Encouraging signs in Iraq

Nibras Kazimi has a column in today's (Thursday January 25, 2007) New York Sun titled "Turnaround in Baghdad."  His thesis is that we are making real progress in Iraq:

The wider Sunni insurgency - the groups beyond Al Qaeda - is being slowly, and surely, defeated. 
Kazimi is a skeptic about the reputation of Geneeral Petraeus, seeing severe flaws in the execution of his two previous assignments in Iraq, but nevertheless thinks that he may reap the benefit of progress that is already evident.  He thinks the turning point came in the fall:

Last October, my sources began telling me about rumblings among the insurgent strategists suggesting that their murderous endeavor was about to run out of steam.
Read the whole thing. 

Is there any other evidence to support Kazimi's scenario?  We here at AT have been pointing to the remarkable surge in the value of the Iraqi dinar that started at about the same time and has continued right through today.  Since the September/October period, as can be seen in the chart, the Iraqi dinar has gained about 14% in value, a very large move for a currency. 

Following an initial slide in value, the dinar had been essentially flat since its introduction by the Coalition Provisional Authority in October 2003.  So the move since September represents a real change in its status.  Why has it advanced in value?  One reason is doubtless the increase in the interest rate - the Policy Rate - by the Central Bank of Iraq from 12% in September to 20% recently.

But this cannot be the whole reason, nor even the principal reason. Why?  Because if there were real fear that the regime would fall, this would be nowhere near sufficient inducement to buy the dinar, which will be worthless if the regime does fall.  What the increase in the value of the dinar very likely represents is a "voting with their feet" of the participants in the economy and an increase in the need for dinars for transactions within Iraq. 

This increase in value coincides with Kazimi's hypothesis of a turning point in the military situation in October.  Of course, there can be no guarantees on any of these points.  But we, as citizens, want to strive to assemble our own mosaic on Iraq and not be panicked about the future when we may, after considerable sacrifice and effort, be finally cresting the peak of the hill there.