Thread: Iraq/Dinar News. 09/05 to 01/14/07

Originally Posted by Wm.Knowles

The question was: To what extent will the poliical changes in the GOI effect the monetary policies of the CBI?
Most americans would be very surprised at how independent the Federal Reserve System is from the fiscal policies of the US Gov. With the exception of deficit spending (which effects the money supply) the Fed acts as an independent central banking function. The same goes for Iraq. I have always been amazed over the last couple of years as to how the CBI and the economy seems to continue on its own course despite the upheavals in the GOI i.e. elections, forming a gov. etc. Since the GOIs spending is consistent with their budget, they actually do a better job of not printing money (by deficit spending) than we do. Monetary policy lies within the responsibility of the CBI and political changes, statements, comments etc. will have little influence on their policies just the same as they do in this country. The Federal Reserve system is govern by a board with the New York fed being the lead system. So you can expect the CBI to follow its own agenda, inspite of what the GOI thinks, says, or does. The monetary system is largely "outside" of the politicians in the GOI, and the CBI is much more influenced by suggestions and guidelines from the IMF and the world bank. However, the good news is that an increase in the currency value has been a goal of the IMF, World Bank from its original exchange in Oct. '03 based on how the monetary system has been put in place and the structure of the banking system that has been established from the beggining. There has been a definable trend towards making their money more valuable through sound monetary policies and economic growth, thus establishing Iraq as an eventual economic powerhouse in the middle east. So, I think in terms of the eventual outcome of this investment, as being well on track and that it will eventually rise to higher significant levels. I feel the CBIs establishment of a peg to the USD in Jan. of '04 to around 1475 as being established after the dinar had risen to a level below 1000 as a way of stabilizing the exchange rate. This allowed stability and increased there currency reserves. I think they knew that increasing currency reserves had to come from outside of the country. Afterall where else would they come from? The problem was that they didn't anticipate how long it would take to form a Govern. reduce outside debt and, since the uprising began in Iraq in April of '04, they didn't anticipate the extent of the violence. So where are they now? They (CBI) are setting on one of the most undervalued currencies in the world. The delays that I have discussed have resulted in a situation that requires a "bold adjust" in the exchange rate value to bring the dinar close to its real market value. Since they have been continuing to sell the dinar at such an undervalued level for so long, the exchane rate has become one of the major contributors to the high inflation rate. This issue was mentioned in the last report from the IMF. In that report, they stated that monetary policies would probably have little effect and that the exchange rate adjustment would have to be considered. I hope these discussion answers some questions. Watching the CBIs auctions in the next couple of days will further establish what type of trend they have in mind. As I stated before, They cannot continue to purchase dinars out of the economy for ever. Thank you for your interest and your comments are appreciated.

Thank you for helping us to understand what is going on. We really appreciate it and hope you will submit many more posts now that we are getting close, thanks again

[QUOTE=Adster;134741]Hhhmmmm, not so good.......hope for all of us and am sure it will have revalued by then or we'll be using the dinars for toilet paper.


QUOTE]
When I hear Adster say "not so good" it makes my stomach hurt. Please don't say things like that! A little later you seem to indicate that the 11/12 of December is the new possibility. I'm off to the outback again for a week Adam, can you give me a little nutshell idea of what to think about while I'm gone?
blessings always

Originally Posted by worf

I understand what you are saying but with the removal of dinars from the Iraq economy, doesn't that make it harder for the Iraqi's to purchase things they need for day to day living? I realize that with the supply getting smaller their value should raise but isn't there is a lag time that could be catastophic for the Iraqis who are trying to buy things but can't get enough dinars to purchase them until the appreciation of the dinar hits?

By the law of supply and demand, when things are harder to come by, their value increases. But it will take some time for the prices to adjust on the street. During this time the Iraqis will be subjected to more misery and suffering won't they?

All I can say is SSSSHHHHEEEESSSSHHHH!!!! What a way to run a country!!!!!

worf

I am no economist but it has often been said that inflation is caused by too many dollars chasing too few goods. With the high amount of dinar in circulation and few consumer goods on the shelves it stands to reason that Iraq would have high inflation. Taking dinar out of circulation should bring inflation down if you follow the above simplified definition. That has always been my concern with a RV. Without taking dinar out of circulation, a RV would just compound the inflation problem.

Question for those in Iraq or have been in Iraq: is there an abundance of consumer goods in shops for the people to spend their money on???

Originally Posted by CharmedPiper

COMPARISON OF LAST 6 AUCTIONS....ANY IDEAS OR THOUGHTS.

Number of banks:
11/2/06 (16)
11/7/06 (14)
11/8/06 (20)
11/9/06 (14)
11/12/06 (10)
11/13/06 (17)

Auction price selling dinar / US
11/2/06 $1470
11/7/06 $1468
11/8/06 $1466
11/9/06 $1465
11/12/06 $1465
11/13/06 $1465

Auction price buying dinar / US
11/2/06 $ ----- -----
11/7/06 $1466
11/8/06 $1464
11/9/06 $------ -----
11/12/06 $1463
11/13/06 $1463

Amount sold at auction price (US $)
11/2/06 70.245.000
11/7/06 109.150.000
11/8/06 97.010.000
11/9/06 70.180.000
11/12/06 24.880.000
11/13/06 110.265.000

Amount purchased at Auction price (US $)
11/2/06 -----
11/7/06 3.000.000
11/8/06 3.000.000
11/9/06 ------
11/12/06 2.500.000
11/13/06 2.600.000

Total offers for buying (US $)
11/2/06 70.245.000
11/7/06 109.150.000
11/8/06 97.010.000
11/9/06 70.180.000
11/12/06 24.880.000
11/13/06 110.265.000

Total offers for selling (US $)
11/2/06 ----- -----
11/7/06 3.000.000
11/8/06 3.000.000
11/9/06 ------ -----
11/12/06 2.500.000
11/13/06 2.600.000

US Dollar
USD
11/2/06 1470.000
11/2/06 1469.265
11/7/06 1470.000
11/7/06 1469.265
11/8/06 1468.000
11/8/06 1467.266
11/9/06 1466.000
11/9/06 1465.267
11/12/06 1465.000
11/12/06 1464.268
11/13/06 1465.000
11/13/06 1464.268

You know I was looking at these numbers and it just doesn't add up. what i mean is over tha past six auctions over 700 billion dinar has come out of circulation or about roughly 7 percent based on 9 trillion dinar. If you were going to simply crunch numbers like some do this should have increased the value then 7 percent yet we only see an increase of less than 1 percent.

I think this proves the rate is artificial and that they are preparing for something bigger.

When I look at the offers selling 11.1 million equaling roughly 16.2 billion dinar

Of course this is purely speculation but could it be that the larger denoms are being pulled out and perhaps replaced with lower denoms in the banks?

With an RV the small amounts that are sold in these auctions will exceed the worth of what has been pulled recently.

I'm fairly certain the currency isn't wearing out that quickly. Interesting to watch.

Originally Posted by robinhoodof sherwoodpark

What free dinar

Check your PM. You will get two free $1,000 NID notes.

Originally Posted by TerryTate

Originally posted by Jedi17:



Yes, it will be interesting to see if she has the stones to show up if the rumor shouldn't pan out.... Hope it does, but not putting too much faith into her.

I'll say this much, this rumor appears to be a confirmed one by members here so I'm watching this clearfully. It may not be today but just to know that others here have spoken to bank managers and found out that BofA is in fact discussing this very event, it appears then that this rumor has legs. The latest we read was indecision on the part of BofA for Monday but that doesn't mean they aren't going to do it soon. We will just have to see what unfolds this week.

Where are the numbers comming from in relation to Nov 13th? If may be me, but the CBI web site has not updated yet....it still shows Sunday the 12th. Like I said, It could just be me. Please advise.......

Originally Posted by aporl

Check your PM. You will get two free $1,000 NID notes.

what pm? i didnt get one

Originally Posted by wciappetta

I'll say this much, this rumor appears to be a confirmed one by members here so I'm watching this clearfully. It may not be today but just to know that others here have spoken to bank managers and found out that BofA is in fact discussing this very event, it appears then that this rumor has legs. The latest we read was indecision on the part of BofA for Monday but that doesn't mean they aren't going to do it soon. We will just have to see what unfolds this week.

I called the 800 number and after being on hold for nearly 20 minutes I got an operator that said I can purchase dinar but I need to go to my branch to do so. Good thing I have a bank of America account because they don't want to talk to you if you don't give them the last 4 of your social or an account number. I don't have time today to go so maybe sometime during the week I will go buy a few dollars worth.

Originally Posted by Wm.Knowles

Ref: The CBI auction.

Again we see an auction where the CBI has conducted an auction that has moved a large amount of currency from circulation (110M). With the exception of yesterday, the last six auctions has been some of the largest in their history. If my math is correct, over 450M USD of dinar has been removed and replaced with USD in the local banks. A huge move in itself. The question was "does this reduce inflation". The answer is yes. We know that inflation is too much money chasing to few goods. This movement of dinars out of the system is an extremely healthy move and when combined with the overall debt reduction is a classic action that will result in a higher value for the dinar and credit worthiness of Iraq as a whole. How many more days can they continue to remove Dinar out of the economy? We don't know. But it isn't a move that can continue indefinitly. At some point they will have removed the excess by using their currency reserves and oil money. This recent trend is exactly what you would expect them (CBI) to do prior to an increase in value of their currency. So I am very encouraged by these actions and feel they are in compliance with the SBA from the IMF. So many times we have seen small countries continue to print money until it is worthless. By removing dinar from the economy they are taking the opposite and responsible direction that will decrease inflation and decrease the CBIs exposure for larger amounts of dinar in the economy should the currency be revalued. Again, how long can this go on? I don't know. We'll have to see. But this is a very large and favorable movement in the direction of an economy that will result in a longer term increased value of the dinar and will benefit all investors and the Iraqi people by increasing their purchasing power. Your comments are appreciated.

They should have started using some of thier reserves to mop up some of the excess liquidty months ago so they could revalue at a decent rate during the 10,000 dinar handout. Because they have waited until recently to increase the amount of dinar being pulled from circulation it is causing the Iraqi people to suffer. The Inflation they are experiencing was caused by the IMF stipulations that they had to increase fuel costs and remove ration cards. This blows my mind that the GOI is handing out the 10,000 dinar without a revalue. I hope the 10,000 dinar handout has some type of restriction on it were the Iraqi canot get spend it until a date in which revalues, Otherwise, this is a big blunder to keep having auctions at the current rates if the GOI is worried about security. They will never tackle the security problem at the artificially low rate the dinar trades at now.

GOI