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

Originally Posted by Wm.Knowles

My take on this. When the currency was introduced in Oct. of '03, by Jan. '04 it was trading in Egypt under 1000 dinar to the dollar. The CBI decided that they didn't want wild fluxuations in the currency and "backed" it off to the very familiar level of around 1475. They under estimated the amount of time it would take to retire the debt (after all who would forgive debt with a rising currency?) and how long it would take to form a the GOI. They may also have under estimated how the economy would grow over the last three years. So now they sit. In a very awkward position. An extremely undervalued currency that needs a "bold adjust" for many reasons. And, do they have the currency reserves, oil money, gold, aggreements with other countries, IMF, world bank and expaning economy that they need in order to adjust the price of the dinar? Not to mention the KURDS are demanding this? We think as part of the reconcilliation with the Sunnis, they are demanding the currency RV, I think the answer is YES to all of the above. Any thoughts of these points? Thank You

i believe i have brought this part of your post up in the forum numerous times when responding to 'why are they still waiting?'. i believe they are milking the debt relief for every last cent they can get before they revalue the currency. this will be after they have the findings of the sba review at the meeting of the 11th-12th. at that point they are full steam ahead IMO.

The devaluation of the dollar due to low interest rates
The devaluation of the dollar due to low interest rates
Source : Iraqi Media Network southern region - 02 / 12 / 2006



Iraqi economic expert attributed the recent decline in the value of the dollar against the Iraqi dinar to the lower interest rate. He said Dr Taha honorary member of the Iraqi Institute for Development and the development of the economy : 'The decline in interest rates is why the President has the slight decline in the dollar In auctions governmental and commercial transactions'. He added : 'This decline is also not demand consumers on imported goods due to the deteriorating security situation, the state pays to finance some deals task '. He pointed to the proud : 'The slight rise or decline of the dollar does not obstruct the growth or value of the dinar is expected to become Iraqi currency is stronger than before with the introduction of the balance of 2007 and the strategic application of the new monetary policy announced by the government last year'. He explained : 'The decline reflected on the value of the precious metals, prices will rise as a result of a fall in the dollar, which gives an opportunity for those who hold commercial transactions, such as automobiles and heavy equipment to invest. He said Fakhri : in some cases linked to the decline in the dollar rate better themselves through the entry and exit of imported goods, including funds. This is huge for those who don't convert everything they hold at the present. Thanks Susie for the post.

Originally Posted by boomcreek

The devaluation of the dollar due to low interest rates
The devaluation of the dollar due to low interest rates
Source : Iraqi Media Network southern region - 02 / 12 / 2006



Iraqi economic expert attributed the recent decline in the value of the dollar against the Iraqi dinar to the lower interest rate. He said Dr Taha honorary member of the Iraqi Institute for Development and the development of the economy : 'The decline in interest rates is why the President has the slight decline in the dollar In auctions governmental and commercial transactions'. He added : 'This decline is also not demand consumers on imported goods due to the deteriorating security situation, the state pays to finance some deals task '. He pointed to the proud : 'The slight rise or decline of the dollar does not obstruct the growth or value of the dinar is expected to become Iraqi currency is stronger than before with the introduction of the balance of 2007 and the strategic application of the new monetary policy announced by the government last year'. He explained : 'The decline reflected on the value of the precious metals, prices will rise as a result of a fall in the dollar, which gives an opportunity for those who hold commercial transactions, such as automobiles and heavy equipment to invest. He said Fakhri : in some cases linked to the decline in the dollar rate better themselves through the entry and exit of imported goods, including funds. This is huge for those who don't convert everything they hold at the present. Thanks Susie for the post.

yw,,,, i think its equally huge for the HIGHER REVALUED RATE!!!

some of the stories we are reading today have given more credence to the $2 range scenario. that would be one VERY HUGE WOOT!!!

Okay...I couldn't find the article I was talking about but I had made notes on it and was going to get back to it this morning. Unfortunately I X'd out of the site this morning (not thinking) but I still have the notes. (Sorry no link, was going to copy it and put it at the end of the notes.) But this is my notes from the website....

Existing Stock Of Money (Currency)

The existing stock of money (currency) is composed of the new currency which has replaced the old ‘printed’ money, previously used in the middle and south of the country, and the ‘Swiss’ money in the north. The stock is largely used for transaction purposes. However, there is an important part, which is held inside and outside the country waiting for the ‘right’ moment to claim its ‘appreciated’ value.

Initially, adopting a flexible-rate regime does avert the potentially damaging role of the speculative dormant balances. But free flexibility (usually resulting in fluctuations) heightens uncertainty and only postpones the speculative effect to such times when the dinar begins to appreciate in value. Then, it will result in more fluctuations and uncertainty. At the end of January 2004 the stock of money amounted to NID6.2 trillion. see #4 footnote By mid-year it had risen to NID7.0 trillion (of which NID6.5 trillion with public). Gee..wish I had remembered this earlier before my calcuation mis-hap This is a huge stock that could assume a serious destabilizing role once the rate of the dinar starts to appreciate.
In this respect it would be possible to neutralize the speculative effect of the existing stock of money by preserving the ongoing market rate of exchange, in a kind of fixed-rate type arrangement. Official currency-board or even hard-peg may not be needed; it is the arrangement that matters. As long as it remains independent, concentrating on its primary objective, the CBI could effect such arrangement, using its reserves.

Footnote
4. This is the currency issued to date, which divides into NID5.3 Trillion with the public and the remainder with the commercial banks, see CBI: Bulletin for the First Half of 2004.

Economic Environment

Improvements in the security situation and increasing inflow of oil revenues and aid (together with the resolution of debt/reparations issues) are conducive to attracting foreign investment and expatriate Iraqi capital. There is a high possibility, though, that this could lead to the appreciation of the dinar. Moreover, the reconstruction boom, when it comes, will, most likely, replicate that of the 1970s (mainly a flourishing non-tradable sector). With no concerted policy to intervene, in order to keep the exchange rate from appreciating, the Dutch Disease symptoms would set in, thus frustrating long-term efforts for economic diversification. Unlike the 1970s, however, a free flexible regime does not hinder the appreciation; rather, it facilitates it (the rate may even overshoot). This is one reason for the monetary authority to step in to prevent such an outcome, but how? If free flexibility is to be preserved the CBI and/or ministry of finance has to resort to monetary (lower interest rate)5 /fiscal (budgetary) expansion leading to a cheaper dinar, therefore, risking a higher inflation in the process. Alternatively the CBI can abandon flexibility in favor of a devaluation of the rate, thus shifting to a peg. A soft peg (but not currency-board type arrangement, which is a hard peg) regime may well result in similar fluctuations.
Fluctuations and exchange policy reversals are detrimental to stable economic environment in general and to attracting foreign and expatriate Iraqi capital in particular. Steady rates are necessary for investors to calculate their costs and returns with some certainty. A fluctuating rate, inherently a characteristic of free flexible regimes (especially with weak monetary institutions and tools), is a hurdle in this respect.

Conclusion

The initial and prevailing conditions in the form of incomplete and underdeveloped exchange market institutions and monetary tools coupled with low foreign exchange reserves might all have obligated the CBI to choose a ‘flexible-exchange-rate’ regime, during October 2003-January 2004. The rate was mainly set by the market, in that period. Since then, however, the monetary authority has assumed an increasing role, through its daily auctions, and established somewhat transparent rules for the market.
On weighing advantages and disadvantages of free flexible versus fixed-rate type regimes the confluence of factors points to the preference of the latter during the next two-to-three years. Furthermore, a kind of virtual fixed-rate regime has already been followed by the CBI in the last seven months, due mainly to considerations of price stability (and fear of possible speculation). Giving up this arrangement, especially when security improves and construction accelerates, would endanger stability and most likely lead to the appreciation of the value of the NID. This will almost certainly invite speculative runs and consequent depletion of foreign exchange reserves.
However, when monetary institutions and tools develop further, price stability could be achieved by more effective and active monetary policy, during which time the exchange regime becomes more flexible. Speculative runs continue to be a threat when the ID appreciates, but then the economy would have grown in size and the CBI tools in sophistication to handle this effect.


Cheers!
DayDream

P.S. Since posting this, wciappetta was kind enough to track the article down for me. So those who are interested can read the article here:

Exchange Rate Regime, Speculation And Price Stability In Iraq

Thanks Ward!

Originally Posted by shotgunsusie

i believe i have brought this part of your post up in the forum numerous times when responding to 'why are they still waiting?'. i believe they are milking the debt relief for every last cent they can get before they revalue the currency. this will be after they have the findings of the sba review at the meeting of the 11th-12th. at that point they are full steam ahead IMO.

So...Susie, is this to say that we are waiting til then for the revalue, or is is possible for things to go into full swing tomorrow? I'm asking, not being critical, I'm just wanting to make sure I understand.

Originally Posted by boomcreek

The devaluation of the dollar due to low interest rates
The devaluation of the dollar due to low interest rates
Source : Iraqi Media Network southern region - 02 / 12 / 2006



Iraqi economic expert attributed the recent decline in the value of the dollar against the Iraqi dinar to the lower interest rate. He said Dr Taha honorary member of the Iraqi Institute for Development and the development of the economy : 'The decline in interest rates is why the President has the slight decline in the dollar In auctions governmental and commercial transactions'. He added : 'This decline is also not demand consumers on imported goods due to the deteriorating security situation, the state pays to finance some deals task '. He pointed to the proud : 'The slight rise or decline of the dollar does not obstruct the growth or value of the dinar is expected to become Iraqi currency is stronger than before with the introduction of the balance of 2007 and the strategic application of the new monetary policy announced by the government last year'. He explained : 'The decline reflected on the value of the precious metals, prices will rise as a result of a fall in the dollar, which gives an opportunity for those who hold commercial transactions, such as automobiles and heavy equipment to invest. He said Fakhri : in some cases linked to the decline in the dollar rate better themselves through the entry and exit of imported goods, including funds. This is huge for those who don't convert everything they hold at the present. Thanks Susie for the post.

OK i understand the word currency and the word stronger. What i am seeking for is someone to define the word before

Before what yesterday, a week ago, a month ago, before 2003, 1990 ??

He pointed to the proud : 'The slight rise or decline of the dollar does not obstruct the growth or value of the dinar is expected to become Iraqi currency is stronger than before with the introduction of the balance of 2007 and the strategic application of the new monetary policy announced by the government last year'. quoted from SGS article

Does anyone really understand what is being said here? "the growth or value of the dinar is expected to become Iraqi currency is stronger than before" (r/v?) "with the introduction of the balance of 2007" (introduction of 2007 budget in Jan 2007?) "and the strategic application of the new monetary policy announced by the government last year" (last year 2005? or this year 2006? If 2005 what new monetary policy are they talking about?)

If anyone can explain the above please help. Thanks,

worf

Originally Posted by shotgunsusie

http://64.233.179.104/translate_c?hl...px%3Fid%3D2678
woOT!!!!

WWWWWEEEEEEAAAAAHHHHHHH!!!

Come on, hit it!

This is saying it all! The Dinar stronger than before!

Oh baby, what a beautiful Christmas this will be!

First thing I am gonna buy from my dinar money is a new chair and a bigger screen to follow the next investment.

Originally Posted by H2O_Lover

OK i understand the word currency and the word stronger. What i am seeking for is someone to define the word before

Before what yesterday, a week ago, a month ago, before 2003, 1990 ??

The way I read it, was that it is referring to before Saddam was ousted the dinar was at $3.22.

Originally Posted by H2O_Lover

OK i understand the word currency and the word stronger. What i am seeking for is someone to define the word before

Before what yesterday, a week ago, a month ago, before 2003, 1990 ??

I think they meant, before you were born!

No serious, I think they are talking about the pre-war level!