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

Originally Posted by jsfletcher

Kiko,

Great post and great observations, I have a comment and a question. My comment is on what I bolded in red above. To avoid several pages of debate on the subject. Moving the . over is actually backwards in the rate that would be 1.34 dinar to 1 dollar. Not that it matters as we know they can really reval at whatever they want. My question is, on HCL. We have seen different articles about "approving by the end of the year" " approving early next year" blah blah blah. Now we are seeing the "lack of quorum" thing again and people taking off for the religious holiday. If memory serves me right, didn't we go through this with the FIL? yes it's done, no it's not, then one day BAM!! there it is. Is it entirely possible that the HCL is already a done deal?

John

Thanks, it's mentioned in articles that HCL will be enacted in January (see other post).

I think they have to enact this HCL for their own people and that it is an obligation to the donor countries in return for aid. Personally I think ICI will only be formally launched as HCL is done.

They cannot postpone this forever for their own sake and time is running out!

I give this its own thread as I and believe others find your observations very interesting. Great Work. Now you will have to deal with they Gang As they Drill your Mind.......

Originally Posted by kiko

Thanks for that one Adster!

Yesterday I posted some nice positive statements made by officials and mentioned in articles. By reading those old articles I already believed in a RV with a minimum of equal to the dollar.

Yesterday I also received an e-mail from Mr. M. from the Warka. In that e-mail I asked him about the recent article about no change in the currency and adding new categories.

Well as expected he didn't react on the lower denoms but said again that there will be no reprint. He said and I quote:

"As stated in my previous email it is not the decision of the Ministry of Finance to implement such a matter but the move of the CBI. The CBI has rejected this proposal."

Ok, we already knew that and I didn't ask him that but ok. First of all I am not bringing that subject up again, but this and the statements made me think all the time.

So I went back to the old articles of june/july from Zubaidi about raising the value of the dinar.

I mention the most important statements:

* Iraqi dinar Value should be raised
* One Iraqi dinar was valued at 3.33 US dollars
* The proposal has support and approval of the World Bank
* Three zeroes be taken from Iraqi Dinar to raise its value
* Minister confirmed that 2007 would see a qualitative budget and first of its kind in Iraqi history and that the new program would pinpoint economic indicators

Link: http://www.iraqdirectory.com/DisplayNews.aspx?id=1593


This article was at that point directly pushed into the zero lop and reprint direction while it's a lot mentioning "the value".

As we have read lately it is the goal to improve purchasing power of the Iraqi people by improving the exchange rate. In other words, improving the real value of the Iraqi Dinar.

Another remarkable point is that we now know that there will be no reprint/zero lop. IMF/World Bank wouldn't approve this and we now that now for a fact.

How is it possible that the World Bank gave support and approval on something that isn't going to happen? Unless they already knew then that they were talking about returning to the real exchange rate of $3.33 but not with a reprint!

Another point, now that I read it back, is that also remarkable words about the budget of 2007 are mentioned and linked to this article.

I think we have seen lately that the budget increased and its booming, something that makes you go hmmmm!

They also mentioned "studiying the proposal". Well in my opinion there is nothing to study about if you do not have the intention to go back to a previous level of the Iraqi Dinar!

I think they have studied about how and when they have to withdraw money from circulation and when to set the real exchange rate!
Then they were of course more statements, like:

"Zubaidi on this subject : the two split the price and that the financial and talk about the monetary side. Monetary value of the Iraqi dinar must revert to the previous level, or at least to acceptable levels as it is in the Iraqi neighboring states."

Link: Translated version of http://www.alsharqiya.com/display.asp?fname=aboutus%5C2006%5C008.txt&storyti tle=

They were telling again the $3 rate or at least equal to neighbouring states. For example Jordan where 1 Jordan Dinar = $ 1,41.

Then of course we have other important issues:

* CBI binder 12, which also is mentioning the $ 3.2169 rate in the
footnote
Link: http://www.cbiraq.org/binder12.pdf
* The books that are kept on $1 = 0.31 NID (=$ 3.22)


So as you can see I am also convinced that they will return to the previous level of $ 3.22 and I also think it will not be done at once but in 2 or 3 steps.

Personally I think (also hope) that they will return to a level around the $ 1.30 and $ 1.50.

This will be exactly in line with 1 SDR ($ 1.48), equal to Jordan which is important to Iraq ($ 1.41) and all the statement that is must have the value of 1:1.

I also thought about the IMF rate of 1345. Lately we saw the Dinar increasing from 3 points a day to 12 points a day and we were hoping that we should see more increasement now by the day, but instead of that they fall back to 8 points.

It seems they are trying to end exactly on the last day of 2006 on the IMF program rate of 1345 dinars to a dollar.

It just a thought, but HCL must as good as done and will be enacted in January as we have read. We also read that Maliki urged Barzani to put it into Force for the Iraqi people.
I still think they are trying to put in action, together with the FIL and ICI on their start of January. As Susie mentioned 2 or 3 January.

I think it is also quite possible that they end 2006 on the rate 1345 or nearing it and then move the decimal to $1.34 or $1.35.

That rate is also nearing 1 SDR, is more than 1:1 level and around neighbouring states.

I also still believe they always can set it overnight. They have proven that in the past and the dinar was also set to the program rate in one night.

My opinion is that they have all planned this out and that they can do whatever they want to do, also setting the rate back overnight.

I will sit on my Dinars untill the exchange rate is at least $1 or higher. We know what the potential is and that will set the value eventually.

Excellent and sensible conclusions based on the comments of the power players not on some self indulging pecuniary mock-up. Real nice accurate work..........

REGIONAL FX HEADLINES Tuesday, December 19, 2006

Inflation-fighting move attracts dinar speculators



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

The dinar appreciated last month to about 1,400 dinars to the dollar, near its two-year low, 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 Middle East currency speculators urging him to buy Iraqi dinars, similar to messages he got after the dinar was issued in 2004 at a rate of 4,000 per dollar.

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 Web site, Bet-OnIraq.com, which sells the Iraqi currency ''because liberty breeds prosperity.'' EDinar Financial in Los Angeles and other similar companies have popped up from Nevada to Wisconsin.

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

''Picture Iraq as a company selling stock,'' the Web site says, ''Each dinar you purchase represents a share in Iraq's bright future.''

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

Electricity in the capital is so sporadic that the Iraq Stock Exchange — which is preparing to switch from white erasable to electronic boards on the trading floor — can still only count on two hours of power a day. Two weeks ago, three car bombs exploded in markets near the Central Bank of Iraq, killing at least 68 people, injuring 111 and destroying 22 businesses, police said.

The dinar's price is determined at street-side 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 forcing the exchange rate down to 1,000 dinars per dollar, in line with the Saudi riyad, 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, part of the nation's reconstruction effort, Iraq is required to increase its dollar reserves and bring inflation down to 15 percent. During the past two years, the bank's dollar reserves about doubled, record show, and now total about $11 billion, while inflation is up 50 percent this year, Jabouri said, citing Iraqi government statistics.

An IMF report last May showed inflation of 58 percent during the previous 12 months, compared with 32 percent the year before.

Economists and investors put inflation even higher, at 70 percent to 80 percent, and the Central Bank has predicted inflation will increase 15 percent this year.

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

''They're basically meeting their targets,'' he said. ''I think this is actually a good thing for Iraqi consumers.''

Others say the currency's rise amid the sectarian civil 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 Steve H. Hanke, a professor of applied economics and 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.

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.

Molly Hennessy-Fiske is a reporter for Los Angeles Times, a Tribune Publishing newspaper.

-- mcall.com

Inflation-fighting move attracts dinar speculators

I wonder how they will recover this money hmmm

25 minutes ago

WASHINGTON (AFP) - US costs to support the Iraq war are likely to top 110 billion dollars in the current fiscal year, White House budget director Rob Portman said.

Portman said that emergency spending for the war effort in the year that started in October "will be in excess of 110" billion dollars, but that a final figure had not yet been reached.

The final amount "depends on a lot of things that are not yet decided, one is policy going forward, which is clearly a major factor," Portman told reporters at a briefing.

News reports had suggested that the Pentagon will seek between 127 and 160 billion dollars in emergency military funds.

Such supplementals have helped fund the US Army's campaigns in both Iraq and Afghanistan in recent years, although the bulk of the monies have been allocated to operations in Iraq.

The Office of Management and Budget (OMB) will release a fuller projection of the Iraq war costs early next year.

The figure would be a supplemental spending request for the fiscal year that began October 1.

Portman said OMB officials were working on reaching a final figure with the Pentagon.

Any fresh funding request would be in addition to the 70 billion dollars already written into the 2007 budget for the US military's operations in Iraq and Afghanistan.

US Iraq war costs likely to top 110 bln dlrs in fiscal 2007 - Yahoo! News

The hard working members have posted several reasons as to why the RV will be in early January. I would like to add one more. The stock market is closed until Jan. 8th or 9th. Markets do not like surprises, thus, this would give the market some time to digest this event.

I just saw that this was posted on pg 36 sorry.



A Law for Investment in IraqAli Al-Fikaki Al-Hayat - 19/12/06//

The Iraqi Presidency Council issued Investment Law No. 13 of 2006, containing provisions for regulation, rights and encouragement for investors, encompassing Iraqis and non-Iraqis, designed for the phases of establishment and operation. The law aims to attract and encourage investment and the transfer of modern technologies to the country; to encourage both the Iraqi private sector and foreign investment in the country; to protect the property rights of investors and their profits, and the expansion of exports and enhancing the competitive edge at home and abroad.

The law covers all branches of investment, production and service activity, except for the extraction and production of oil and gas, banks, and insurance companies. However, it did turn out that the extraction activities for other minerals, in addition to the mineral refining and oil refining sectors, are covered by the law like other branches of industry, investment and other sectors like agriculture and tourism, health, etc.

The law does require the participation of an Iraqi partner with foreign investors, except for the purposes of licensing or enjoying tax exemptions and privileges and facilities. The law also stipulates the establishment of a National Commission for Investment to take up the task of implementing these provisions. It allows regions and governorates, provided they are not ensconced to the region, to form investment commissions in their own areas that enjoy licensing authority and the granting of exemptions and facilities and the management of investment projects there. In order to facilitate the licensing process, the bill authorizes the issuance of establishment approvals (investment licenses) through the establishment of the so-called 'single window' in the region or province.

The investor enjoys, regardless of nationality, all the advantages and facilities, guarantees and exemptions. In housing projects, the investor has the right to acquire the land needed for the project.

The rights, privileges and facilities in the new law include the following:

(1) Enjoying a tax exemption for a period of ten years from the year of operation, with an exemption on import duties for importing the requirements in the establishment phase, and the phases of expansion, development and modernization of equipment and machinery, means of transportation and materials, and the operational phase of the import of raw materials and intermediary and spare parts.
(2) Allowing capital and earnings in and out of the country and the opening accounts in banks inside and outside Iraq.
(3) Circulation in the Iraqi market for securities, bonds, equities, and the setting up investment portfolios.
(4) Rental of the land needed for the project for the period of 50 years; a renewable term. The right to own land also in housing projects.
(5) Facilitating the investor's enjoyment of additional advantages, especially according to the international bilateral agreements between Iraq and its government, or according to multilateral agreements. Including the right of the foreign investor to sell his project in whole or in part.

After nearly half a century of providing tax exemptions and generous assistance to the industry in Iraq, starting from the 1950s, the result was loss-making government projects that could only be resolved by selling them off. Project administrations, enterprises and factories became addicted to State assistance and protection. The projects were powerless to face up to competition, at home and abroad, accompanied by a qualitative and quantitative underdevelopment, and in terms of price, with unsustainable spin-off industries that feed key inputs into these sectors. They failed to catch up with the demands of the market for constant modernization and the fragmentation of demand. This also includes obsolete and marginal factories and declining investment rates from year to year, while the country gradually lost its ability to attract investments, and many bureaucratic complexities, and many of them administrative constraints, which prevent opportunities for progress, repressing the speed of response and wasting time and effort.

To what extent will the new law in this new phase achieve its objectives in attracting investments?

This depends primarily on the availability of advanced infrastructure, which, in turn, includes all the social, political and material factors, and not only the roads and bridges, and electricity and water; but also, the conditions of the parts and components manufacturers and the conditions of secondary, spin-off industries, and the availability of government management skills. Not to mention the tax system and the availability of transparency and the system of macroeconomic management, and the rates of education, training and the country's reserve of the educated, engineers and technicians, and population characteristics.

The availability of an infrastructure of this kind, along with the new investment law, will be a crucial factor in attracting investment.

The extent to which financial and administrative corruption is shrinking or expanding is another factor that attracts or repel investments.

In a Transparency Global (headquartered in Berlin) report, the State of Haiti ranked first among the most corrupt, and Iraq came in third. In his statement before the US Congress on February 8, 2006, former US Secretary of Defense Donald Rumsfeld said: "administrative and financial corruption in Iraq is omnipresent in all aspects of government administration and finance ". Even if this corruption recedes, there will remain a more deeply rooted problem, in the form of concepts, perceptions and attitudes inherited by the bureaucracy and in the government administrative cadres at all levels.

The new law has recommended adopting the so-called 'single window' to receive investment applications to decide on them. These recommendations follow the pattern of development and investment legislation in the developing countries for the purpose of simplifying procedures to save time, effort and money. Will the situation in Iraq become congenial to the establishment of this window? It is noteworthy that the General Directorate for Industrial Development in Baghdad applied this 'window' for more than a year. But what is being done by the aforementioned Directorate is just unifying the entity that receives applications (the formal side). As for the bureaucratic content, it remains the same as it was about 30 years ago or more, without change.

Certainly, Iraq will attract many investments after the issuance of the new law, but will the volume of these investments reach the desired ambition? As is the case in the South-East Asian countries, such as Singapore or Malaysia, for example, this also demands a revolutionization of the same concepts and ways of thinking and dealing with such topics. What is necessary is reliable economic administration that lays the foundations before the structure, and not vice versa, when it comes to handling development and dealing with investments. Only then can the new law achieve its goals and the aspirations of the country.



<h1>A Law for Investment in Iraq</h1>
<h4>Ali Al-Fikaki Al-Hayat - 19/12/06//</h4>
<p>
<p>The Iraqi Presidency Council issued Investment Law No. 13 of 2006, containing provisions for regulation, rights and encouragement for investors, encompassing Iraqis and non-Iraqis, designed for the phases of establishment and operation. The law aims to attract and encourage investment and the transfer of modern technologies to the country; to encourage both the Iraqi private sector and foreign investment in the country; to protect the property rights of investors and their profits, and the expansion of exports and enhancing the competitive edge at home and abroad.</p>
<p>The law covers all branches of investment, production and service activity, except for the extraction and production of oil and gas, banks, and insurance companies. However, it did turn out that the extraction activities for other minerals, in addition to the mineral refining and oil refining sectors, are covered by the law like other branches of industry, investment and other sectors like agriculture and tourism, health, etc.</p>
<p>The law does require the participation of an Iraqi partner with foreign investors, except for the purposes of licensing or enjoying tax exemptions and privileges and facilities. The law also stipulates the establishment of a National Commission for Investment to take up the task of implementing these provisions. It allows regions and governorates, provided they are not ensconced to the region, to form investment commissions in their own areas that enjoy licensing authority and the granting of exemptions and facilities and the management of investment projects there. In order to facilitate the licensing process, the bill authorizes the issuance of establishment approvals (investment licenses) through the establishment of the so-called 'single window' in the region or province.</p>
<p>The investor enjoys, regardless of nationality, all the advantages and facilities, guarantees and exemptions. In housing projects, the investor has the right to acquire the land needed for the project.</p>
<p>The rights, privileges and facilities in the new law include the following:</p>
<p>(1) Enjoying a tax exemption for a period of ten years from the year of operation, with an exemption on import duties for importing the requirements in the establishment phase, and the phases of expansion, development and modernization of equipment and machinery, means of transportation and materials, and the operational phase of the import of raw materials and intermediary and spare parts.<br>(2) Allowing capital and earnings in and out of the country and the opening accounts in banks inside and outside Iraq.<br>(3) Circulation in the Iraqi market for securities, bonds, equities, and the setting up investment portfolios.<br>(4) Rental of the land needed for the project for the period of 50 years; a renewable term. The right to own land also in housing projects.<br>(5) Facilitating the investor's enjoyment of additional advantages, especially according to the international bilateral agreements between Iraq and its government, or according to multilateral agreements. Including the right of the foreign investor to sell his project in whole or in part.</p>
<p>After nearly half a century of providing tax exemptions and generous assistance to the industry in Iraq, starting from the 1950s, the result was loss-making government projects that could only be resolved by selling them off. Project administrations, enterprises and factories became addicted to State assistance and protection. The projects were powerless to face up to competition, at home and abroad, accompanied by a qualitative and quantitative underdevelopment, and in terms of price, with unsustainable spin-off industries that feed key inputs into these sectors. They failed to catch up with the demands of the market for constant modernization and the fragmentation of demand. This also includes obsolete and marginal factories and declining investment rates from year to year, while the country gradually lost its ability to attract investments, and many bureaucratic complexities, and many of them administrative constraints, which prevent opportunities for progress, repressing the speed of response and wasting time and effort.</p>
<p>To what extent will the new law in this new phase achieve its objectives in attracting investments?</p>
<p>This depends primarily on the availability of advanced infrastructure, which, in turn, includes all the social, political and material factors, and not only the roads and bridges, and electricity and water; but also, the conditions of the parts and components manufacturers and the conditions of secondary, spin-off industries, and the availability of government management skills. Not to mention the tax system and the availability of transparency and the system of macroeconomic management, and the rates of education, training and the country's reserve of the educated, engineers and technicians, and population characteristics.</p>
<p>The availability of an infrastructure of this kind, along with the new investment law, will be a crucial factor in attracting investment.</p>
<p>The extent to which financial and administrative corruption is shrinking or expanding is another factor that attracts or repel investments.</p>
<p>In a Transparency Global (headquartered in Berlin) report, the State of Haiti ranked first among the most corrupt, and Iraq came in third. In his statement before the US Congress on February 8, 2006, former US Secretary of Defense Donald Rumsfeld said: "administrative and financial corruption in Iraq is omnipresent in all aspects of government administration and finance ". Even if this corruption recedes, there will remain a more deeply rooted problem, in the form of concepts, perceptions and attitudes inherited by the bureaucracy and in the government administrative cadres at all levels.</p>
<p>The new law has recommended adopting the so-called 'single window' to receive investment applications to decide on them. These recommendations follow the pattern of development and investment legislation in the developing countries for the purpose of simplifying procedures to save time, effort and money. Will the situation in Iraq become congenial to the establishment of this window? It is noteworthy that the General Directorate for Industrial Development in Baghdad applied this 'window' for more than a year. But what is being done by the aforementioned Directorate is just unifying the entity that receives applications (the formal side). As for the bureaucratic content, it remains the same as it was about 30 years ago or more, without change.</p>
<p>Certainly, Iraq will attract many investments after the issuance of the new law, but will the volume of these investments reach the desired ambition? As is the case in the South-East Asian countries, such as Singapore or Malaysia, for example, this also demands a revolutionization of the same concepts and ways of thinking and dealing with such topics. What is necessary is reliable economic administration that lays the foundations before the structure, and not vice versa, when it comes to handling development and dealing with investments. Only then can the new law achieve its goals and the aspirations of the country.<br>

</p>
</p>

My thoughts exactly they have this planned out and will strike when we least expect it.
LIT

Originally Posted by Inscrutable

Thanks Charmed, sounds promising.

MSNBC - Video Front Page

In the Siggy. First Line.

Iraq's economy booming despite chaos



MENAFN - 19/12/2006




(MENAFN) Despite all the havoc and chaos in Iraq, the country's economy is growing strong, even booming in areas where growth can be deemed impossible by outsiders, MSNBC reported.

For a certain segment of businessmen, there's good money to be made in Iraq. For example, Iraqna, the leading mobile-phone company posted revenues of $333 million in 2005 and this year its expected to achieve $520 despite employees kidnapped, cell-phone towers bombed, storefronts shot up and a huge security budget—up to four guards for each employee.

The U.S. State Department reports that there are now 7.1 million mobile-phone subscribers in Iraq, up from just 1.4 million two years ago.

The U.S. Chamber of Commerce reports 34,000 registered companies in Iraq, up from 8,000 three years ago. Sales of secondhand cars, televisions and mobile phones have all risen sharply. Estimates vary, but one from Global Insight puts GDP growth at 17 percent last year and projects 13 percent for 2006. The World Bank has it lower: at 4 percent this year. But, given all the attention paid to deteriorating security, the startling fact is that Iraq is growing at all.