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

Hi All,

I have been a member of roi for a long time now and a member of PIPS but i would suggest that you read this (rather long) view of the DIna

Overview

A number of people have begun touting so-called "investment" opportunities in the Iraq Dinar as a "sure way" to make a lot of money with little or no risk. Many of our clients have asked our opinion on the legitimacy of this.

Is "investing" in the Iraq Dinar a sure way to profit? We don't think so. In our opinion, buying the Iraq Dinar is a high risk investment with a poor outlook.

A Little History

The official rate of the old Iraq Dinar, $3.22 USD (U.S. Dollars), was set in 1982 by Saddam Hussein. The old Iraq Dinar could not be freely traded, so this rate was never tested or upheld on the world market.

The current Iraq Dinar (IQD) was introduced between October 2003 and January 2004 by the Coalition Provisional Authority in close consultation with financial experts from Iraq and the international community. The IQD is currently valued at a little less than seven hundredths of a US cent. (1 USD = 1460 IQD). The old "Saddam" Dinar has no current value and is worth only what a collector is willing to pay for it.

What's Happening Now?

The IQD is not freely traded, and is not being used in any significant international transactions. We are unaware of any official bank or foreign exchange office outside of the middle east that will exchange the IQD.

The IQD trades on a very small, tightly controlled exchange. The total volume of IQD traded by the Central Bank of Iraq is in the thousands of dollars, compared to the $1,900 billion dollars traded on the Foreign exchange market every day. This small number of trades makes the IQD's value effectively immaterial.

The Central Bank of Iraq's stated objective is not to promote the free trade of IQD, as is the case in a true free market economy, but rather to keep the value of the IQD stable. The only way the Bank can ensure the semblance of stability is by tightly controlling the exchange of IQD on the market, and by ensuring that the currency cannot freely trade on the open market. They evidently fear that open trading of the IQD would lead to a rout in which the value of the IQD would sink to practically nothing.

Consider the situation. Why tightly control the trading of the IQD if it is likely to appreciate in value? If the value of the IQD were to surge, this could be held out as evidence of a surge of confidence in Iraq's economy. So why not open the IQD to free trading? Why would this be done unless the Iraqi Central Bank itself feels that the IQD would decline in value in a free market?

A Snapshot of Iraq Today

The current situation in Iraq is pretty grim:

Over a decade of international economic sanctions and a devastating war has left the infrastructure in tatters
$125 billion of external debt
Millions of dollars in post-war debt
No stable government
Insurgency steadily on the rise
Oil facilities and pipelines are sabotaged regularly
Many (including the former Prime Minister of Iraq) predict out-and-out civil war
These aren't the kind of conditions typically conducive to the creation of booming economies. More to the point -- a 450,000% increase in the value of the IQD (as predicted by some of its promoters) seems ridiculous in the face of these challenges.

But Surely There's Oil Under Those Dunes?

A lot of the hype over the IQD centers around Iraq's vast oil reserves and their supposed economic value. The oil market is extremely unpredictable. An economy based on oil alone (oil makes up 95% of Iraq's foreign exchange earnings), will mirror that unpredictability. Let's look at a real-world example: Venezuela.

Oil accounts for 80% of Venezuela's national exports and 50% of its government revenues. The country is one of the world's top five oil producers. In the last four years, Venezuela has experienced intense political instability, including an oil strike and an attempted coup d'état. The resulting economic chaos has led to the extreme devaluation of the Venezuelan Bolivar -- today, it is worth only about a third of its US Dollar value from January 2000, and only about a quarter of its Euro value from January 2000.

Investing in a country's currency is tantamount to investing in that country's economy as a whole, not in any single commodity. Investing in the Iraq Dinar is not the same as investing in Iraq's oil.

But What About Kuwait?

Promoters of the IQD like to compare Iraq now to post-Gulf War Kuwait -- but this is comparing apples to oranges.

Before the Gulf War, Kuwait had a stable government and its foreign investments generated more income for its economy than its oil did. After the war, despite losing a third of its pre-war investment portfolio (over $100 billion USD), Kuwait still had a solvent economy, a stable government, and an intact infrastructure. Of course its currency increased.

In comparison, Iraq entered the war with a $125 billion USD debt, has almost no infrastructure, no stable government, and no other foreign income except its oil -- the vulnerability and unpredictability of which we have already pointed out. The outlook for its economy and the IQD is grim for the foreseeable future.

In late 2004, the US was successful in convincing some foreign creditors to "forgive" some of Iraq's debt. However, debt forgiveness is seldom a blessing, and generally comes at a very heavy price. Other countries whose foreign debts have been "forgiven" have found it nearly impossible to generate any foreign investment afterwards. Think about it: how would you feel about investing in Iraq again if you lost your entire investment (i.e. you "forgave" it) last time?

If it Sounds Too Good to be True...

Ask yourself one question: if the Iraq Dinar is such a hot commodity, why would anyone in the know be willing to sell it to you? If you thought that the IQD was going to multiply in worth by hundreds of thousands of percent, would you sell it? Of course not -- you'd be too busy buying as much of it as you could.

But if you thought that the IQD was going to go down in value over time, well, then you might start trying to convince people that it was a "great deal" so that you could get rid of all of yours before it nose dives.

Remember the old saying: if it sounds too good to be true, it probably is. Be careful!

they information is valid. It is doubtful that you will EVER make a penny from a collapsed currency in a country that buys and sells barrels of gold in $US not Dinas

in case you doubt the information, here is where the information comes from :http://www.xe.com/iqd.htm

What's a "Dina" ?

Originally Posted by zugdor

Does this mean that the budget is already approved by all involved or does it still have to be presented to CBI for final approval?

"At the event, the Minister announced the successful completion of a new 2007 budget structure (chart of accounts) compliant with the International Monetary Fund's Government Financial Statistics (GFS) classification system, a major condition of the Iraqi Government's Stand By Agreement with the IMF and World Bank."

Zugdor, that's what I pulled out of it...not sure about CBI presentation.

Originally Posted by asaele

Hi All,

I have been a member of roi for a long time now and a member of PIPS but i would suggest that you read this (rather long) view of the DIna

Overview

A number of people have begun touting so-called "investment" opportunities in the Iraq Dinar as a "sure way" to make a lot of money with little or no risk. Many of our clients have asked our opinion on the legitimacy of this.

Is "investing" in the Iraq Dinar a sure way to profit? We don't think so. In our opinion, buying the Iraq Dinar is a high risk investment with a poor outlook.

A Little History

The official rate of the old Iraq Dinar, $3.22 USD (U.S. Dollars), was set in 1982 by Saddam Hussein. The old Iraq Dinar could not be freely traded, so this rate was never tested or upheld on the world market.

The current Iraq Dinar (IQD) was introduced between October 2003 and January 2004 by the Coalition Provisional Authority in close consultation with financial experts from Iraq and the international community. The IQD is currently valued at a little less than seven hundredths of a US cent. (1 USD = 1460 IQD). The old "Saddam" Dinar has no current value and is worth only what a collector is willing to pay for it.

What's Happening Now?

The IQD is not freely traded, and is not being used in any significant international transactions. We are unaware of any official bank or foreign exchange office outside of the middle east that will exchange the IQD.

The IQD trades on a very small, tightly controlled exchange. The total volume of IQD traded by the Central Bank of Iraq is in the thousands of dollars, compared to the $1,900 billion dollars traded on the Foreign exchange market every day. This small number of trades makes the IQD's value effectively immaterial.

The Central Bank of Iraq's stated objective is not to promote the free trade of IQD, as is the case in a true free market economy, but rather to keep the value of the IQD stable. The only way the Bank can ensure the semblance of stability is by tightly controlling the exchange of IQD on the market, and by ensuring that the currency cannot freely trade on the open market. They evidently fear that open trading of the IQD would lead to a rout in which the value of the IQD would sink to practically nothing.

Consider the situation. Why tightly control the trading of the IQD if it is likely to appreciate in value? If the value of the IQD were to surge, this could be held out as evidence of a surge of confidence in Iraq's economy. So why not open the IQD to free trading? Why would this be done unless the Iraqi Central Bank itself feels that the IQD would decline in value in a free market?

A Snapshot of Iraq Today

The current situation in Iraq is pretty grim:

Over a decade of international economic sanctions and a devastating war has left the infrastructure in tatters
$125 billion of external debt
Millions of dollars in post-war debt
No stable government
Insurgency steadily on the rise
Oil facilities and pipelines are sabotaged regularly
Many (including the former Prime Minister of Iraq) predict out-and-out civil war
These aren't the kind of conditions typically conducive to the creation of booming economies. More to the point -- a 450,000% increase in the value of the IQD (as predicted by some of its promoters) seems ridiculous in the face of these challenges.

But Surely There's Oil Under Those Dunes?

A lot of the hype over the IQD centers around Iraq's vast oil reserves and their supposed economic value. The oil market is extremely unpredictable. An economy based on oil alone (oil makes up 95% of Iraq's foreign exchange earnings), will mirror that unpredictability. Let's look at a real-world example: Venezuela.

Oil accounts for 80% of Venezuela's national exports and 50% of its government revenues. The country is one of the world's top five oil producers. In the last four years, Venezuela has experienced intense political instability, including an oil strike and an attempted coup d'état. The resulting economic chaos has led to the extreme devaluation of the Venezuelan Bolivar -- today, it is worth only about a third of its US Dollar value from January 2000, and only about a quarter of its Euro value from January 2000.

Investing in a country's currency is tantamount to investing in that country's economy as a whole, not in any single commodity. Investing in the Iraq Dinar is not the same as investing in Iraq's oil.

But What About Kuwait?

Promoters of the IQD like to compare Iraq now to post-Gulf War Kuwait -- but this is comparing apples to oranges.

Before the Gulf War, Kuwait had a stable government and its foreign investments generated more income for its economy than its oil did. After the war, despite losing a third of its pre-war investment portfolio (over $100 billion USD), Kuwait still had a solvent economy, a stable government, and an intact infrastructure. Of course its currency increased.

In comparison, Iraq entered the war with a $125 billion USD debt, has almost no infrastructure, no stable government, and no other foreign income except its oil -- the vulnerability and unpredictability of which we have already pointed out. The outlook for its economy and the IQD is grim for the foreseeable future.

In late 2004, the US was successful in convincing some foreign creditors to "forgive" some of Iraq's debt. However, debt forgiveness is seldom a blessing, and generally comes at a very heavy price. Other countries whose foreign debts have been "forgiven" have found it nearly impossible to generate any foreign investment afterwards. Think about it: how would you feel about investing in Iraq again if you lost your entire investment (i.e. you "forgave" it) last time?

If it Sounds Too Good to be True...

Ask yourself one question: if the Iraq Dinar is such a hot commodity, why would anyone in the know be willing to sell it to you? If you thought that the IQD was going to multiply in worth by hundreds of thousands of percent, would you sell it? Of course not -- you'd be too busy buying as much of it as you could.

But if you thought that the IQD was going to go down in value over time, well, then you might start trying to convince people that it was a "great deal" so that you could get rid of all of yours before it nose dives.

Remember the old saying: if it sounds too good to be true, it probably is. Be careful!

they information is valid. It is doubtful that you will EVER make a penny from a collapsed currency in a country that buys and sells barrels of gold in $US not Dinas

in case you doubt the information, here is where the information comes from :http://www.xe.com/iqd.htm

Other that the mis-spelling of dinar......isn't this article like 2 years old? A lot has happened in the last 2 years, you know!

Originally Posted by asaele

A Snapshot of Iraq Today

The current situation in Iraq is pretty grim:

Over a decade of international economic sanctions and a devastating war has left the infrastructure in tatters
$125 billion of external debt
Millions of dollars in post-war debt
No stable government
Insurgency steadily on the rise
Oil facilities and pipelines are sabotaged regularly
Many (including the former Prime Minister of Iraq) predict out-and-out civil war
These aren't the kind of conditions typically conducive to the creation of booming economies. More to the point -- a 450,000% increase in the value of the IQD (as predicted by some of its promoters) seems ridiculous in the face of these challenges.]

Hey asaele

Nice first post. For being on ROL Club as long as you say you need to do ALOT of reading. Most if not all of the things in this section of the article have now changed completely and 180 degrees the other way! I wont go into the details because most of this has been debunked throughout this thread. Go back and read some of it.

Yea Tiff, the biggest thing from that report that has been corrected is below. It's a biggie.

$125 billion of external debt

...Nothin' like wiping the slate clean for a new beginning, right Cigarman?

Originally Posted by freedom05

Maliki Rejects Shiite Bloc's Calls to Cancel U.S. Visit
Backers of Iraq's leader say he has pressing issues that supersede efforts to protest war in Lebanon.
By Borzou Daragahi, Times Staff Writer
July 23, 2006

BAGHDAD — Lawmakers from Iraq's main Shiite Muslim coalition urged Prime Minister Nouri Maliki on Saturday to cancel his trip to the United States to protest Washington's support for Israel's military actions in Lebanon.

But Maliki, speaking at a news conference, said he would proceed with his long-planned visit, which includes meetings with President Bush and other U.S. officials. He said that after he arrives July 25, he will press for an end to "Israeli aggression" against Lebanon.

"The hostile acts against Lebanon affect the region," Maliki said. "We are not removed from this issue. We will speak with the United Nations and the American government in order to accelerate the cease-fire and to apply international resolutions."

Still, some parties within the United Iraqi Alliance, the coalition of Shiite political parties, have called on him to cancel the trip.

"The United States along with its allies gave the green light for Israeli troops to commit these crimes," said Sheik Sabah Saadi, a lawmaker who belongs to Al Fadila al Islamiya, one of the main parties in the Shiite bloc. "Canceling the trip is support for the Lebanese people, who are suffering very much from the Israeli attacks."

Followers of radical Shiite cleric Muqtada Sadr marched Friday, wielding assault rifles and vowing to support Hezbollah leader Sheik Hassan Nasrallah. The capture of two Israeli soldiers by guerrillas of the Shiite militant movement sparked the latest fighting in Lebanon.

Many Iraqi Shiites look to Nasrallah as a symbol of Arab defiance of Israel and growing Shiite regional clout. Maliki's Islamic Dawa Party, Nasrallah's Hezbollah and other Shiite fundamentalist groups throughout the Middle East share roots in the shrines and seminary cities of Iraq and Iran.

But Maliki must tread carefully. His government depends on the 130,000 U.S. troops in Iraq to provide security in the face of a Sunni Arab-led insurgency and growing sectarian warfare.

Some Shiite strategists worry that a visit to Washington will fuel perceptions that Maliki is throwing in his lot with the Americans. Many say the perception that former interim Prime Minister Iyad Allawi was too close to the Americans hurt his election chances in 2005.

Maliki's more moderate supporters within the Shiite coalition said the prime minister must place Iraq's immediate interests, which include urgent security and economic matters to be taken up in Washington, before the Arab-Israeli conflict.

"The prime minister knows there will be criticism," said Sheik Jalaluddin Saghir, a cleric and lawmaker from the Supreme Council for Islamic Revolution in Iraq, a party in the Shiite coalition. "But we have special circumstances in Iraq that will not let us delay this visit."

http://www.latimes.com/news/printedi...news-a_section

I gathered these key thoughts from this report.

Your very correct Tiff. I feel that the 2007 budget being done is HUGE!!! It's beginning to look alot like Christmas. I love that song.LOL

Originally Posted by everwiser

That they are waiting for that 2007 budget before doing the reval...

Here's my thinking...Since Iraq wants to be in the international markets and revalue the Dinar, they have to comply with certain requirements of the international financial/banking community. I'm betting one of them is a valid and approved yearly budget. Unless they have a budget, they can't legitimately quantify what Iraq is worth (or projected to be worth for 2007). It's Iraq's worth that the Iraqi's have to quantify before they can legitimately have their revalue accepted by the international community.

Just my thoughts...Any discussion?

EW

http://www.portaliraq.com/news/Iraq+...__1112113.html