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

Originally Posted by MrsCK

HOLD UP FOLKS THIS IS A REPEAT WITH "NEW" DATE!!!
Those sneeky buggies over there are doing reprints of old stuff.

Good one...You beat me to it Rehash of old news with a new date..WHAT are they doing!

Commercial exchange retreats between Iraq and Jordan
12 December 2006 (Iraq Directory)

The substantial decline in commercial exchange between Iraq and Jordan during the last nine months of the current year is due to the difficulty of dealing with the road linking Baghdad to Amman, where goods are looted and trucks are stolen by armed outlaws, as economic experts say.

According to figures of the Jordanian General Statistics Department, the commercial exchange has declined between the two countries during the first nine months of this year, to about 335.1 million dinars compared with 388.4 during the same period last year; that is by 13.6%.

The imports from Iraq fell by 72.6% during the first nine months of the current year, up to 4.9 million dinars, and that is lower than the imports of the same period last year which were 17.9 billion dinars. The figures also showed retreat in the Jordanian exports to Iraq during the first nine months of this year to around 258 million dinars, compared with about 293 million dinars during the same period last year; that is by 11.9%.
The main exports to Iraq were: oils and vegetable gee, soap and washing formulas, as well as aluminum products.

In this context, the Secretary-General of the Jordanian Ministry of Industry and Trade, Dr. Montasser Al-Uqla, said that the rapid change in the prevention or permit of the passage of certain goods was one of the reasons that have affected the decline in Jordanian exports to Iraq, as well as the absence of a safety on the roads of truck and convoys destined for Iraq.

He explained that the government had asked the Iraqi side to revive a new trade protocol between the two countries, also submitted a proposal for signing a free trade agreement; however, both proposals are under study.

Al-Uqla said that the Convention will provide the legal framework for trade exchanges, and give a strong impetus to bilateral trade, as well as stimulating the private sector in both countries to establish investment projects in various fields.
He pointed out that both countries are members of the Great Arab Free Trade Convention, which gives them the opportunity to benefit from the full exemption from customs duties of a similar effect among all the Arab countries that are members in the Convention.

The Iraqi - Jordanian trade relations are under a trade protocol renewed annually, and include goods needed by Iraq from Jordan over the full year in return for oil received by Jordan from Iraq at preferential prices.

Despite the decline in the commercial exchange between the two countries, Iraq still maintains his position as the second on the list of trading partners to Jordan after the United States.

Commercial exchange retreats between Iraq and Jordan | Iraq Updates

Originally Posted by Ranger III

I have been comforted in the last sixty days or so by the fact that the ten thousand dinar distribution has been delayed, thinking that the delay was being caused by a corresponding delay in the revaluation we expect.

Now we are told that a three million dinar distribution is contemplated. This
makes me nervous, unless this new proposal is a decoy or unless the idea is to distribute ultimately three million dinars in value measured at the dinar's current rate.

Is any one else troubled by this development?

IMO, Iraq has to keep moving along and this requires that costs and disbursements be announced based on current value. Absolutely everything will have to be recalculated post RV. This is not as big a deal as everyone thinks. Most countries in the world accept USD as tender for anything, but not so with most other currency. You cannot walk into a pharmacy in the U.S. and hand them Jordanian Dinar. Noone would know what to do with it. But, if you used USD to pay at a pharmacy in Jordan I bet they would just take out their calculator. I have not travelled outside the U.S. very much, but in mexico, for instance, they will always offer you a better deal if you pay in USD. Absolutely everybody uses a calculator. While this may sound confusing to us, I really don't think it will be for Iraqi's. They import goods and pay for them in USD or other foreign currency and then have to calculate into dinar. It is second nature to them.

CapeK

If the RV doesn't happen by the end of the year, what do you think the likely plan would be by the CBI next year? Continue with a gradual rise or still banking on a sudden high revalue?

Sorry If this has already been posted. I have not been on to much as i have family in town for the holidays.

Iraqi dinar builds head of steam amid nation's chaos
12/12/2006
Source: Los Angeles Times

An unexpected bright spot has appeared in this war-ravaged Iraqi capital: The national currency is strengthening against the U.S. dollar.

The dinar has appreciated to about 1,400 dinars to the dollar, near its two-year high, triggering a dinar buying frenzy among currency traders.

"I had people call to sell $150,000, $100,000. I had to tell them I didn't have that many dinars," said Alaa al Shemry, deputy manager at the Beirut Exchange Co., where he sat last week, watching a man sell dollars for the blue 5,000-dinar notes adorned with waterfalls and desert fortresses.

Economists and investors say the dinar's rise is temporary and largely driven by the Iraqi Central Bank, which is buying the currency as it seeks to raise interest rates to combat rampant inflation.

But that hasn't stopped currency speculators from seeking to cash in.

A.F. Alhajji, an associate professor of economics at Ohio Northern University who has studied the Iraqi economy for 15 years, received e-mail from Mideast currency speculators urging him to buy Iraqi dinars, similar to messages he got after the dinar was issued in 2004.

Alhajji says he watched teenagers in Jordan and Saudi Arabia respond to the e-mail, buying up the currency.

"They seriously think they can gain money by buying Iraqi dinars. This has become like a fever over there," he said.

And not just over there.

In Danbury, Conn., Jeff Pasquarella is buying billions of Iraqi dinars for customers through his currency trading website, Bet-OnIraq.com, which sells the Iraqi currency "because liberty breeds prosperity." EDinar Financial in Los Angeles and similar companies have popped up from Nevada to Wisconsin.

At Dinar Trade in Brentwood, Tenn. (formerly Bakersfield), sales dropped off during the last few months but picked up again in the last two weeks as many of its 54,000 customers took a renewed interest in the dinar, an employee said. The company expects the dinar to appreciate 10% to 20% in value.

"Picture Iraq as a company selling stock," the website says. "Each Dinar you purchase represents a share in Iraq's bright future."

On Thursday, the last day of business in this largely Muslim country, the dinar was trading at 1,424 against the dollar, according to the central bank. That was its strongest price since March 2004, when it was 1,420.

Some economists are surprised at the dinar's rise, considering that Iraq's economy is still a shambles, with trade and major industries such as agriculture and oil crippled by the ongoing conflict.

Electricity is so sporadic in the capital that the Iraq Stock Exchange — which is preparing to switch from erasable white to electronic boards on the trading floor — can still count on only two hours of power a day.

In late November, three car bombs exploded in markets near the central bank, killing at least 68 people, injuring 111 and destroying 22 businesses, police said.

The dinar's price is determined at streetside foreign exchanges and daily dollar auctions at the central bank. Each weekday except Friday, the Muslim day of prayer, traders from 30 state-run and private banks arrive at the central bank in downtown Baghdad, each bearing an envelope listing the amount of dollars they wish to buy and a bid price. Bank managers confer and set the price.

The central bank is widely believed to be trying to force the exchange rate down to 1,000 dinars per dollar, in line with the Saudi riyal and the Jordanian and Kuwaiti dinars.

Ahmed Salman Jabouri, the deputy central bank governor who oversees the foreign exchange market, said Iraqi banks were buying up dinars, reversing a recent trend.

Under a multiyear agreement with the International Monetary Fund, Iraq is required to increase its dollar reserves and bring inflation down to 15% as part of the nation's reconstruction effort. During the last two years, the bank's dollar reserves about doubled, records show, now totaling about $11 billion, while inflation has leaped this year, Jabouri said.
An IMF report in May showed inflation of 58% during the previous 12 months, compared to 31.7% the year before. Economists and investors put current inflation even higher, at up to 80%.

A Western official in Baghdad said the Iraqi government is doing all it can to fight inflation.


"They're basically meeting their targets," said the official, who requested anonymity. "I think this is actually a good thing for Iraqi consumers."

Most Iraqis receive oil and food subsidies but struggle to pay for cars, computers and other items, said Laith al Abadi, 30, a computer engineer who was exchanging dollars for dinars at the Beirut Exchange Co. last week. Abadi said he imports PCs on the black market to avoid taxes and keep his prices low — $300 to $1,400 for a basic model.

"If something changes, if the market is OK, then I pay taxes," he said.

Investors were more upbeat last week at the stock exchange, where 93 stocks appeared on whiteboards. In a stucco building behind an armed checkpoint and concrete barriers, men fingered prayer beads as they waited for the exchange to open. Some said they are more confident that the central bank can curb inflation as the dinar's value rises.

"It's a sign of stability because you are going to have capital that has fled the country coming back," said Saad Lutfi, 64, a trader who mostly invests in the banking sector, which he said is picking up. "But it's a long-term thing."

Alhajji, the Ohio economist, said Iraqis were following the bank's lead, exchanging dollars for dinars.

"People historically, since the days of Saddam Hussein, saved their money in non-Iraqi currency. Since the U.S. came, it was the U.S. dollar, especially since the military was paying in dollars," he said. Now people believe the economy is improving and will keep buying dinars, he added.

Even with prices rising, U.S. soldiers in the streets and bombs in the markets?

"Sometimes high inflation is a sign that the economy is picking up," Alhajji said. "In Dubai, inflation is rampant, but it is one of the most prosperous places in the world."

But Iraq is no United Arab Emirates. The Dubai skyline is dotted with construction cranes, while Baghdad's high-rises are pocked by mortar rounds. Iraq emerged from Hussein's rule with $125 billion in international debt, pared down to $76 billion, and trade ties weighted heavily in favor of foreign countries, chiefly the U.S.

Add to that the complications of post-colonial currency shifts.

After World War I, when Iraq fell under British rule, the official currency was the Indian rupee, with rates set by the empire. Once Iraq gained independence in 1932, leaders created a national currency board to set exchange rates for the dinar but not shape monetary policy.

Under Hussein, the exchange rate fell from $3.30 per dinar to a low of 3,000 dinars per dollar in 1995 as the government, bedeviled by international embargoes, massively printed old dinar notes, including those emblazoned with the dictator's likeness.

The new central bank was created with U.S. and British oversight in part to help stabilize the dinar. Some say the currency's rise amid the sectarian war is the result of the bank's dysfunctional money management.

"Given their history with money in Iraq, they should never have had a central bank," said professor Steve H. Hanke, co-director of the Institute for Applied Economics and the Study of Business Enterprise at Johns Hopkins University in Baltimore.

He said Iraq should replace the central bank with the currency board it had before or adopt a foreign currency. Ecuador, El Salvador and East Timor have adopted the dollar, he noted, while Montenegro and Kosovo use the euro.

Hanke called the dinar's rise "both very dangerous and the worst of all possible worlds" because it is not curbing inflation.

"This is a major train wreck waiting to happen," he said.

The head of the Iraq Stock Exchange, Taha A. Salam, said the dinar will inevitably decline in value. When it does, he said, "you will have more problems in the streets" as Iraqis' buying power wanes.

Shemry, the exchange dealer, advises clients like Mudhaffar Jenari, an employee at the Ministry of Oil, to keep their dollars as insurance against further unrest. Just a few months ago, a car bomb exploded up the street, wounding the owner of another foreign exchange shop and killing an employee. After the blast, thieves stole $40,000.

"Everything depends on the security situation," Shemry said.

This is true for the dinar as with everything else. "One thing goes badly, and we lose everything."

http://www.iraqdirectory.com/DisplayNews.aspx?id=2747

Dinar-Excited

Inflation since the advent of the new Iraqi dinar in late 2003 is up a total of
roughly 150%. Increasing the value of the dinar by only 13% via the current
gradual appreciation will not anywhere near restore the buying power that
the Iraqis had three years ago. Only a radical r/v can accomplish that, and
only a radical r/v can jump start the Iraqi economy to the point that a serious
number of new jobs is created.

As a whole the Iraqis are prideful people. They don't want to have the weakest currency in the Middle East; they want to have the strongest
eventually. If they could just stop killing each other long enough to recognise and realize that the world could be their oyster, then a positive,
upward spiral could develop.

While this inflation curbing goal is worthy, it is nevertheless penny ante when compared to the slew of more significant goals the Iraqis could achieve with a radical r/v.

Originally Posted by kiko

Raising the value of the dinar against the dollar by the Central Bank, welcomed by economists
12 December 2006 (Iraq Directory)

Many specialized economists in finance and monetary considered raising the rate of the dinar against the dollar sale by the Iraqi Central Bank an important step to control the volume of inflation.

They emphasized the importance of raising the interest rate up to 12% to curb inflation, which would lead, in the short term, to stabilize the price prevailing in the Iraqi market.

A depression and confusion in the stocks of selling and purchasing the dollar in most of the banking stores in Baghdad may accompany this procedure. Thus, it is necessary to follow up this dangerous turn in the Iraqi capital market. In press statements, a number of those concerned emphasized the importance of this remarkable step towards reducing inflation, raising the value of Iraqi dinar and reducing prices of goods and services.

The minister of planning, Ali Ghalib Baban, said that the Central Bank's decision, which came after extensive study, aimed at encouraging capital owners as well as the citizens in general on saving.

On his part, Governor of the Central Bank, Sinan Shabibi said that: "The aim of the Central Bank currently is limited in the fight against inflation, which reached about 76% and reduce its heightening, through the provision of better conditions for economic development, improving the performance of the banking sector and providing stability in it".

Shabibi said that among the reasons of inflation is the increase in cash circulation, which made it necessary to follow a new monetary policy, aimed at improving the dollar's exchange rate towards reducing its price several points in the auction, organized by the Central Bank every day to sell the dollar, to withdraw currency from circulation.

Director General of Researches at the Iraqi Central Bank, Dr. Madhhar Mohamed Salih, said: the Iraqi Central Bank is responsible, according to the law No. 56 of 2004, for dealing with inflation and reduce its levels. This principle forms the main objective adopted by the monetary policy in performing its duties. Accordingly, the Central Bank must set the priorities of its policies; meaning, the monetary policy to fight inflationary activities using the tools available.

He pointed out that monetary policy faces intermediate variables or objectives that show the relationship between the impact of these variables to reduce the general level of prices and the containing inflation.

Among these variables are the stabilizing interest rates "the long-termed" and the stabilizing or real exchange rate.

It is noted that these variables can not be controlled directly, unless they are targeted by similar variables which are considered as signals or informative means used to influence stability in the cash market. Among these signals is what is known as the interest rate of the Iraqi Central Bank; it is an indicator price which is considered as a compass influencing the behavior of interest rates and determining what the Central Bank lends to banks, and what banks deposit in the Central Bank.

Whatever the sources of inflation were, it is, in the end, considered to be a monetary phenomenon. Accordingly, the priorities of stability are necessary to build and stimulate the economy.

Thus, inflation is the main reason of speeding up money circulation and spending them, leading to less demand for cash and more demand for goods and services. In order to maintain the cohesion of demand and maximize cash levels in order not to turn into strong spending on goods and services, all the Central Bank had to do is to use its tools in raising the interest rate to stimulate the interest rate structure and maintain the coherence of savings and maximize their purchasing power which will help monetary policy to deal with the high levels of liquidity and contain it within the cash or " banking" market, without becoming a cash bloc drifted towards commodity and services.

In light of what have previously been mentioned, several questions arise: Can the Central Bank procedure curb inflation and control the volume of cash? What is the use of raising the level of interest against the high prices?RV RV RV IS THE ONLY WAY!!

Economists stressed the importance that the Central Bank will continue this approach to curb inflation, which now threatens the stability of the entire situation in Iraq, including security, social and economic situations.

The observers speculate that the rise in the value of the Iraqi dinar against the dollar would reduce inflation and revive the economic situation of Iraqi families, who has suffered greatly because of the high rate of inflation, which is the cause of deteriorating the level of savings as well. Thus, the Central Bank had to take this action, which many observers consider it a step towards a comprehensive reform of Iraqi economy.

Raising the value of the dinar against the dollar by the Central Bank, welcomed by economists | Iraq Updates


Increasing the exchange rate is the approach to curb inflation according to economists and they stressed to continue this. Also now the inflation is 76% again and yesterday 50%??

They are planning to set the real exchange rate.

RV HERE WE COME!!
WWWWWEEEEEAAAAAAAAAAHHHHHH!!

FARMMMMMMMMMMMMMMM
JIGGGGGGGGGGGGGGGGGG



DEC. 14!!!!!!!!!!!!!!!!

The Oil investment law, completed its final stages
The Iraqi Oil investment law, completed its final stages
12/12/2006

Source: Translated by IRAQdirectory.com

Iraqi Prime Minister Nuri al-Maliki said that his government had completed the preparation of a law encourages foreign investment in the oil and gas industry in the country and will submit it to Parliament for ratification. But members of the Committee, which is working to prepare the law, were more cautious; they pointed out that they have done most of the work but they need another week or ten days to complete.

There are foreign investments with billions of dollars to exploit the third largest oil reserves in the world, pending the adoption of an appropriate legal framework

http://www.iraqdirectory.com/DisplayNews.aspx?id=2741

Dinar-Excited

Originally Posted by postcon

If the RV doesn't happen by the end of the year, what do you think the likely plan would be by the CBI next year? Continue with a gradual rise or still banking on a sudden high revalue?

Honestly, I don't think they even know what the hell they want to do...

Originally Posted by postcon

If the RV doesn't happen by the end of the year, what do you think the likely plan would be by the CBI next year? Continue with a gradual rise or still banking on a sudden high revalue?

If this happen Iraq will be hell!

If I was Iraqi and I see that the whole world is ripping my oil and I am still standing on the street begging for a job to feed one of my children and still live in poverty I would be furious.

CBI has to increase big time here, bigger than that lousy points that they are doing now.

Besides that I think the donor countries won't accept it and they have a huge influence on Iraq.

In todays newspaper Maliki asked all participating countries to drop all debt thus also the last 20%. I think you can only do that if are planning something big and that's not a rate of 1260:1

We must see a bigger change and the CBI has told it in the document of 18 october 2006 and we have read it more often all these statements.

It will come and must come!