on Allawi’s Strategic Council. As well, the 3 unfinished GOI positions.

I also believe it is unlikely we will see new smaller denominations such as a 1/2, or 1, 5 10 dinar till post RV. Some smaller notes have surfaced, they are unconfirmed and may very well be outdated. I expect Shabibi’s plan will be to have the people exchange there 500, 250, and 50’s for “new” smaller notes once the new rate takes effect.

I don’t think we are “home free” yet in this process. With political issues to still be resolved, including some new developments, legislation still outstanding including the Hydro Carbon Law, this may take anywhere from 1 week to 2 more months to get worked out. I hope not.

Kap