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

Originally Posted by CharmedPiper

This is the most detailed article I have found relating to the above articles. We are so close.....Way too much publicity now....!!!

Iraq Central Bank Buys Up Currency to Fight Inflation; Dinar at 2-Year High Vs. Dollar
Thomas Wagner

December 8, 2006 - 2:13 p.m.

BAGHDAD, Iraq (AP) - Iraq's dinar currency has risen to a nearly two-year high against the U.S. dollar, as the nation's central bank tries to fend off skyrocketing inflation by buying up the currency with dollars at its daily auctions.

Most of the money the Iraqi government earns is in U.S. dollars because oil exports are the main source of its income, and the bank has about $14 billion in foreign assets, said Mudher Qassim, the Central Bank of Iraq's director of statistics.

On Thursday, the last day of the work week in Baghdad, the central bank led the way at its daily currency auction, which saw 25 million U.S. dollars sold by about a dozen banks, the central bank said. Even larger amounts of dollars were sold during 10 of the auctions in November.

"Our goal is to reduce inflation, which is now running at about 50 percent, by improving the dinar and thereby making imported goods cheaper," Qassim said in a telephone interview, adding that more than 80 percent of all Iraq's tradable goods are imported, he said.

In a report in August, the International Monetary Fund also said inflation was escalating in Iraq. The 12-month rate of inflation ended 2005 at 31.7 percent, but inflation then accelerated, with 12-month inflation reaching 58 percent in May 2006, the report said.

Iraq's Central Bank also is trying to fight inflation by raising interest rates. In November it raised its key policy rate to 16 percent from 12 percent. Wednesday's report from the bipartisan U.S. Iraq Study Group said that by the end of 2006, the bank will raise rates to 20 percent and appreciate the dinar by 10 percent.

The Central Bank's fight against inflation could prove to be an uphill battle, however, since many observers believe the leading contributor to inflation is the high cost of security involved in distributing goods throughout the country.

On Thursday, the dinar was trading at the central bank's auction price of 1,424 against the U.S. dollar, according to the bank's Web site, its strongest price since March 23, 2004, when it was at 1,420.

Between Nov. 29 and Thursday, the Iraqi currency traded widely at a market price between 1,410 to 1,442 to the dollar, the best market price the dinar had seen Jan. 26, 2005, when it traded at 1,405.

"The dinar has steadily increased against the dollar because of the central bank's efforts to stabilize the currency and control inflation," said Hussein al-Uzri, president of the state-owned Trade Bank of Iraq.

"Iraqi consumers get oil and food that is government subsidized, so the rise in the dinar won't have an immediate effect on them and the economy. It will take some time. But as Iraqis realize the value of the dinar is rising, they will stop immediately exchanging their currency into dollars," he told The Associated Press.

Two money changers in Baghdad said Thursday said their businesses haven't been affected by the central bank's intervention yet, but some consumers were watching to see what will happen to the dinar next.

Government employees who are paid in dinars already are benefiting by getting a better deal at the many Iraqi stores that import products such as electronic goods and sell them in dollars only, said one money changer.
The other trader said the many poor and unemployed Iraqis who survive by receiving U.S. dollars from relatives overseas — and Iraqis who work for foreign companies and are paid in dollars — are worse off.

Both money changers spoke on condition of anonymity to protect their security in Baghdad, where many people are killed in sectarian violence between Sunni Arab insurgent and Shiite militias. Businessmen and store owners often are kidnapped by common criminals seeking ransoms from their relatives.
Iraq Central Bank Buys Up Currency to Fight Inflation; Dinar at 2-Year High Vs. Dollar | Markets | Market News | Canadian Business Online

So what is your opinion about all these news?
i know that you will have a good explanation on it

Originally Posted by Precocious

Thank you for your cordial reply. Most certainly there is more here than meets the eye, and I among the many here are still hopeful, But you don't need to be an expert to see the disparagy in the numbers and I want to be a realist.

How can a country that produces $94 Billion in products a year, have $14 Trillion dollars of buying power? It would take over 100 years for them to produce $14 trillion dollars worth of goods.

i would think if they are selling oil and natural gas those would be considered in their annual goods totals. i mean its about how much you take in and that certainly is the biggest thing. if you consider that then the 94B is a very small estimate.

My opinion is we are on our way. That simple.
The only thing that I noticed in the Charmed post, was that the article states;

"Our goal is to reduce inflation, which is now running at about 50 percent, by improving the dinar and thereby making imported goods cheaper," Qassim said in a telephone interview, adding that more than 80 percent of all Iraq's tradable goods are imported, he said.

I have been reading everywhere that the inflation has now passed 70%.
Anyone know why the clash of numbers? Just curious.
Good day.

Originally Posted by DLMCFX

As I remember thise countrys also had agreed on buying oil for their Dinars to be the only way of cashing in their large dinar holdings.

this concept is why you can add all those figures up you want to try and make it look as if there will be no large revalue in any capacity. but, if they sell their oil for dinars they have previously sold to countries that brings the oil dollars into play on the economy and that changes the playing field tremendously.

This is a really good read of an Iraqi's story of the inflation hardships.



http://www.alertnet.org/thenews/newsdesk/IBO660378.htm

FEATURE-Violence, inflation eat into Baghdad stores

07 Dec 2006 12:30:25 GMT
Source: Reuters

BAGHDAD, Dec 7 (Reuters) - Lina is madly in love but is dreading her wedding day in two weeks -- she's afraid the bakery will be closed, the photographer won't open his studio and the hairdresser will run out of hairspray.

Soaring inflation, bombs, kidnaps and shootings at markets and on bandit-ridden roads used by supply trucks are stifling Baghdad's shops and businesses, wrecking the brief economic revival that the end of United Nations sanctions brought to the capital and stifling Iraqis' once-famous joie de vivre.

Small shop-owners and businesses are struggling to keep stocks running on everything from light bulbs to toothbrushes, chocolate bars to disposable razors.

Lina, 33, is in despair.

"When my friend married in July it was bad but this is worse. I'm terrified to go shopping. I should be happy, but I don't feel like a bride."

Baghdad's wholesale Shorja market, one of the city's oldest and a key supplier for countless small shops scattered across the capital, has been bombed frequently. In a brazen daylight attack last month, gunmen kidnapped dozens of porters at the market, which has recently cut its business hours.

"There is stagnation in the market," complained Wisam Badia, a 40-year-old shopkeeper in central Baghdad. "A year ago I used to make $100 a day. Now I make $50 a day."
Abdul Hussein, another shop-owner, said it was getting harder for small businesses to purchase their goods at wholesale markets such as Shorja because of the violence.

"The vehicles that carried the goods used to have big posters painted on them advertising the goods they deliver, but not any more. They've erased these posters. They are afraid they might be killed or kidnapped."

Pointing at a U.S. military convoy rumbling past, he asked:

"How do you expect people not to be afraid when you see scenes like this? People might not be afraid of the Americans but they are afraid of explosions that might happen near them."

HARD TIMES

Abu Mohammed, who owns a small store in the central Karrada district, said gloomily:

"Because of the bombings and the shootings, Shorja is closing early now. They are too afraid to open. You never know what you are going to find in Shorja if you go so for the small stores it has become very hard."

Inflation is running above 50 percent a year but lately prices of some imported luxuries such as coffee and chocolate have leapt by 50 percent in just a week or so. (It looks like the CBI better think of another way to fight inflation like a fast and high reval now.)
Many stores in Mansour, once an upscale shopping district with lively restaurants, are shuttered with signs reading "For Sale".

Mass kidnappings -- a common plague in Baghdad -- have taken place in neighbourhood shops, restaurants and electronics businesses. Barbers and bakers have been gunned down. Butchers at a meat factory outside Baghdad were kidnapped recently.

With Islamic militants pressing their agenda for a strict interpretation of Islamic law, alcohol shops in Christian areas have been bombed and set on fire.

Beefed-up security and inflation cut into profit margins, unless producers and shopkeepers pass on the higher cost to consumers.

All this is making life miserable for Iraqis.

Ask bride-to-be Lina, who fears what should be one of the happiest days of her life will be a disaster.

"I feel such a burden when I think of what might happen on our wedding day."

Another update, Chase is still selling here in Illinois. All is good.

Iraqi committee making progress in drafting new oil law
The Associated PressPublished: December 9, 2006

BAGHDAD, Iraq: A government committee drafting a new law to resolve the politically charged question of distributing Iraq's oil wealth has made significant progress, the panel's chairman said Saturday.

The distribution of oil revenues, the mainstay of Iraq's economy, is at the heart of some of Iraq's most contentious political issues at present, including the push by Shiite leaders to allow the oil-rich south of Iraq to set up a self-rule region a similar to a Kurdish one in the north.

"We have reached important agreements. I cannot put a timeframe on when it will be ready, but we are very keen on achieving that as soon as possible," Deputy Prime Minister Barham Saleh, a Kurd who chairs the committee, said. "We hope that we will reach a comprehensive agreement that will enhance the oil sector and make oil a unifying factor to all Iraqis."

He said, however, that key issues still need to be resolved, including "the administration of the oil sector, deals and contracts."



Iraqis near agreement on oil revenue sharing

Underlining the sensitivities involved, Nechirvan Barzani, the Kurdish region's prime minister, said Thursday that talks he held with the Baghdad government this month failed to produce an agreement on his demands for control of oil resources in the region.

"We demand that the signing of contracts to develop oil fields in Kurdistan should be handled by the Kurdistan region," he said, according to Dow Jones Newswires.
Iraq is believed to producing around 2.2 million barrels of oil a day and exports about 1.5 million, well below prewar levels. Insurgent attacks have frequently targeted oil facilities and pipelines, disrupting exports and disrupting efforts to modernize the industry.

A report by a high profile bipartisan U.S. commission released Wednesday recommended that the U.S. government work with the Iraqis to come up with a clear, legal framework for oil investment as soon as possible. It also suggested that the U.S. military work with Iraqi and private security forces to protect oil facilities.

Also speaking to the AP, Oil Ministry Spokesman Assem Jihad said the government hoped that the new law, which has to be approved by the Cabinet and parliament before it comes into force, was partially designed to encourage foreign investment in the oil sector, whose woes began with the imposition of sweeping U.N. sanctions on Iraq following its 1990 invasion of Kuwait.

A boost in Iraq's oil exports could provide a much desired shot in the arm for the country's ailing economy. The Iraq Study Group report said put inflation in Iraq at around 50 percent and unemployment at between 20 percent to 60 percent.


Iraqi committee making progress in drafting new oil law - Africa & Middle East - International Herald Tribune

Originally Posted by rvalreadydang

A number of members of the House of fueling bill commits the government to distribute 30% of the oil revenues between the citizens month.

.The deputy said the bloc compatibility Noureddine Hayali : that the principles of the project are now under discussion will be circulated with the Minister of Planning to Papan and chairman of the Economic Committee of the Council, Dr. Haidar Abadi. Hayali believes it is possible to present the draft to the parliament for approval before the end of this year.

.Economists estimated proceeds of Iraqi oil annually, including more than thirty billion dollars or ten billion dollars distribute them among citizens in the form of monthly salaries. The price of a barrel of oil is 60 dollars, while observers speculate is likely to increase prices due to the prevention of some OPEC countries to increase production and thus reduce vulnerable in the market. The law aims to notice their ill citizens, which should be preserved by all of the waste and theft and benefit from them directly.

.He says : Hayali citizens that the law will be divided into three different categories : the first category shares from birth until six years ago, two : from 7 to 18 years old, the third 19 and above. He explained that the law would shroud the cash portion who earns more than 1 million dinars, as well as denying them involved crimes against honor, such as drug trafficking and abuse, adultery, as well as espionage, all felony owner holding more than five years. He said : that the law also deprive the Iraqi who migrate abroad. It is likely to amend the House in some of these barriers, or add to them, however, they seized a whole : they are factors helping to suit the society and the restoration of cohesion and unity. The large number of deputies he welcomed this project is to be paid to Andhajeh and developed and put to the Council. The previous references officials commented on the need for citizens to feel the benefits of the oil wealth directly, expecting to address the House for this task by the law governing the rights of people. It is hoped that the 2007 budget, the largest budget in the history of Iraq as the $ 40 billion and described the Prime Minister Balanfjarih. While citizens were pleased with the promises of the government to improve their living conditions, which appeared signals in the new salary scale and the law of retirement yesterday and the day before yesterday, will be identified by looking at the oil quotas.

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theres that law of retirement that was always talked about in the articles concerning raising the rate of the dinar.

Iraq panel: Security hampering economy
2006/12

By JEANNINE AVERSA, AP Economics Writer 14 minutes ago

WASHINGTON - The Iraqi people are struggling financially as the war goes on, facing high unemployment and soaring prices.

The Iraq Study Group said this week that corruption and uncertainty as well as security problems are hampering Iraq‘s economy, and significant improvement is not likely until those problems are fixed and the country pumps up its oil production.

There are some signs of progress, the bipartisan commission told President Bush . New businesses are cropping up and computers, cell phones and other consumer goods are flowing into the country.

But that is the future. For the present, the commission gave a bleak assessment of economic conditions.

_Inflation is above 50 percent.

_Foreign investment is less than 1 percent of gross domestic product.
"The economic situation parallels the security situation," said Randall Filer, economics professor at Hunter College. "Security is key."

Current output is also "far short of the vast potential of the Iraqi oil sector," the commission said.

Yet, if some obstacles are overcome, Iraq could boost production from existing fields to around 3 million to 3.5 million barrels a day over a three- to five-year period, the report said.

The commission also urged Bush to say anew that the U.S. does not seek to control Iraq‘s oil. The commission endorsed the idea that the Iraqi government should take a portion of oil revenues and share it with the country‘s citizens.

"Nothing in the economy can work without peace and secure property rights. Investment and job creation depend on those," said Roger Myerson, economics professor at the University of Chicago. "Peace is what they need more than anything else."

A World Bank report released this year said security is "the most critical condition for economic recovery" in Iraq.

Overall, Iraq‘s economy is growing but not as quickly as hoped. Inflation is high; so is unemployment.

Economists say the country needs to harness the potential of its rich oil reserves, lure investors, diversify its economic base and create productive jobs.

The Iraq Study Group suggests the U.S. boost economic assistance to Iraq to a level of $5 billion a year, in part to help creation of job opportunities.

"For now, oil production is key. Because so much of the economy at the moment depends on oil, that is the foundation for other things," Filer said.
"On the other hand, if I were advising the Iraqi government, I wouldn‘t become overly fixated on oil. There is other potential in the country," Filer said, including agriculture, food processing, textiles and some metal fabrication. "It is clear that, given the backwardness of the industrial base, foreign investors in terms of physical capital and in terms of management know-how will be critical," he said.

Westfall Weekly News

09/12/2006 11:04:25 Õ

Gulf Cooperation Council secretary Abdul Rahman al-Attiya

Monetary union, Iran top Gulf summit agenda

Gulf Arab leaders gather in Saudi Arabia on Saturday for a meeting to help resolve problems over a planned monetary union in 2010 and raise concerns over Iranian influence in the region.

The two-day summit will assess progress on the customs union and the monetary union, said a spokesman for the Gulf Cooperation Council (GCC), which groups Saudi Arabia, Qatar, Bahrain, Oman, Kuwait and the United Arab Emirates.

Oman recently cast doubt on the timetable for the single currency project, suggesting the agreed 2010 deadline might not be met and that other nations shared this concern.

The six countries have agreed five criteria for European Union-style economic union, including capping budget deficits at 3 percent of gross domestic product, public debt at 60 percent of GDP, and inflation at the GCC average plus 2 percent.

Interest rates are to be no higher than the average of the lowest three states plus 2 percent and countries must have foreign exchange reserves to cover 4-6 months of imports.

The economic targets are achievable but Gulf states had made little progress on a customs union that went into effect in 2003 to help prepare for integration, Oman's central bank governor Hamood Sangour Al Zadjali said last month.

GCC secretary general Abdul-Rahman al-Attiya said later the launch of a single currency was still on track for 2010 and he had not received any request for a delay.

The summit is also expected to consider a proposal made last year to limit to six years the stay of expatriate workers.

An estimated 12 million foreigners live in GCC countries and represent more than 80 percent of the population in some cases.

The summit of some of the world's richest nations in terms of energy resources is also expected to discuss sectarian violence in Iraq, Tehran's nuclear programme and rising tension in Lebanon.

Saudi Arabia, the world's largest oil exporter and home to Islam's holiest sites, wants to check what it views as the creeping influence of Shi'ite power Iran in the Arab region through support for Lebanese group Hezbollah, Shi'ite parties in Iraq and its alliance with Damascus.

The GCC countries are mainly Sunni, with Shi'ite minorities, though Shi'ites are a majority in the island state of Bahrain.

The UAE has a long-standing dispute with Iran over three islands occupied by Tehran.

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