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

Originally Posted by Jola

Check this out:

Dar Al Hayat

ANY TAKERS?

The Implications of the Improvement of the Iraqi Dinar Exchange Rate
Ali Mahmoud al-Fakiki Al-Hayat - 26/11/06//


The Iraqi dinar is witnessing a gradual improvement in its exchange rate these days. The price of the dinar has risen from $ 0.000676 in early November to $ 0.00069 later during the same month. This means that the number of dinars against one dollar dropped from 1480 dinars to 1440 during that period. It is noteworthy that the exchange rate in the 1970s was $3.20 for one dinar, which exceeds the current price by four thousand and six hundred times.
It seems that the Iraqi government is planning now to fix the exchange rate at 1000 dinars/dollars, which is almost one third. The government plans to make this gradual, in order to avoid a sudden rise. This was the lesson learned in the aftermath of the sudden catastrophic decline that had occurred among traders and businessmen in 1995 and the accompanying financial and commercial turmoil, bankruptcies and trade and banking collapses.
If the current rise of the exchange rate from 1480 dinars to 1000 dinars to one dollar is applied, some people in Iraq will gain while others will lose, as follows:
Losers:
A- Savers in dollar. Iraqi savers lost confidence in the dinar. This urged many of them to keep most of their savings in dollars. These include traders and industrialists. When they will need to convert their savings to dinars, the loss will be huge.
B- Contractors in projects priced in dollars: Those are paid in dollar, but the majority of their expenses and local purchases are usually in dinar. This includes the labor wages and their purchases of materials of local origin. This is the case with building and construction contractors who purchase local supplies and construction materials (bricks, soil, sand, gravel). When they submitted their quotations they had evaluated their contacting service at the prevailing exchange rate before raising the value of the dinar and now they have to pay at the new rate and hence lose. After they handover the projects, they will receive the rest of their money in dollars.
C- Lenders in dollar: They will regain their loans valued at less than the value before the rate of the dinar was raised.
D- Borrowers in dinar: They will pay their debts upon maturity in dinars of a dollar purchasing power more than that at the time of lending. They will have to pay in a dinar that exceeds the lending rate by almost one-third. When the major collapse happened in 1995, thousands of traders announced their bankruptcy while indebted to others, and this was disastrous.
E- Employees who earn in dollar.
F- Estate lessors with rental allowances in dollar while their expenses are in dinars.
G- Estate tenants who pay in dinar while their income is in dollar.
Gainers:
A- Savers in dinar, for being able to buy more dollars.
B- Employees and workers who are paid in dinar, since they will receive the same pay but with a more purchasing power and a better exchange rate.
C- Producers: since they will sell their products for the more powerful dinar.
D- Borrowers in dollar and whose savings are in dinar: since they will pay their debts and their interests in the cheaper dollar.
E- Retirees: they will have more purchases with the same salary.
F- Those covered by the program of the social safety network (the retirees themselves).
G- Estate lessors in dinar.
H- Estate tenants in dollar while their incomes are in dinar.
This means that raising the dinar exchange rate will benefit some and harm others.
It is noteworthy that the terrible continuous escalation in prices during the 1980s and 1990s of the last century in Iraq was not due to an increase in the value of money itself, but due to the fact that this increase was not met by a real balance or a strong national economy and national income or a supporting domestic product. When the State issued currency, it behaved like a merchant who issues instruments with no balance to meet their nominal value. Moreover, there were the constraints of trade and external transfer. Otherwise, the amount of money in circulation in a country like Japan is more than the amount of Iraqi currency in circulation (as an absolute figure).
During the post-war period, the balance was met, but the rise in prices was due to high costs and shortage of supply. For example, the average of the prices of Iraqi vegetables and fruit has increased this year by 100% as compared to the prices of 2005, but due to the shortfall in production. The agricultural expert Jaber Abu al-Eis (Ministry of Agriculture) says that the execution rate in the agricultural plan for 2006 amounted to 17%. The prices of local poultry products this year are twice as much as 2005. The reason was the banning of the poultry industry, among the procedures of combating avian flu and the prevention of the importation of these products from many countries. Moreover, it was due to the rise in the costs of energy, fuel and transportation costs to the double or even more. Also there are the imposed royalties paid by the importers, producers and transporters to gangs and bandits, including kidnapping payments and ransoms. There is also bribery, corruption and alliances between businessmen and government officials, in addition to the high wages, the rise in prices and interests of loans caused by the Central Bank. All these factors led to an increase in the cost of production and inflation rates. Such factors have to do with costs and supplies while they have nothing to do with demand. Thus, the saying, "Much money looking for a few commodities" does not apply here.
The current inflation is due to high cost and shortage of supply. Nowadays, the government ensured assets that cover the nominal value of money and a domestic product that supports it. But there remain two options. The first option is to increase the quantity (number of units) by a third, raise salaries and wages and expand and improve the miserable network of social safety to include additional numbers of extremely poor people living at half a dollar per day amounting to four million. The second option is that the government raises the dinar exchange rate by one third as it is planning now.
In the first case, the needy employees and workers who are not covered by social welfare will benefit, and there will be no loss or damage to other people. In the second case, employees, workers, retirees and others will benefit, but, at the same time, others will lose as mentioned earlier.
According to reliable sources, the second option comes in implementation of the directives of the International Monetary Fund.

SO NOW WE KNOW WHAT CBI IS DOING....

But, as we stated in a previous article, the former American Secretary of State, Henry Kissinger, described the IMF as "a doctor who has only one pill for every conceivable illness".
* Mr. Ali Mahmoud al-Fakiki an Iraqi expert in economics

Looks to me like just another opinion as to where the rate will go.

May have already been posted....


New fiscal policy leading to a rise in the exchange rate of the Iraqi dinar The first page : new fiscal policy leading to a rise in the exchange rate of the Iraqi dinar


Baghdad / long
In an unprecedented led the Central Bank of Iraq ambitious campaign to promote the exchange rate of the Iraqi dinar according to a plan designed to absorb liquidity and the reduction of inflation rates expressed at heights and clear on the prices of goods and services.

The presentation of the Central Bank through the auction, organized by the daily buying and selling of foreign currency sums of dollars, where they were able to achieve a gradual reduction of the dollar exchange rate started from 1470 dinars to the dollar to reach the price at the meeting yesterday transactions related to 1444.

Al (short) from official sources in the Central Bank, said that this policy would continue to thrive and become the Iraqi dinar currency of choice in daily dealings. With those sources expressed its confidence in achieving this policy even finishing off phenomenon (dollarization).

The financial sources noted that government agencies, companies and several parties overestimated the adoption of the dollar currency dealings content in the market, including played an influential role in the exacerbation of the situation inflationary and this policy comes in the wake of several warnings by the Central Bank pointed to the escalation of the situation to the inflationary rate of 76.6% during the month of August last year compared with August 2005. it depends on the impact of an interest rate increase granted by the pointing of 6 to 12%.

With the bank issuing of the bonds amounted to Release hundred billion dinars rewarding benefits are paid through the 182 days, But the reluctance of banks to respond to civil actions that carry the Central Bank to adopt a policy to strengthen the exchange ambition and confirmed in a statement pursuit and determined action to reduce the inflationary situation at various levels.

On the other hand, currency exchange market witnessed weak demand for the dollar and other foreign currencies, including advances of the price of the Iraqi dinar prelude to potential Anaaksh on the prices of commodities and services in the local market.

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Originally Posted by Jola

Check this out:

Dar Al Hayat

ANY TAKERS?

The Implications of the Improvement of the Iraqi Dinar Exchange Rate
Ali Mahmoud al-Fakiki Al-Hayat - 26/11/06//


The Iraqi dinar is witnessing a gradual improvement in its exchange rate these days. The price of the dinar has risen from $ 0.000676 in early November to $ 0.00069 later during the same month. This means that the number of dinars against one dollar dropped from 1480 dinars to 1440 during that period. It is noteworthy that the exchange rate in the 1970s was $3.20 for one dinar, which exceeds the current price by four thousand and six hundred times.
It seems that the Iraqi government is planning now to fix the exchange rate at 1000 dinars/dollars, which is almost one third. The government plans to make this gradual, in order to avoid a sudden rise. This was the lesson learned in the aftermath of the sudden catastrophic decline that had occurred among traders and businessmen in 1995 and the accompanying financial and commercial turmoil, bankruptcies and trade and banking collapses.
If the current rise of the exchange rate from 1480 dinars to 1000 dinars to one dollar is applied, some people in Iraq will gain while others will lose, as follows:
Losers:
A- Savers in dollar. Iraqi savers lost confidence in the dinar. This urged many of them to keep most of their savings in dollars. These include traders and industrialists. When they will need to convert their savings to dinars, the loss will be huge.
B- Contractors in projects priced in dollars: Those are paid in dollar, but the majority of their expenses and local purchases are usually in dinar. This includes the labor wages and their purchases of materials of local origin. This is the case with building and construction contractors who purchase local supplies and construction materials (bricks, soil, sand, gravel). When they submitted their quotations they had evaluated their contacting service at the prevailing exchange rate before raising the value of the dinar and now they have to pay at the new rate and hence lose. After they handover the projects, they will receive the rest of their money in dollars.
C- Lenders in dollar: They will regain their loans valued at less than the value before the rate of the dinar was raised.
D- Borrowers in dinar: They will pay their debts upon maturity in dinars of a dollar purchasing power more than that at the time of lending. They will have to pay in a dinar that exceeds the lending rate by almost one-third. When the major collapse happened in 1995, thousands of traders announced their bankruptcy while indebted to others, and this was disastrous.
E- Employees who earn in dollar.
F- Estate lessors with rental allowances in dollar while their expenses are in dinars.
G- Estate tenants who pay in dinar while their income is in dollar.
Gainers:
A- Savers in dinar, for being able to buy more dollars.
B- Employees and workers who are paid in dinar, since they will receive the same pay but with a more purchasing power and a better exchange rate.
C- Producers: since they will sell their products for the more powerful dinar.
D- Borrowers in dollar and whose savings are in dinar: since they will pay their debts and their interests in the cheaper dollar.
E- Retirees: they will have more purchases with the same salary.
F- Those covered by the program of the social safety network (the retirees themselves).
G- Estate lessors in dinar.
H- Estate tenants in dollar while their incomes are in dinar.
This means that raising the dinar exchange rate will benefit some and harm others.
It is noteworthy that the terrible continuous escalation in prices during the 1980s and 1990s of the last century in Iraq was not due to an increase in the value of money itself, but due to the fact that this increase was not met by a real balance or a strong national economy and national income or a supporting domestic product. When the State issued currency, it behaved like a merchant who issues instruments with no balance to meet their nominal value. Moreover, there were the constraints of trade and external transfer. Otherwise, the amount of money in circulation in a country like Japan is more than the amount of Iraqi currency in circulation (as an absolute figure).
During the post-war period, the balance was met, but the rise in prices was due to high costs and shortage of supply. For example, the average of the prices of Iraqi vegetables and fruit has increased this year by 100% as compared to the prices of 2005, but due to the shortfall in production. The agricultural expert Jaber Abu al-Eis (Ministry of Agriculture) says that the execution rate in the agricultural plan for 2006 amounted to 17%. The prices of local poultry products this year are twice as much as 2005. The reason was the banning of the poultry industry, among the procedures of combating avian flu and the prevention of the importation of these products from many countries. Moreover, it was due to the rise in the costs of energy, fuel and transportation costs to the double or even more. Also there are the imposed royalties paid by the importers, producers and transporters to gangs and bandits, including kidnapping payments and ransoms. There is also bribery, corruption and alliances between businessmen and government officials, in addition to the high wages, the rise in prices and interests of loans caused by the Central Bank. All these factors led to an increase in the cost of production and inflation rates. Such factors have to do with costs and supplies while they have nothing to do with demand. Thus, the saying, "Much money looking for a few commodities" does not apply here.
The current inflation is due to high cost and shortage of supply. Nowadays, the government ensured assets that cover the nominal value of money and a domestic product that supports it. But there remain two options. The first option is to increase the quantity (number of units) by a third, raise salaries and wages and expand and improve the miserable network of social safety to include additional numbers of extremely poor people living at half a dollar per day amounting to four million. The second option is that the government raises the dinar exchange rate by one third as it is planning now.
In the first case, the needy employees and workers who are not covered by social welfare will benefit, and there will be no loss or damage to other people. In the second case, employees, workers, retirees and others will benefit, but, at the same time, others will lose as mentioned earlier.
According to reliable sources, the second option comes in implementation of the directives of the International Monetary Fund.

SO NOW WE KNOW WHAT CBI IS DOING....

But, as we stated in a previous article, the former American Secretary of State, Henry Kissinger, described the IMF as "a doctor who has only one pill for every conceivable illness".
* Mr. Ali Mahmoud al-Fakiki an Iraqi expert in economics

I'd like to hear some opionions from our "old hands", Adam? Mike? William?

Iraq: EU, Iraq to kick off 1st round of trade negotiations Iraq: EU, Iraq to kick off 1st round of trade negotiations
Wednesday, November 22 @ 11:10:55 PST
Topic: Iraq
The EU and Iraq has commenced here Monday the first round of trade negotiations to reach a joint cooperation deal in diverse economic areas.

EU External Relations Commissioner Benita Ferrero-Waldner said negotiations show renewed European commitments towards Iraq, which were earlier announced by the EU.

For his part, EU Trade Commissioner Peter Mandelson stressed the significance of the deal that could help Iraq wriggle out of its deteriorating economic conditions and ensure stability which the Iraqi government seeks to bring to the country.

The deal is meant to reintegrate Iraq into the international community and the EU as far as economy and trade are concerned, he said, noting that the EU seeks to shore up efforts exerted to overhaul trade, economic and social institutions and to reconstruct the country.

EU-Iraq trade talks are expected to deal with goods, services and necessary means to stimulate and spur investment, as well as taxes and intellectual property rights.

Both sides will also mull over how to curb poverty and protect environment, along with cultural and academic issues.

The European Commission said in a release that all agreements hammered out between the EU and other countries attach much attention to human rights, terrorism and weapons of mass destruction. Due to insecurity in Iraq, bilateral talks will also deal with the political and security situations in the country, it said, vowing that the EU would promote Iraq's national reconciliation.

Minister of Trade Borham Saleh is leading the visiting Iraqi delegation.

Source: Kuna

Iraq: American Treasury: the donor countries will meet in December Iraq: American Treasury: the donor countries will meet in December
November 20 @ 11:15:01 PST
Topic: Iraq
U.S. Treasury official said that the donor countries that seek to help Iraq to rebuild its economy, plans to hold a ministerial meeting in December to work out the details of the aid pledges and debt reduction.

Robert Kimmitt, Deputy Secretary of the U.S. Treasury, said that the meeting likely to be held in the Gulf would be an important step towards defining "the International Charter with Iraq", which is an international initiative sponsored by the United Nations to provide aid for the reconstruction of Iraq in return for economic reforms.

But he added that it was not yet clear whether the donors are ready to sign pledges under the Charter.

Officials from donor countries met in September, for the first time, then representatives of 75 countries and international organization met once again last Monday at the United Nations to discuss the draft Charter and plans to ensure the provision of aid.

An official in the Iraqi government said last month that the country needs about 100 billion dollars over the coming four or five years for the rehabilitation of its infrastructure which has deteriorated after years of sanctions and wars in the era of the former President Saddam Hussein, in addition to the invasion which was led by the United States in 2003 and the continuous violence since then.

Iraq was expecting the influx of billions of dollars of foreign funds after the overthrow of Saddam, but foreign companies have eschewed in order to avoid the shelling and shooting incidents and the kidnapping as well as the affected oil production by the repeated sabotage attacks.

Iraq is a major producer of oil and has the third largest oil reserves in the world; therefore, reviving its economy, which is dominated by oil, is necessary to create job opportunities and reduce the unemployment rate which stood at 50%, according to some estimates, that officials believed it is behind the increasing numbers of those who join the gunmen.

Kimmitt said that although Iraq's obligations under the Charter were not declared, one of its main components is a law to regulate the oil and gas industry and the equitable distribution of oil revenues on the parts of the country on the basis of population density.

Most of Iraqi oil reserves are concentrated in areas dominated by Shiites in the south and Kurds in the north, and the aim of the draft Charter is to ensure that the Sunni areas, which are concentrated in central Iraq, gets its share of oil wealth.

The draft is still under discussion within the Iraqi government. Kimmitt said that it was also expected to establish rules for contracting with foreign investors to modernize the country's oil industry.

AND...If they raise it by 1/3 as the article stated...wouldn't the rate be.. based on 1470= 490IQD/$1USD

Not a mathmetician but I really dont think 1/3= 1000IQD/$1USD

AND...How are the ones holding the dollar the loser in all that? According to their statement of raising the rate 1/3, the dollar is still the WINNER not the LOSER!
JMO

Cheers!
DayDream

Originally Posted by Jola

Check this out:

Dar Al Hayat

ANY TAKERS?

The Implications of the Improvement of the Iraqi Dinar Exchange Rate
Ali Mahmoud al-Fakiki Al-Hayat - 26/11/06//


The Iraqi dinar is witnessing a gradual improvement in its exchange rate these days. The price of the dinar has risen from $ 0.000676 in early November to $ 0.00069 later during the same month. This means that the number of dinars against one dollar dropped from 1480 dinars to 1440 during that period. It is noteworthy that the exchange rate in the 1970s was $3.20 for one dinar, which exceeds the current price by four thousand and six hundred times.
It seems that the Iraqi government is planning now to fix the exchange rate at 1000 dinars/dollars, which is almost one third. The government plans to make this gradual, in order to avoid a sudden rise. This was the lesson learned in the aftermath of the sudden catastrophic decline that had occurred among traders and businessmen in 1995 and the accompanying financial and commercial turmoil, bankruptcies and trade and banking collapses.
If the current rise of the exchange rate from 1480 dinars to 1000 dinars to one dollar is applied, some people in Iraq will gain while others will lose, as follows:
Losers:
A- Savers in dollar. Iraqi savers lost confidence in the dinar. This urged many of them to keep most of their savings in dollars. These include traders and industrialists. When they will need to convert their savings to dinars, the loss will be huge.
B- Contractors in projects priced in dollars: Those are paid in dollar, but the majority of their expenses and local purchases are usually in dinar. This includes the labor wages and their purchases of materials of local origin. This is the case with building and construction contractors who purchase local supplies and construction materials (bricks, soil, sand, gravel). When they submitted their quotations they had evaluated their contacting service at the prevailing exchange rate before raising the value of the dinar and now they have to pay at the new rate and hence lose. After they handover the projects, they will receive the rest of their money in dollars.
C- Lenders in dollar: They will regain their loans valued at less than the value before the rate of the dinar was raised.
D- Borrowers in dinar: They will pay their debts upon maturity in dinars of a dollar purchasing power more than that at the time of lending. They will have to pay in a dinar that exceeds the lending rate by almost one-third. When the major collapse happened in 1995, thousands of traders announced their bankruptcy while indebted to others, and this was disastrous.
E- Employees who earn in dollar.
F- Estate lessors with rental allowances in dollar while their expenses are in dinars.
G- Estate tenants who pay in dinar while their income is in dollar.
Gainers:
A- Savers in dinar, for being able to buy more dollars.
B- Employees and workers who are paid in dinar, since they will receive the same pay but with a more purchasing power and a better exchange rate.
C- Producers: since they will sell their products for the more powerful dinar.
D- Borrowers in dollar and whose savings are in dinar: since they will pay their debts and their interests in the cheaper dollar.
E- Retirees: they will have more purchases with the same salary.
F- Those covered by the program of the social safety network (the retirees themselves).
G- Estate lessors in dinar.
H- Estate tenants in dollar while their incomes are in dinar.
This means that raising the dinar exchange rate will benefit some and harm others.
It is noteworthy that the terrible continuous escalation in prices during the 1980s and 1990s of the last century in Iraq was not due to an increase in the value of money itself, but due to the fact that this increase was not met by a real balance or a strong national economy and national income or a supporting domestic product. When the State issued currency, it behaved like a merchant who issues instruments with no balance to meet their nominal value. Moreover, there were the constraints of trade and external transfer. Otherwise, the amount of money in circulation in a country like Japan is more than the amount of Iraqi currency in circulation (as an absolute figure).
During the post-war period, the balance was met, but the rise in prices was due to high costs and shortage of supply. For example, the average of the prices of Iraqi vegetables and fruit has increased this year by 100% as compared to the prices of 2005, but due to the shortfall in production. The agricultural expert Jaber Abu al-Eis (Ministry of Agriculture) says that the execution rate in the agricultural plan for 2006 amounted to 17%. The prices of local poultry products this year are twice as much as 2005. The reason was the banning of the poultry industry, among the procedures of combating avian flu and the prevention of the importation of these products from many countries. Moreover, it was due to the rise in the costs of energy, fuel and transportation costs to the double or even more. Also there are the imposed royalties paid by the importers, producers and transporters to gangs and bandits, including kidnapping payments and ransoms. There is also bribery, corruption and alliances between businessmen and government officials, in addition to the high wages, the rise in prices and interests of loans caused by the Central Bank. All these factors led to an increase in the cost of production and inflation rates. Such factors have to do with costs and supplies while they have nothing to do with demand. Thus, the saying, "Much money looking for a few commodities" does not apply here.
The current inflation is due to high cost and shortage of supply. Nowadays, the government ensured assets that cover the nominal value of money and a domestic product that supports it. But there remain two options. The first option is to increase the quantity (number of units) by a third, raise salaries and wages and expand and improve the miserable network of social safety to include additional numbers of extremely poor people living at half a dollar per day amounting to four million. The second option is that the government raises the dinar exchange rate by one third as it is planning now.
In the first case, the needy employees and workers who are not covered by social welfare will benefit, and there will be no loss or damage to other people. In the second case, employees, workers, retirees and others will benefit, but, at the same time, others will lose as mentioned earlier.
According to reliable sources, the second option comes in implementation of the directives of the International Monetary Fund.

SO NOW WE KNOW WHAT CBI IS DOING....

But, as we stated in a previous article, the former American Secretary of State, Henry Kissinger, described the IMF as "a doctor who has only one pill for every conceivable illness".
* Mr. Ali Mahmoud al-Fakiki an Iraqi expert in economics

Great find Jola!

To me it's an opinion article.

Sometimes the article is written like facts and that they will do it but also as an opinion article.

First they write "It seems that the Iraqi government is planning now to fix the exchange rate at 1000 dinars/dollars" and next they write "The government plans to make this gradual, in order to avoid a sudden rise.".

Again, to me personal it's more like a personal opinion article, because at this moment I think nobody knows what the CBI is planning.

The article of 24/11 by voice of Iraq was also stating this.

quote:

"He said in a statement to the News Agency (Voices of Iraq) Independent that "requests for the dollar will remain low in wait for the exchange rate that the Central Bank wants to get to and not known until now."

Link to this article:

ÏæáÇÑ- (ÇÞÊÕÇÏ) :: Aswat al Iraq :: Aswat al Iraq

If we see this article in more news sources than I believe it will be more fact than opinion.

Again, I think nobody knows what the CBI is planning.

My personal opinion is that a 1000:1 rate is too low for the donor countries, to low to boost the purchasing power of the iraqi people what also a goal is!

Originally Posted by Adster

Looks to me like just another opinion as to where the rate will go.

Welcome back Adam,

Nice to see you are back in the saddle, sort of speak. Have a speedy recovery.

Good luck to all, Mike

He Adster, welcome back.

Hope everything is OK?

Originally Posted by DayDream

AND...If they raise it by 1/3 as the article stated...wouldn't the rate be.. based on 1470= 490IQD/$1USD

Not a mathmetician but I really dont think 1/3= 1000IQD/$1USD

AND...How are the ones holding the dollar the loser in all that? According to their statement of raising the rate 1/3, the dollar is still the WINNER not the LOSER!
JMO

Cheers!
DayDream

Well one third of the current value based on your figures is the 490 like you say, but you must reflect that figure in the current rate by subtracting that amount from the current rate. That said, who is to say that our logic or the article is following the intention of the CBI?

This could be a threshold for RV or just simply disinfo to mask the intended RV. In any case we will soon find out.