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

Two questions are presented: The first one asks if this removal of large amounts of dinar is the first step in the RV process? While I can't say that a RV is about to happen. But, the removal of large amounts of excess currency would exactly be what would be expected prior to the reeval of dinar. My opinion is that yes this is a first step. Second, are they (CBI) simply "catching up". The amounts being transacted a far in excess of what would be expected in a catch up procedure from the CBI being down for a few days If they were catching up, they would extend this process over a longer perios of time. Also they (the auctions) are so one sided. Primarily REMOVING currency and not a tit-for-tat of exchange of USD and dinars. So this is very different, something odd. something very strange than what has happened in the past. Your comments are appreciated.

Originally Posted by jedi17

agreed...a lot going on right now and this week....could tomorrow bring an r/v in time to hand out 10,000 dinar checks? I hope so..lets not forget the BoA rumour about tomorrow and selling dinar...also, do you ever sleep Charmed?

I am in South Carolina and my husband called a person we know at BOA to find out if they started selling dinar today. The person he was looking for was not available but he did speak with a woman there that said they did start selling dinar (today). He said, so if I want to purchase Iraqi dinar I can come into your banki and do so; she said yes. He asked her what was the rate, she said she did not know(mysterious) so he left a message for the lady he usually talks with to call him back. She called him back within 30 minutes and said that they "are not" selling dinar. She said that Iraqi currency is still sanctioned. Don't know what that means. She said they will begin to sell it when the sanctions are lifted. I am not sure who to believe. We call and asked to speak with somone in foreign currency, this poor dude did not even know what the iraqi dinar was. I am still trying to confirm...I am just not sure who to believe. Just thought I would see if anyone else heard anything.

Originally Posted by aporl

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

could you pm me too thanks in advance...

I took out most of the clutter in this and i dont know if its been posted


The Republic of Iraq
مجلس الوزراء- دائرة الإتصالات الحكوميةCouncil of Ministers-the governmental communications
العلاقات الإعلاميةMedia Relations
Press Release بيان صحفي /Press Release Press release /
الأثنين 13-11-2006Monday 11 - 13-2006

البنك المركزي يعتمد سياسة نقدية مشددةThe Central Bank adopted tight monetary policy
لمعالجة ارتفاع معدلات التضخمTo address the high rates of inflation

Anofficial from the Iraqi Central Bank on inflationary phenomenon, including the following :
ي
Following the Iraqi Central Bank current trends of inflationary phenomenon and its implications on the tracks economic growth because of their undesirable effects on economic stability and the ability to allocate resources among the various activities of the economy and social conditions, especially the standard of living of the poorer classes and limited father vinegar, It should be noted that inflation in the Iraqi economy, which negatively affected the security conditions resulting from two sources :

.First : supply bottlenecks in the real sector, which mainly concentrated in the fuel processing sector and its negative effects on the cost of transport and communication and other production costs.
The second : the significant influence of aggregate demand for goods and services in the economy.
%.He added : We have reached the annual rates of inflation high levels exceeded 50%. In spite of the positive developments shown by the index of consumer prices (an indicator of inflation) during the month of September 2006, which represented a decrease of 13%. However, the inflation rate base (the index of consumer prices excluding fuel and lighting, transport and communication), which represents the effects of the aggregate demand for goods and services in the Iraqi economy, what remains high and the level of not less than 33%.

He pointed out that the Central Bank notes and in the follow-up of economic policy in general and the implementation of monetary policy in particular, The inflationary effects arising from supply bottlenecks sector requires addressed through other means of economic policy, which is outside the scope of the impact of the Iraqi Central Bank and its monetary policy adopted, realizing that the inflationary effects of the base index, resulting from the demand side can turn Alihalh rooted in the joints and components of the Iraqi economy if not addressed through the measures and procedures required and available to macroeconomic policies and in particular the financial and monetary policies, it found the Central Bank and after-depth analysis of these policies that causes inflation back to the base the following factors

:That does not suit the Iraqi dinar exchange rate prevailing with the nominal level, which reflects the real capacity of the Iraqi economy achieved and conditions of flows of foreign currency to the following :

The oil revenues generated by high oil prices in the world market during the last two years, , which was reflected in the ongoing expansion of government expenditure.


Power expenses multinational forces stationed in Iraq. , which are internal cover their expenses in foreign currency. As well as the flow of foreign aid is different still available in the local market and foreign currency.


.The Almusderali that the Iraqi Central Bank believes that the above factors contributed to their widespread phenomenon of dealing in dollars (Dollar), which are outside the influence of monetary policy, The trends negatively affect the stability of the monetary demand and monetary policy course of action and its role in the stability of the financial market and the Iraqi dinar.

.In terms of public expenditure has increased paragraph salaries and wages has accelerated during the past two years to reach 60% of GDP-oil after the increase does not exceed 35% till the year 2004.


He said the Iraqi Central Bank will adopt a tight monetary policy in this regard is aimed at reducing the inflation base through improved exchange rate of the Iraqi dinar and raise the purchasing power of the Iraqi dinar and make cash more attractive means to reflect the circumstances and encouraging indicators in the economy which would help in addressing the Dah danger of dollarization, which is one of the factors -

.The desired in the work of monetary policy and the level of effectiveness to achieve their goals in reducing inflation.

Furthermore, the Central Bank will adopt interest rates help to diversify financial market tools religion gradually terms at the same time enabling increased levels of savings and control the levels of cash.


.He went on to say that these measures will provide a climate conducive to the economic stability which will pave the way for reconstruction and achieve the required growth. in addition to higher levels of employment and reducing unemployment, which will be channeled all in the future of the Iraqi economy and prosperity.



Sotaliraq.com

Originally Posted by archangel

USA Today Article
Posted 11/13/2006 12:14 AM ET

Q: I invested heavily in Iraq dinars thinking I'd make a mint, but I'm losing money. I'm worried I could lose more. What should I do?
A: You're learning firsthand the dangers of currency trading. Anytime I hear of regular individual investors buying and selling foreign currencies, I just shake my head and hope they don't lose it all.

With currency trading, you're betting not only against and with other speculators like yourself, but also with governments that need to buy or sell currency. You're at a giant disadvantage: Governments have superior information about their economies. You're also taking on the currency trading desks of some of the most sophisticated investment banks in the world. And get this: Currency trading is all about darting in and out of currencies trying to pick up a penny here and a penny there. No wonder a vast majority of individuals who dabble in this market lose their shirts.

The Iraqi dinar is a great example, so I'm glad you brought it up. Back in 2003, buying dinars seemed like a no-brainer. After all, the U.S. military was sure to unseat the Iraqi regime and quickly replace it with a capitalistic society. Some expected Starbucks and McDonald's to spring up on street corners in Baghdad like daisies in a capitalistic field.

"Iraq was very entrepreneurial before Saddam. Baghdad has a history of culture and trade," Robert Hormats, vice chairman of Goldman Sachs International and an expert on the world economy told USA TODAY on April 10, 2003. "It's no slam-dunk, but with the right kind of reforms, (Iraq) could emerge as an important financial and trading center."

Optimism fueled huge interest by individual investors to buy Iraqi dinars. USA TODAY's John Waggoner wrote about the trend back on Aug. 3, 2004.

But the dinar didn't work out like many speculators had hoped. Iraq, and this is not a political statement whatsoever, remains a troubled region. USA TODAY reported Oct. 27, 2006 there's a "prospect of combat in Iraq for at least another four years." You can read this and other Iraq coverage here.

And the result on the dinar has been disappointing. In Aug. 3, 2004, it took 1,460 dinars to buy $1, according to currency value tracker Oanda.com. As of Nov. 9, it takes 1,529, according to Oanda.com. That represents a 5% deterioration in the value of the dinar. MarketWatch, where USATODAY.com gets currency data, reports that it takes 1,468 dinars to buy a dollar.

So whichever source you use, it's fair to say the dinar hasn't panned out for investors. Had you skipped the dinar and bought the Standard & Poor's 500 index (SP500) on Aug. 3, 2004, you would have been up 22% and taken less risk.

The dinar has been another reminder that unless you're a government or a currency trading genius or are traveling to another country or doing business in foreign currency, leave currency trading to the pros.

Matt Krantz is a financial markets reporter at USA TODAY. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at
Leave currency trading to the pros - USATODAY.com

Simply scare tactics.

I trade FOREX, and yes you can lose a lot if you don't know what you're doing. I will say this though. Holding physical Dinars and FX trading are completely different games. I think that having 100% of your "investmets" in Dinar would probably not be the most prudent choice. IMO, having a few million is great as long as you realize the risks

Originally Posted by Wm.Knowles

Two questions are presented: The first one asks if this removal of large amounts of dinar is the first step in the RV process? While I can't say that a RV is about to happen. But, the removal of large amounts of excess currency would exactly be what would be expected prior to the reeval of dinar. My opinion is that yes this is a first step. Second, are they (CBI) simply "catching up". The amounts being transacted a far in excess of what would be expected in a catch up procedure from the CBI being down for a few days If they were catching up, they would extend this process over a longer perios of time. Also they (the auctions) are so one sided. Primarily REMOVING currency and not a tit-for-tat of exchange of USD and dinars. So this is very different, something odd. something very strange than what has happened in the past. Your comments are appreciated.

If you don't I'm going to pick your brains a bit more,

What I mean by catching up is I'm of the belief that the RV is a planned event with a presupposed chain of events leading to that moment. Perhaps the desired position on the timeline is lagging So I'm speculating that perhaps political pressure is forcing the hand of the CBI to get back on schedule or even better the CBI, which seems to working well is leading the way.

Certianly we have all observed the foot dragging of the government.

Originally Posted by H2O_Lover

It should help the average Iraqi as it will put him to work !

Thanks, that is true. I was thinking in terms of the immediate benefits of the RV which would go to the government, and so it should for the reason you stated.

Originally Posted by MrsCK

can I have PM too?

Me too, Please?

Concerning the 10K gift, why does it have to be connected to the economy? I had the initial impression that it was more a stipen or token connected more to their religious holiday than to their actual economy. I also see many saying what a s lap in the face it would be to give them so little and then revalue the dinar after....but if my children were starving today, I might be grateful for that loaf of bread today, regardless of what happens tomorrow. Just my thoughts.

Originally Posted by Inscrutable

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.

Curious to find out how long before they expect to fill the order? You know where I'm going with this.

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.

One interesting thing that many don't know is that the Fed Bank has nothing to do with the US Gov. Well, i shouldn't say nothing but they are not an "arm" of the Gov. The Fed is, debatably, the most powerful corporation in the World.

So, the CBI has done a great job of increasing reserves but at the expense of monetary inflation. They can't keep the exchange rate at the level it is and they can't keep buying back dinar in order to control inflation. As you said, they are probably their own worst enemy by keeping the rate where it is.