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

http://www.rolclub.com/150086-post33292.html

according to gk the official real rate of the dinar is 2.53SDR. checking history as i know they have had articles where the iraqis actually said 'real exchange rate' when quoting a number.

SDR
U.S.$1.00 = SDR 0.664106
SDR Valuation

I think I found the article of the forcast and more, Great Read!!!!!
IRAQ

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The successful United States led invasion and overthrow of former President Saddam Hussein in spring 2003 has turned this nation of Iraq to a possible future of great wealth and stability in the long term. Under former President Hussein’s regime, Iraq was a country of two societies, one that was very wealthy living in opulence and the other where the majority of Iraq’s people were fighting for survival. At the end of Gulf War I in 1991, the implementation of economic sanctions by the world community further crippled Iraq both economically and socially following a brutal 8 year bloody war with Iran during the 1980’s. After Gulf War II in spring 2003, much of the Iraqi infrastructure was destroyed although massive Western monies are now in due process for rebuilding. However, violent insurgencies and coalition deaths still prevail in a current time of disarray and war under way. Below is a detailed discussion of our findings and its relation to the Iraqi currency, the ‘dinar’.

The war with Iran cost Iraq in excess of $100 billion USD while an economic embargo sponsored by the United Nations (‘UN’) from 1991-2003 have had a further net cost of $150 billion USD in lost oil revenues to Iraq. It is no surprise that today Iraq remains in default of its huge net external sovereign debt estimated at $122 billion USD ($40 billion USD to Paris Club and $82 billion USD to sovereign nations). Inflation during the 1990’s reached a staggering 100 percent level resulting in a collapse of the Iraqi dinar with very little global purchasing power parity although the previous official exchange Iraqi exchange rate is an illusion to the real economic situation that took place in Iraq during Mr. Hussein’s rule. Iraq funded its war with Iran by borrowing from foreign markets abroad, particularly Kuwait. In the early 1990’s when Kuwait called in their loans coupled with a disputed oil border, Iraq invaded. Since 1989, the Iraqi economy collapsed and by the mid to late 1990’s GDP was down 60 percent with sanctions. However, by the late 1990’s, Iraq implemented a massive contraband oil smuggling operation of which brought in billions of US-dollars into then Mr. Hussein’s regime.

POLITICS: on June 28, 2004, the United States transferred self rule power to Iraq to transitional Prime Minister Ayad Allawi, a Shia Muslim to run an interim government until free elections. Former President Hussein, 67, was the leader of the Baath Socialist Party and Revolutionary Command Council where he ruled Iraq that of a police state and crushed all opposition. Mr. Hussein was President of Iraq from 1979- April 2003 although basically a strongman leader since 1968, widely guarded as brutal dictator. Those tied to former President Hussein’ rule lived well, if not lavishly. Mr. Hussein was well known for his extravagance, building 21 palatial lavish palaces. Mr. Hussein’s regime was that of a Sunni minority clan like clique, former President Hussein who was caught is now awaiting trial in Iraq along with some of his closest confidents for crimes against humanity. Prior to Mr. Hussein’s helm at power, Iraq has had a volatile history of unstable governments, coups and minimal democracy, formal country independence took place in 1958.

The difficulty with Iraq that it is similar to Afghanistan, it is made up of different ethnic factions consisting approximately of 150 tribes. In the south, Iranian Shiite brethren make up 60 percent of Iraq’s population which could possibly rejoin Iran thus giving it more oil reserves and power. In the north, the Kurds who represent 20 percent of Iraq’s total population are in the majority of which they may want their own independent Kurdish state. In the middle of the country, the Sunni Muslims are predominant but with only 20 percent of the population.

It may take upwards of 10 years to get Iraq to that of a functioning democracy and stable economy. It is quite possible the coalition forces led by the United States will have a military presence in Iraq for years to come. However, good things have taken place in Iraq with a large quiet economic revolution underway and the resurgence of the Iraqi middle class as reconstruction funds are driving the economy.

ECONOMY: the Iraqi economy currently remains dependent on United States and foreign grants as the nation rebuilds from the fall of former President Hussein’s regime. Essentially, the international community is providing the bridge financing up until Iraq is self-dependent from its oil production, this may take 5 years to achieve this goal. Many global multi-national corporations are now in Iraq taking advantage of post Gulf War II redevelopment contracts from the petroleum industry to infrastructure. Prior to Gulf War II, GDP/Capita was 10 percent higher than it was in 1990. On the whole, Iraq is a wealthy nation with immense oil wealth where Iraq’s petroleum industries represent 95 percent of foreign exchange. Some sort of civility is returning to Iraq with commercial flights now arriving at Baghdad International airport. The country is now flooded with many Western consumer goods from around the world including new BMW’s and Japanese automobiles are evident, satellite television, etc. However, the overall economy is presently in disarray from the fallout of Gulf War II with upwards of 2 million Iraqis’ remain unemployed out of a 7 million labor force.

Now with a new regime, support of the international community, better times lie ahead. Under Mr. Hussein’s regime, the Iraqi economy was based upon a centralized model of extensive state planning. Today, modern Western free market principles are now being implemented with the support of the international community. The future economy for Iraq is quite bullish assuming political stability and prudent political management. Investors can expect Iraq to operate with a low tax economy, access to foreign investment and aid in the near term as required, trade liberalization, privatization of state-run industries and a reduction in sovereign debt levels. Recently, the governments of Japan, Canada, Kuwait announced that they will forgive part of Iraqi debts owed to them. Other countries are expected to follow suit at the Paris Club (19 countries) debt meetings in addition to the World Bank debt forgiveness. And there are also plans to set up a stock exchange in Baghdad. At present, there is approximately $8 billion USD available to Iraq from funds held within the UN oil-for-food policy. The United States has pledged $18.4 billion USD over the next 3 years. The World Bank estimated that Iraq will need upwards of $55 billion USD over the next 4 years for rebuilding infrastructure to provide the necessary foundation for economic growth.

Economic Statistics
GDP 2000 at $57 billion USD as measured by purchasing power parity, GDP measurement for 2003 was at $39 billion USD reflecting the economic disruption during the period of March - April 2003. Market GDP is at $26.5 billion USD with corresponding GDP/Capita at $1,100 USD. Iraq’s GDP growth for 2000-01 at 15 percent, year 2003 fell 20 percent, year 2004 to grow at a spectacular rate 50 to 60 percent of GDP. Inflation during year 2003 at 28 percent, year 2000 at over 100 percent, year 1999 at 135 percent, from 1995-2000 inflation averaged 100 percent. Iraq’s current account surplus for 2002 at positive 8 percent of GDP, year 2001 came in at 2.7 percent, year 2000 surplus at 11 percent. Major trade partners include United States, Taiwan.

POSITIVE: massive oil wealth, AIDS disease is very rare, Iraq is opening up the economy to foreigners except in oil, real estate and natural resources. CONCERN: environmental, security concerns include assassinations & kidnappings, massive electrical energy shortfall, domestic security with continued insurgencies terrorist attacks, disease is making a reappearance including cholera & typhoid, hospitals are in bad shape, water quality is poor, infrastructure damage is extensive, famine & malnourished children are prevalent, agricultural - major irrigation problems and high infant mortality rate.

BANKING SYSTEM: Iraqi citizens are now able to bring foreign currency into Iraq, no restrictions to the amount. Iraqi banks are allowed to lend hard currency with foreign banks now given permission to operate and in invest in Iraqi banks up to 100 percent ownership. Most Iraqi assets remain frozen overseas. Although Central Bank of Iraq (CBI) was established in 1947, it is being restructured to reflect more of a modern Western style monetary system including management of the currency, holding of foreign exchange reserves, liberalizing of interest rates, price stability, etc. Iraq’s banking system presently remains for the most part on a cash basis. There is basically no electronic banking including no ATM’s, credit cards, etc. The banking system under former regime of Mr. Hussein, most Iraqis during this time kept dinars as mattress money rather than depositing at state banks. The banking system consists of 17 private banks, 6 state-owned banks that are considered insolvent plus banking licenses granted to United Kingdom’s HSBC & Standard Chartered and the National Bank of Kuwait of which these 3 banks have yet to open up branch offices.

REGIONAL and GLOBAL ANALYSIS: Saudia Arabia, Iran, United States
The threat of a political collapse in Saudia Arabia is real as the Saudi Royal Family is now under increased pressure from many opposition groups including al Qaeda terror organization. America’s military presence in Iraq will further help to maintain this regional stability and ensure protection of much of the Middle East oil reserves. The political implosion of Saudi Arabia will not derail Iraq’s rebirth as a stable sovereign nation in BI.C’s view. With respect to Iran, growing influence of many of Iraqi’s Shiites in the south for closer political ties to Iran while Iran’s politicians have taken notice of the regime change threat that may possibly lie ahead for them. Iran is considered to be a long time enemy of Iraq although relations are now improving with Mr. Hussein out of power. There has been discussion in financial circles that the real ambition for the United States during Gulf War II was not about the weapons of mass destruction threat, but more about protecting the value of the USD as the world’s reserve currency. With the United States now with security presence in the Gulf Region, America is sending a strong signal to OPEC and other oil producing countries to keep using the USD as the world’s reserve currency instead of pricing in EUR or another currency. This currency pricing of the USD for oil will help the United States maintain its lofty standard of living.

KNOWLEDGE: Iraq holds the second largest proven oil reserves in the world behind Saudia Arabia with Iraq holding 113 billion barrels of economically viable proven reserves and another 215 billion barrels of probable & possible reserves. Since February 2000, the Iraq-Syria oil pipeline of Kirkuk-Barias opened of which Syria profited handsomely from re-selling Iraqi oil at a profit for their export industry particulary with Iraq like Saudi Arabia having very low production costs that average at $1 USD/barrel of oil. Tremendous wealth potential exists with the future development of the Qurna oil field located in southern Iraq. It is one of the world’s largest with 20 plus billion barrels in reserves. Future Iraqi oil policy will be determined by the level of foreign investment. It is estimated that upwards of $50 to $100 billion USD will be required for redevelopment in capital investment, production and exploration to get to full Iraqi oil potential to similar levels of that of Saudia Arabia. Since the end of Gulf War II in April 2003, Iraqi crude oil sales have reached $10 billion USD over the last year as reported by the Coalition Provisional Authority with the monies then deposited into the development fund for Iraq. Oil sales for 2005 for Iraq is estimated at $20 billion USD, year 2000 recorded sales of $16 billion USD.

Iraqi crude oil production as of June 29, 2004 are in the range of 2.126 million bpd with exports at 1.138 million bpd from its two southern terminals. Output was temporarily scaled back 800,000 bpd from recent sabotage from domestic insurgencies on the Kirkuk pipeline in northern Iraq (home to 40 percent of Iraq’s oil reserves) to Turkey. In the last 7 months alone, there have been 130 terror attacks on Iraqi oil infrastructure which consists of 260 oil facilities and 7,000 miles of pipeline. Pre-Gulf War I oil production at 3.3 million bpd which represented 95 percent of national earnings for Iraq. Pre-Gulf War II oil production at 2.7 million bpd. The goal by the authorities is to increase production by another 500,000 bpd by year-end 2004. Iraq is a member of OPEC but does not have a quota since its membership is in a holding pattern until stability and normality returns. Natural gas reserves for Iraq are impressive at 3.15 trillion cu m.

CURRENCY: ISO symbol ‘NID’, formerly IQD prior to January 22, 2004, New Iraqi Dinar. At time of review on July 1, 2004, the Iraqi dinar had an exchange valuation of 1456 IQD to the US-dollar (‘USD’). As of January 2004, Iraq has a new unified Iraqi dinar with a then high valuation of 1,000 NID to the USD. Formerly, Iraq had two dinars in circulation, a perceived stronger currency in the largely autonomous Kurdish north ‘Swiss dinar’ (printed in Switzerland) and the other ‘Saddam dinar’ circulating in the rest of the country ‘IQD’. On October 15, 2003, the New Iraqi dinar was launched with a 3-month deadline to swap the old dinars currency notes to the NID which expired on January 15, 2004. The New Iraqi dinar has appreciated by approximately 25 percent to the USD since its inception 9 months ago in October 2003. The Swiss printed dinar during the 3-month conversion time was converted at a rate of 150 to the USD, valuations for the Swiss dinar have included March 2003 at 10 to the USD. It should also be stated that there is no plans to fixed the NID to the USD due to America’s impression, the NID is a Hussein-free dinar note.

CURRENCY HISTORY: in April 1932 at the end of the British mandate, the Iraqi currency board opened with the launch of the dinar which was then pegged at par with the British pound and backed by pound reserves. In year 1947, the currency board was then replaced by the central bank system with the dinar quoted at $4.86 USD to the dinar. By 1970, the official exchange rate had the dinar at $2.80 USD, year 1973 at $3.39 USD. By 1982 up until Gulf War II, the official rate devalued by 5 percent to $3.22 USD to the dinar or conversely the peg at at 0.3109 IQD to 1 USD. Black market rate is volatile and fluctuates around 2000 IQD to the USD in 2001 and also in August 2002 of which represents a significantly lower valuation than the irrelevant official rate. However, it should be noted that black market rates differ tremendoulsy from official rates. It was interesting to note that former President Hussein demanded that oil payments from the United Nations be paid in euros rather than US-dollars to further embarrass the United States. Further, it is widely viewed that the official exchange rate policy was for the most part only available to former President Hussein and his associates.

At the height of the Iraq-Iran was in 1986, inflation in Iraq reached 50 percent with black market exchange rates estimated in the range of 500 to 1000 IQD to the USD. Historical black market valuations include shortly after Gulf War I in 1991 the old dinar collapsed to 7,000 IQD to the USD and by 1995 the rate had rallied to 3000 IQD. In 1996 just before the United Nation’s implemented the oil-for-food program, the IQD then rallied to a level of 2400 IQD to the USD, year 1997 at 1530, December 1999 at 1910 IQD, December 2002 at 2330 IQD to the USD, April 2003 the dinar fell to 9000 IQD to the USD as Iraqi banks were being looted, March-April 2003 traded as low as 4,000 IQD with other reports of trading in the 5000 to 6000 IQD to the USD level, an exchange valuation of 2000 IQD at the time of Mr. Hussein’s regime overthrow in April 2003, July 2003 at 1500, October 15, 2003 at 1970 NID to the USD (currency swap to New Iraqi dinars from old dinars) and May 2004 at 1340 to 1660 NID. During the war in spring 2003, the old Iraqi dinar brought back memories of its validity as wheelbarrows of paper currency were required to facilitate transactions, the currency almost worthless at that time. In addition, other currencies came into circulation during this time of chaos within Iraq include the Kuwaiti dinar, the USD, Euroland euro, Syrian pound, gold, and the Jordanian dinar.

CURRENCY FORECAST: ultimately in BI.C’s view, a much higher standard of living for the Iraqis will take hold and corresponding stronger exchange valuation for the NID. The short term may continue to be difficult as exchange valuations for the NID will be determined by the level of terrorist insurgencies versus the speed of successful redevelopment. BI.C is very optimistic and bullish for the long term outlook for Iraq and its new currency. The challenge for the new government will be to provide stability, peace, growth and then prosperity may follow. The short term outlook will determine Iraq’s political & domestic stability. Further, higher world oil prices over the last 3 years will help to provide hard currency earnings for rebuilding as new oil Iraqi oil production comes online.

A key decision to the authorities is what kind of currency regime should be in operation for Iraq. Peg to the price of oil? A currency peg to a basket of currencies including the Euroland euro ‘EUR’? Or perhaps dollarize completely with another currency such as the EUR as what has taken place with Montenegro, Kosovo in the Balkans. BI.C believes a fluctuating peg to the price of oil and hard currencies including the yen, euro and USD maybe a viable solution for maintaining currency and price stability for Iraq.

There is great speculation in the New Iraqi Dinar by many in the international community as some investors believe what happened to Kuwait during the 1990-91 Iraqi occupation with respect to the Kuwaiti dinar may very well happen to Iraq. Foreign buying of the NID is providing for appreciation pressures as speculators think that the rebuilding of a new Iraqi economy will propel the NID to much stronger valuations. The Kuwaiti dinar collapsed to below 10 cents to the USD before rebounding to significantly higher valuations of $2-3 Kuwaiti dinars to the USD by the end of the 1990’s. Short to medium term volatility may take place with the day to day theatre expected with the trial of former President Hussein in the months ahead. The media event may create enthusiasm amongst his supporters thereby potentially increasing the insurgency attacks.

Iraq should be one of the wealthiest nations in the world today with its huge oil reserves if had responsible management, but this has not been the case for decades and even before Mr. Hussein’s tenure. The risk is that even with a U.S. sponsored puppet government, Iraq has had a very turbulent history of government. The ethnic make-up of Iraq consisting of different factions of tribes and cultures similar to Afghanistan makes Iraq a very difficult country to govern. Overall country risk remains very high for Iraq for at least the next 2 to 3 years, NID currency speculators take notice.
UPDATED: July 1, 2004

Originally Posted by neno

This was the first thing I saw last night when checking other sites. I saw the Safedinar's new graph and thought that was pretty new. Then with your article this morning, saying "Official" and "Real" rates. made me go back to cigarmans findings way back of the default rate and two sets of books.

it is aparent that it is being more and more mentioned. This is the reason I have never ruled out a "OVERNIGHT SUCCESS". Now that they are mentioned more, people are not stupid. i think it is a back-up plan to move the rate as needed to a much bigger exchange rate, when needed. Sorry, but that is my story and I;am sticking to it. get Ready for a surprise at anytime.

er... what happened to jun07 1:1 ??!?!?

Originally Posted by rvalreadydang

He added that "the rate of 75% of the real exchange rate of the dollar to improve, and is of tradable goods, such as oil revenues, which represents the first and only in Iraq, noting that" the oldest bank to increase the rate of flow of the International Monetary deposits greater than for the control of inflation and improving the value of the dinar

i meant to highlight this part

This is awsome!

Great find guys!

Another one that is pointing to big RV and I bet you it won't be over a year.

No way, January must be our month!!

raq Stock Exchange : Iraq Central Bank to let five more banks operate; more Treasury bills on the way
Tuesday, November 2nd 2004
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The Iraqi Central Bank said today it will allow five Middle Eastern banks to operate in the country, bringing the number of foreign banks it has licensed to eight.

A senior central bank official, who asked not to be named for security reasons, said Jordan's Arab Bank and the Bahrain-based Arab Banking Corporation (ABC.BH) received licenses, while two Iranian and one Turkish bank were granted initial approval to do business in Iraq.

"The Export Bank of Iran, the Agricultural Bank of Iran and Turkey's Bank of Agriculture have asked us to grant them licenses to open branches in Iraq and we have given them our initial approval," the official told Dow Jones Newswires in an interview.

The central bank earlier this year awarded the first licenses in decades to HSBC Holdings PLC (HBC), Standard Chartered PLC (STAN.LN) and National Bank of Kuwait (NBK.KW) to transact business in Iraq. They've yet to do so, though, and were previously warned to open their doors or risk losing their licenses.

The official said the central bank is willing to wait until early next year before penalizing the non-operating foreign banks.

"We are ready to extend that period to three more months until the end of March 2005 if they ask for such extensions," he said.

Originally, the central bank invited international banks to bid for five-year licenses. It said the licensed banks would start with a minimum capital in Iraq of $25 million each. The new banks would be subject to the rules and monitoring of the Iraq Central Bank, it added.

The ABC's major shareholders include the Kuwait Investment Authority, the central bank of Libya and the Abu Dhabi Investment Authority. The ABC is listed on the Bahrain, Kuwait and Paris stock exchanges.




More Treasury Bills On The Way

The senior central bank official said the government would issue more Treasury bills to the secondary market to help create viable domestic capital markets and begin the process of trimming massive prewar debt.

The central bank auctioned Treasury bills from the beginning of July for the first time in years, so far selling 900 billion Iraqi dinars ($628 million) worth of three-month bills with coupons ranging between 2.5 percent and 6.8 percent to local banks, the official said.

The official wouldn't give details of the next planned Treasury bill auctions.

Iraq's central bank is also aiming to build up its foreign-currency reserves to improve the value of the local currency, the dinar, against the dollar, he said. He didn't provide a target exchange rate.

After bank notes with Saddam Hussein's picture were replaced in January by U.K.-printed ones embedded with security features that make them difficult to forge, the dinar has strengthened to 1,460 against the U.S. dollar from around 3,500 against the dollar during the U.S.-led invasion last year.




Modernizing Iraq's Banking System

The banking system in Iraq is still backward compared with other countries, he said.

"Our banking system is handicapped by lack of computers, security and intermittent electricity and communications," he said.

The central bank, after more than a decade of international isolation, has started an ambitious plan to train 500 of its staffers abroad. He said the bank staff, with the help of the World Bank and the International Monetary Fund, are being trained in the United States, Britain and neighboring countries.

He said the central bank has distributed free-of-charge computer systems to government agencies and private banks to improve and modernize their operations.

"We have also allowed the private banks to open training centers to train their staff on the up-to-date banking systems," he said.

The official said the Paris Club - a forum in which 19 creditor nations have negotiated and organized the rescheduling of debt repayments since Argentina's debt crisis in 1956 - will meet this month to decide how much of Iraq's foreign debt of $120 billion can be written off.

Many countries, which owe Iraq billion of dollars, have decided to write off some of the country's debt inherited from Saddam's regime.

The central bank also controls Iraq's oil revenues, which were recently estimated by the Iraqi Oil Minister Thamer al-Ghadhban at $17.8 billion. The money is held in the Iraq Development Fund at the U.S. Federal Reserve, but is supervised by the United Nations.

The Iraqi Central Bank is the only authority allowed to approve spending from the fund.

The country may well need to tap its reserves.

Iraq also faces up to $300 billion in compensation claims from its invasion of Kuwait and has signed an estimated $57 billion in contracts, all of which may be enforceable in court.

Originally Posted by shotgunsusie

http://www.rolclub.com/150086-post33292.html

according to gk the official real rate of the dinar is 2.53SDR. checking history as i know they have had articles where the iraqis actually said 'real exchange rate' when quoting a number.

Originally Posted by Originally Posted by H2O_Lover

The thing i wonder is what the " real " rate is ? We have read that it is a defacto rate or something like that. Time will tell if the less traveled path will prove to be a good one for all us.

Originally Posted by CK

Iraq's official exchange rate or par value is still 2.53 SDR, and will stay that way until the current sovereign/internationally recognized government decides to propose a new par value to the IMF. The IMF members will have to vote on it. The current CBI published exchange rate or basis for the exchange rate is still the "program exchange rate" under the IMF program. The first program exchange rate of 1460 was set by the IMF with approval by the CPA under Iraq's EPCA agreement. The second/current program exchange rate of 1500 was set by the IMF with agreement from the Iraq transitional government (note the word transitional, not sovereign or internationally recognized) under the IMF SBA. I wouldn't even classify this as a de facto exchange rate, since there's no such animal. So at present, the official exchange rate of the IQD is still 2.53 SDR, but the program exchange rate is 1500. The only basis I believe for the 1500 exchange rate is the 15:1 Heavy Dinar recommendation to the UN back in 2003. At this rate, we're talking about differences in decimal points. Starting with no fils (1500) to 100 fils (15) to 1000 fils (1.5). At the program exchange rate of 1500/$1, that's equivalent to 15IQD : $.01 with no fils. Very well planned by geniuses.

copied and pasted from history.

http://www.rolclub.com/150086-post33292.html

Inflation-fighting move attracts dinar speculators
Companies sprouting up to buy billions of Iraqi currency.
By Molly Hennessy-Fiske Special to The Morning Call
| 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.

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''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.

Originally Posted by rvalreadydang

He added that "the rate of 75% of the real exchange rate of the dollar to improve, and is of tradable goods, such as oil revenues, which represents the first and only in Iraq, noting that" the oldest bank to increase the rate of flow of the International Monetary deposits greater than for the control of inflation and improving the value of the dinar

i meant to highlight this part

This is saying that they intend to restore the currency value to 75% of its true value. That value according to the US government is about $1.60
Library of Congress / Federal Research Division / Country Studies / Area Handbook Series/ Iraq / Glossary

Seventy-five percent is about $1.20 USD Happy Days folks!!!!!!!

This is a range we have heard over and over again…….And this is for starters...Yipeeeeeeeee!!!!!!

Originally Posted by crave681

er... what happened to jun07 1:1 ??!?!?

Not here in the News Thread.