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

Originally Posted by Mike5200

SGS- what do you make of Bigslick116 post in the rumor section ?

Quote:
Originally Posted by Bigslick116
Hello everyone, I just got third hand information that Iraq just opened up the dinar on the world market at .14 cents. This came from a contact in the green zone. I hope to god this is true just like all of you so lets wait and see. I know this sounds flaky but it's all I got right know.


Just got a call back and was told that this has been the central bank of Iraq's plan for a while now but hasn't been the #1 goal on their agenda until after the international compact for Iraq held by Kuwait on the 31st of October. Thats when things really started to come together as we have seen.

First: They would take out as much currency in circulation as possible (which they have)

Second: Iraq would have to pass/ratify/implement FIL & HCL.

Third: Iraq would need to be completely debt free

fourth: Come to some sort of agreement with the Kurds

Since Iraq has completed these steps and has full support from the World Bank, Paris club, IMF, etc. They now are required to follow suit with a revaluation of their currency

Word from the ground right now is that all their paperwork and such is in it's final stages and there is a bit of a buzz around Iraq as well. (hope some one can also confirm) I should have a little more information later in the day so I will pass it on as it comes.
__________________

someone misread the decimal point placement is my thought.

But if the value of imports will reduce there will be more of them (not good) raising the value of exports, that means there will be less exports (not good either) Tell me if I am wrong. I did take a bit of economy.

Held in Washington, DC, the reconstruction of Iraq VI for the period from 7-6 December next. She said the organization of the exhibit as authorized UNHCR to Iraqi institutions of civil society in Iraq to extend invitations to the relevant authorities of the business community and interested body indicated that the conference attended by senior Iraqi officials, as well as officials of government agencies major American author e contracts ages interested in finding partners and the Iraqi contractors, will also participate in the conference by delegates from firms from other countries interested in creating opportunities for contracts with Iraqi companies will be through the provision of studies and research.

The project to develop the services and the reconstruction of Iraq. as well as a major exhibition includes pavilions variety of views participate in the reconstruction of Iraq to the Iraqi Office of the institutions of civil society in Iraq approached the ministries concerned and interested in participating with the aim of coordinating the organization, He explained Dr. Basil al-Azzawi, head of the Office of the institutions of civil society in Iraq that Alvezh and approvals will travel directly from the American embassy. He pointed out that the travel and subsistence expenses for official delegations borne by the Organization of the exhibit will be on companies and businessmen, those expenses.

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Cheers!
DayDream

Originally Posted by ErelisLT

But if the value of imports will reduce there will be more of them (not good) raising the value of exports, that means there will be less exports (not good either) Tell me if I am wrong. I did take a bit of economy.

Good question... this is a Brand New economy though, with potential to be one of the richest on earth ... and theyre just starting to open the doors to foreign capital now... resulting in a difficult to understand dynamic re: the value of the goods soon to flood there .... i wish i had gone past econ101 sigh.

Originally Posted by ErelisLT

But if the value of imports will reduce there will be more of them (not good) raising the value of exports, that means there will be less exports (not good either) Tell me if I am wrong. I did take a bit of economy.

Very true!

But oil is 95% of Iraqs exports and the price of oil will never go down.

Arkie.

You are right. All of this is hapening because of the black gold.

Originally Posted by ErelisLT

But if the value of imports will reduce there will be more of them (not good) raising the value of exports, that means there will be less exports (not good either) Tell me if I am wrong. I did take a bit of economy.

Try to keep in mind currently Iraq is dealing with 2 primary curriencies. The big purchases use usds. The in country purchases use dinars. Since their primary export is oil and sold in dollars, and all of their imports are valued in dollars and then converted to dinars for use inside the country, when they r/v the dinar, their in country costs will dramatically reduce. Instead of spending 1500 dinars for the cost of a pair of children's shoes, it will go down to 2 or 3 dinars. Instead of a liter of gas costing 750 dinars, it will go down to 2 or 3 dinars.

Look in the history thread and find Paynes1 posts on the Marshall plan. Then you'll see that with the r/v there will come govt assistance (cash bonus) to help to kick start the economy like what happend in West Germany after WWII. This added to the fact that their banks are holding billions if not trillions of dinars that are currently nearly worthless all of a sudden become very valuable. The hopes of this will kick start their economy and dramatically reduce inflation and unemployment leading them to more stability and harmony as a nation. This added to billions of dollars/dinars of foreign investment about to hit will be awesome.

Soon there will be conversations among the Iraqis similar to the following: Insurgent: "Hey Jahil I need someone to blow themselves up today at the market. I am willing to pay 100 dollars usd and give it to your family. Are you interested?" Jahil: "You'll have to get someone else, because I am on my way to work making alot more than that. What did you say your name was again? I have an uncle who is a legit police officer that would like to know. Since there is a reward for any information concerning insurgents, you'll be hearing from us later."

Well, we can only hope and pray that this r/vs soon and quick for all of us dinarholics as well as the Iraqis themselves.

worf

Originally Posted by Wm.Knowles
Thank you for your interest. When will the CBIs policy of not selling dinar effect the supply in the US. That will depend on how much Chase had on hand when this started. Also, we might not like to think about it, but there are people who will have sold their dinar. They (I know 2) may find themselves overextended, maybe broke. These individuals will probably not come up on rolclub and announce this. So it is reasonable that Chase is not only selling dinar, but they have bought it also. They will in turn have made a spread and will have dinar to sell to others. Old eceonomic law, behavior changes at different price levels. So some will/have sold cheaply. Thank You

I would not have thought this to be a possibility, but I can confirm that it has happened. I have a good friend in Honolulu that I introduced to the dinar in Feb '06. He has dealt mainly through SafeDinar, but recently he told me he bought some dinar at American Savings in Honolulu. On his second purchase at American Savings, to his surprise the teller not only took his order but was able to give him the dinars on the spot. In his previous purchase he was told that American Savings put in the order and they got their currency from Bank of America. However on this occasion, the teller told him they had some in stock because they had purchased some dinar from a customer two days prior and they still had the money on site. I feel badly for those that have to give up their dream or at least a part of it. It has been such a long road and to be this close and have to give up your "stash" would be very hard to do. The fact that it has gone from wall paper to actual currency where you can recover a good portion of your investment if you have to, is an amazing thing just in itself. Do whatever you have to do, sell furniture, cars, personal possessions, anything so you won't have to give up your dinars. You can always buy the stuff back after the reval. This is a once in a lifetime shot, and we are part of a very select few you are going to benefit from this unique moment in history. Hang in there !!

Love the insurgent conversation!

Originally Posted by DayDream

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!

DD, Am I wrong, or is this actually saying that "hey we plan to revalue our money"