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

Originally Posted by DayDream

I found this article in the Official Gazette, the translation isn't worth a darn but, The sentence I highlighted has me scratching my head.
Does this sound as if tomorrow we may see some kind of "GOOD NEWS" printed in the paper? Something STRANGELY sounds GOOD!! Or is this nothing?
HMMMM!

Indeed, the economic indicators in the international oil market
Hossam Alsamuk
If the citizens of the oil-producing countries expected indicators rise in oil prices in the international market to strengthen their economies and ensure that future generations auspicious for the new, it remains on the surface of the globe, peoples and governments, companies and economic institutions and research centers as well as investors and speculators and middlemen all these justifications and Esteneon catalysts and perhaps even rumors of the return of the prices of a barrel of oil to a few dollars to ensure all of them support its sector in the crucial arena where the criterion of oil Stratijiat region in the world today.
As previously exposed to that drawn several times, it competed oil-producing countries invest achievements of the oil price increases in the projects. whatever its internal or external, but guaranteed-at least - rising billion of the proceeds earned from the increases anticipated from the rise of the price of a barrel of oil to four times over a year or a little more.
And crumbled Alaoblk to face rabid campaign to reduce oil prices and Almbergaah Ptdaulat international market and the principle of supply and demand. But it was surprised by that, Having decided to reduce its products million, two hundred thousand barrels per day that prices clung on session per barrel remained its place, at a time when it just announced that it would meet to consider a possible reduction of its production. Iqbal incentive for those who gamble on the vagaries of the market to escalate their applications mood of the price of a barrel of oil to cancel any idea of reducing production.
.Impressively, the deterioration in the international market prices for oil comes in the season preparedness warehouses for the storage of strategic outlook and oil products alike, as we approach the winter season, and despite the declaration of a mere declaration-- OPEC that it may proceed with its efforts to reduce the production of another five hundred thousand barrels during the month of December next, However, some lenders and speculators are still betting on the credibility of the commitment of the OPEC states commissioned by only weeks ago Btakhqid million, two hundred thousand barrels. even some experts and the oil corporations say that they gamble, although the major institutions and research centers already expected sharp rise in the price of oil, a few months ago to more than $%.
Before this terrible reality of the international oil market and could pose repercussions on the economies of oil-producing countries, especially those that have not paid attention to what feels changes. where will stand in the column tomorrow when the effects of the repercussions of this reality on the Iraqi economy and the policies followed in dealing with our revenues have increased.

AL-MADA Daily Newspaper...ÌÑíÏÉ ÇáãÏì

Cheers!
DayDream

DD,this looks like this could be something BIG to me.Maybe one of our GENUISES will come back with something. I think they're discussing the smaller denoms right now and haven't seen this yet. LISA

Originally Posted by nventr

I see a significant logical position that does not favour a 0.05 rate if the NID is traded on Forex. It would likely simply be changing the ownership of the Dinar but not suceed in withdrawing it from circulation. Ultimately it will be 'cashed in'. A 1.00 to 2.00 rate is more logical IMHO.

I not only agree but I believe it is required. A low Revalue does not solve the price disparity of the region. This was made quite clear recently by the MOF when he spoke about returning to the former level. Without price parity in the region cheap goods in Iraq will ultimately harm both sides of the economic equation; Shortages on one side as smugglers take their profits over the border and the depressing of prices on the other. It’s a two edged sword.

The region is used to a high currency rate for the dinar IMO it is the low rate that is abnormal to the region.

Adjustment can only go so far. Political will also has its place and there is history to back it up, most recently Japan 1985 with the plaza accord and we all know about the German economic miracle. I think Iraq is about to trade in their economic shoes for a pair of German ones….

Reuters
Nov 10 2006 10:13

LONDON, Nov 10 (Reuters) - Investment bank JP Morgan cut its allocation to Iraqi external debt on Friday but upped the share of Tunisian external debt, citing greater uncertainty in the former and strong economic growth in the latter.

The bank moved Iraq to underweight from marketweight in its model portfolio in the Emerging Markets Bond Index Global (EMBIG) <11EML>, a broader index of high-yield bonds, saying developments in the past six months had forced it to attach a 50 percent probability of a deterioration in outlook.

It said the outcome of U.S. mid-term elections were adding to uncertainty over Iraq's mid- and long-term future.

"With political headlines deteriorating the spread (on Iraq's 2028 eurobond to Treasuries) has widened rapidly from 430 to 523 over the past few weeks, and with little further political improvement in sight, we expect further volatility going forward," the bank said in a note to clients.

It added however: "We remain of the view that Iraq's debt service is not in peril over the medium-term as per our current outlook."

On the other hand that Tunisia's political outlook looked stable, JP Morgan said, while economic growth is likely to pick up to 6 percent by end-2006. It highlighted that Tunisian assets looked attractive relative to the second-wave European Union accession states, with the 2013 bonds trading some 42 basis points wider than Romania's 2012 issue.

"We expect Tunisia's assets, over time, to receive some support from European convergence funds in search of diversification and yield in the investment-grade world. On the back of a promising economic outlook and a relative scarcity of North African external debt, we move Tunisia external debt to marketweight from underweight in our model portfolio," the bank added.

Iraq's portion of the EMBIG was trading unchanged at 525 bps over comparable Treasuries while Tunisia's debt was one point wider to 88.

Mr. Knowles says CBI isn't interested in selling dinars anymore. They want to buy them back as cheaply as they can. Any hopes for a high dinar revaluation are totally dashed! Like any business or good investor - they want to buy low and sell high. That's the theory - and honestly, who else is qualified to argue?

Personally, I remain much more optimistic!

Originally Posted by michael16

These people in the Fed Res. are experts in their field and they know very well how currency works. I find it amazing with all the political upheaval in the country the dinar is going up in value. Oil production isn't quit up to the prewar levels and yet the dinar is going up. So, what is the dinar really tied to? Remember what Rothchild said, I care not who governs the country if I control the currency I control the country.

While on the Fed topic.

Purchases and sales of foreign currency by the Fed are directed by the FOMC, acting in cooperation with the Treasury, which has overall responsibility for these operations. The Fed does not have targets, or desired levels, for the exchange rate. Instead, the Fed gets involved to counter disorderly movements in foreign exchange markets, such as speculative movements that may disrupt the efficient functioning of these markets or of financial markets in general. For example, during some periods of disorderly declines in the dollar, the Fed has purchased dollars (sold foreign currency) to absorb some of the selling pressure. Same thing CBI is doing.Intervention operations involving dollars, whether initiated by the Fed, the Treasury, or by a foreign authority, are not allowed to alter the supply of bank reserves or the funds rate. The process of keeping intervention from affecting reserves and the funds rate is called the "sterilization" of exchange market operations. As such, these operations are not used as a tool of monetary policy.

http://www.frbsf.org/publications/fe...ary/tools.html

Originally Posted by worf

I understand your point about starting low, but isn't there a 2 edged sword in play here? If they r/v too low (lets say .01 - .05) that won't be high enough to discourage the black marketers who would still get their items in Iraq and go over the boarder and sell them for a profit in neighboring countries. True it will have moved up considerably from where it is currently but probably not enough to cut off the black market. If they don't address the black market, then their few precious consumable items will still go accross the boarder for profit and out of the hand of the Iraqis for whom it is intended.

So don't they have to r/v high enough to try and knock out the black market so their consumables stay in Iraq for the Iraqis? Personally I don't think .01 is nearly enough. My thought has been around .30 to start (similar to Saudi Arabia, Egypt, Iran, Turkey, Isreal etc.) (like you say to try and get as much dinar back into the country as cheap as possible) and then raise it up steadily until it reaches the neighboring rate (Jordan, Kuwait, Qtar etc.) or at least 1:1. Again, you dealing with a proud people who have a recent history of a much more valuable dinar then it is currently. So I hope you are too low Wm. on your inital est. of course no offense intended just a disagreement in initial starting rate. (I hope I am right. )

But in a further effort to pick your brain, once it does r/v at some lower rate, based on your experience how long will they leave it low to try and get as much overseas currency cheaply, and how long will it take to raise to the 1:1 figure in your opinion? I realize no one really knows but you probably have a far better educated guess than the rest of us. Thanks for your reply,

worf

Hello worf
I like many of your comments and questions. I think we wonder will the currency will be "re-pegged", or will they allow the iraqi dinar to trade on the forex. Or possibly on the Chicago Board of trade or some other exchange, New York, Tokyo currency exchange etc. Much of this will determine what can happen and will be a directional sign for us at the time. Should they place this currency on a world wide tradable exchange then anything can happen. My opinion is if they do that, then it is straight UP! But should they just re-peg to the dollar (or Euro) then they will maintain some control over the level, and they could re-peg at a later date at any level. I don't mean to be nasty or inhuman, but If I was President of the CBI, I think I would advocate a re-peg just to see how many billions from the faint of heart that I could buy at a cheaper level. I would not want to spend .31 cents (310 million) per billion when I could buy it cheaper, e.g. .05. If I am a banker, don't assume I have a heart. Now, with a re-peg, I also have the option of an additional re-peg at any time. So, if I am not cleaning out the system fast enough, I will simple try to remove more dinar from the suckers at a slightly higher price. (Sorry, but these people are not angels). One of the best indicators that we have seen are the banks that are now dealing in dinar. They are not doing this for your self-esteem. These are just a few thoughts. Most of you have worked hard for your money and need this boast in your life. I hate the idea of a Bankers greed taking people for their hard earned cash before they are ready to exchange.

Originally Posted by Inscrutable

While on the Fed topic.

Purchases and sales of foreign currency by the Fed are directed by the FOMC, acting in cooperation with the Treasury, which has overall responsibility for these operations. The Fed does not have targets, or desired levels, for the exchange rate. Instead, the Fed gets involved to counter disorderly movements in foreign exchange markets, such as speculative movements that may disrupt the efficient functioning of these markets or of financial markets in general. For example, during some periods of disorderly declines in the dollar, the Fed has purchased dollars (sold foreign currency) to absorb some of the selling pressure. Same thing CBI is doing.Intervention operations involving dollars, whether initiated by the Fed, the Treasury, or by a foreign authority, are not allowed to alter the supply of bank reserves or the funds rate. The process of keeping intervention from affecting reserves and the funds rate is called the "sterilization" of exchange market operations. As such, these operations are not used as a tool of monetary policy.

http://www.frbsf.org/publications/fe...ary/tools.html

Very good, very good, now we into the real meat of the issues. Thank you for this.

Originally Posted by sassy

DD,this looks like this could be something BIG to me.Maybe one of our GENUISES will come back with something. I think they're discussing the smaller denoms right now and haven't seen this yet. LISA

I think tomorrow is just being used as a cliche, here today and gone tomorrow, tomorrow is another day, the pessimist will be surprised tomorrow.

Yeah, I'm pretty sure it's just that.

Mr Knowles in regards to what I posted about a possible mention of the lower demoninations, what could the phrase....

to meet the expenses of the state in the next stage mean in regards to this, if this is referrring to the small denoms? Your opinion on this would be greatly appreciated.

Cheers!
DayDream

Originally Posted by billknows

Mr. Knowles says CBI isn't interested in selling dinars anymore. They want to buy them back as cheaply as they can. Any hopes for a high dinar revaluation are totally dashed! Like any business or good investor - they want to buy low and sell high. That's the theory - and honestly, who else is qualified to argue?

Personally, I remain much more optimistic!

It seems to me that the CBI's program is a very good sign for us holders of dinar. Just as when healthy corporations buy in their own shares thereby
driving up the value of their stock, the CBI's pruchase of dinars which reduces the amount of dinar in circulation should definitely drive up the value of dinar.