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brooke

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  1. Sorry if this has been posted There is a growing division among investors over the fate of Iraq’s currency, the dinar. While some expect the IQD’s redenomination to lift the dinar’s value dramatically higher, others say it will have no effect on the money’s value at all. Iraqi politicians are equally at odds with one another, with some strongly for and others strongly against the plan. But isn’t redenomination supposed to be good for the nation’s currency? Why are they stalling? Opposing Views in Government The plan to redenominate the dinar by dropping 3 zeros off its notes has been anticipated since the Iraqi government first announced it back in 2010. The reason for the redenomination is to make transactions and accounting easier for the government, banks, and the general populace. As Shayya, an MP for the State of Law Coalition, explained to the Middle Eastern newspaper Al-Monitor: “The Iraqi currency is weak, and the money supply has amounted to multi-trillions because of the existence of these useless zeros. The country will witness a significant increase in oil revenues, financial earnings and high budgets. Thus, we need to print new banknotes, as estimated by the Central Bank.” Indeed, now that the UN has removed Chapter 7 restrictions from the nation, Iraq is fully open for business again and will see ever increasing trade over the coming years. A new currency with fewer zeros will make things so much easier. Yet some in the Iraqi government are reluctant to move ahead with the change, upsetting a number of redenomination advocates, including MP Nahida Daini, who lamented, “The Council of Ministers asked to delay the process for fear of money laundering operations.” Daini believes such fears are baseless, reassuring that “there are regulators in Iraq who can follow up and ensure the integrity of the project.” Those opposed to redenomination, though, are adamant that the Iraqi government is simply not yet ready for such a monumental task. Mudher Mohammad Saleh, former deputy governor of the Central Bank of Iraq, stessed to Al-Monitor that the deletion of zeros “does not only involve changing the design of the currency; it implies changing the economic system in the country in general.” He warned that “the decision to implement the deletion of zeros next year is very dangerous and risky” and “must be done at the appropriate time.” In the meantime, ruling officials would rather see the Iraqi government focus on other ways of stabilizing its currency and economy. As Magda al-Tamimi, member of the parliamentary Finance Committee, described it, “Iraq is not ready to control the possible currency fraud that may result from the deletion of zeros. The Finance Committee is now working toward controlling the Iraqi currency auction, which is witnessing a significant fluctuation in the exchange rate of the Iraqi dinar against the dollar.” Through these daily currency auctions, the Central Bank of Iraq issues U.S. dollars only to registered banks, importers, and other firms who need USD for conducting international transactions. By thus restricting the amount of USD circulating in Iraq, the CBI manages to control the value of the IQD, holding it at a steady rate. Source: XE.com Click to enlarge By deliberately controlling the IQD:USD exchange rate, the Iraqi central bank ensures the IQD remains weak, as can be evidenced on the chart above. Every time the dinar starts to strengthen (shown by descending plotlines), the CBI manages to bring it right back to its desired exchange rate. Why? Because maintaining a cheap IQD means that every U.S. dollar of oil revenue the country brings in would be worth more dinars, allowing the country to print more of its own money, which would then allow it to pay for more reconstruction, hire more unemployed, and stimulate its economy. Almost every other nation in the world is trying to keep its currency weak for the same reasons. Even as Tamimi confirms, “Development is the gateway to strengthening the currency. Thus, raising the value of the dinar is more important than the deletion of zeros.” Can Redenomination Include Higher Valuation? But Tamimi’s comment brings up a very interesting point. While many investors in the Iraqi dinar believe its redenomination (chopping off 3 zeros) will be accompanied by a revaluation (a sudden increase in the value of the new Iraqi money), Tamimi’s statement shows the two events do not happen together. They are two separate concepts that do not coincide. In stating that “raising the value of the dinar” (through CBI-controlled daily auctions) is “more important than the deletion of zeros,” she implies that the deletion of zeros would not strengthen the dinar. Tamimi wants to see a strong dinar, but she sees exchange rate controls as accomplishing that more than the deletion of zeros would. The Best Free Investment You'll Ever Make Stay on top of the hottest investment ideas before they hit Wall Street. Sign up for the Wealth Daily newsletter below. You'll also get our free report, "Gold & Silver Mining Stocks". Enter your email: We never spam! View our Privacy Policy Think, too, of the implications of Iraq simply declaring its new money as being more valuable overnight. Currently, it takes about 1,164 IQD to buy 1 U.S. dollar. When the Iraqi government deletes 3 zeros, it would take 1.164 of the new money to buy 1 U.S. dollar. Yet if the Iraqi government takes the additional step of increasing the value of the new money – let’s say by doubling it – then that same 1.164 of new money would buy 2 U.S. dollars. This would mean that with one stroke of the pen, the nation of Iraq would be worth twice as much in USD as before, overnight. However, the amount of assets the country owns would still be the same the day after the revaluation as it was the day before. So where would that additional value come from? Is there suddenly twice as much oil in Iraq’s stockpile? No. Is there suddenly twice as much gold in Iraq’s vaults? No. Other nations would protest. In order for the government to declare its money to be suddenly worth twice as much in USD as before, it would have to provide assets to account for that extra wealth in USD – not underground reserves, but actual exchangeable assets. A nation’s currency is not a representation of its wealth. A nation’s currency is simply a representation of its assets. Its assets are the true indication of a nation’s wealth. If a nation’s assets have not changed, its wealth will not change either, regardless of any changes it makes to its money. Even as 1,000 old money is worth 1 new money, they will still be worth the same in USD because the entire country of Iraq will still be worth the same in USD on the day of the conversion as it was the day before. Investing in Iraq’s Future Iraq will some day – and not far into the future either – mount one of the greatest comebacks since Japan and Germany after the second world war. Iraq is destined to become the world’s second largest oil exporter, and it will be rich. It makes sense, then, to invest in the country early on, while it is still under development. But there are better ways of doing it than buying a fixed IQD that does not trade freely. Iraq has an active stock market, the Iraqi Stock Exchange (ISX), which currently lists more than 100 companies including industrials, banks, insurers, hotels, and telecoms – all sectors which will undoubtedly flourish as the nation develops. It may be complicated for a foreigner to invest in the ISX. However, many companies listed in Iraq are listed in other countries as well where it may be easier for you to trade. The IQD, however, is a different story. The Iraqi government simply cannot afford to let its currency trade freely on an open market at the whim of supply and demand forces. If it were allowed to trade freely, it would probably strengthen to a certain extent, as graphs show. But this would lead to deflation, make money too expensive for businesses to get their hands on, and it would ultimately stop the economy’s gears from turning. A strong IQD would shut Iraq down like the 2008 credit crisis nearly shut American down. And just as the U.S. central bank has been doing all it can to keep interest rates down and prevent the USD from strengthening too much, so too will the CBI continue to do what it can to keep the IQD down. Since redenomination is not the same as revaluation, investors would do best to find other ways of benefiting from Iraq’s future rise, since they won’t find it in the dinar – no matter how many or how few zeros it has. Joseph Cafariello
  2. By Goran Mustafa ERBIL, Kurdistan Region – The lifting of Chapter 7 sanctions last month can be considered one of Iraq’s biggest achievements since the ouster of Saddam Hussein a decade ago, allowing Baghdad to regain control over its own currency, oil and economy. Chapter 7, imposed on Iraq by the UN Security Council after Saddam’s invasion of Kuwait in 1991, froze all Iraqi assets in international banks, ordering they be used to compensate victims of the aggression. Besides placing limits on use of its wealth, the sanctions also placed limits on the Iraqi military. One of the biggest advantages of the lifting of the sanctions is the return of all frozen assets to the Iraqi government, estimated at $82 billion, according to Central Bank data. Its return will not only revitalize the economy, it will strengthen the value of the Iraqi dinar and increase its purchasing power. A few hours after Chapter 7 was lifted, the value of Iraqi dinar increased against other currencies. The exchange rate of dinar is fixed against the dollar, but its value continues to rise. Saif Al-Halafi, an economic and banking expert, expects that the dinar will probably replace the dollar for investments, and that as demand for the dinar rises, so will its value. With Chapter 7 lifted, Iraq also can independently handle its oil revenues without UN supervision. “The lifting of Chapter 7 against Iraq will enable it to regain independence in its oil policy, and Iraq again can become an important regional and international energy player,” said economic expert, Dr. Rebwar Khinsi. Iraq plans to emerge as one of the world’s biggest oil exporters in 12 years. According to Iraq’s energy plan, oil exports are expected to reach six million barrels per day (bpd) by 2017, elevating the federal budget to $216 billion dollars. The plan aims for exports of nine million barrels bpd by 2020, raising the budget to $324 billion dollars. In 2025, the federal budget will reach 432 million dollars, if Iraq succeeds to export 12 million barrels of oil per day. Under George Bush’s administration the US government agreed to keep $50 billion belonging to Iraq in America, and Barack Obama’s administration continues to do the same. An estimated $7.8 billion dollars are blocked in Jordan and Lebanon, and a huge amount of capital belonging to Iraqi Airways remains frozen in Kuwait and Jordan. The United Nations Security Council forced Iraq to compensate Kuwait for an estimated $52 billion. Following the first Gulf War, Iraq did not have an independent economic policy, with all of its income administered by Iraq’s development program and supervised by the UN. Five percent of Iraq’s annual oil revenue was allocated to compensating Kuwait. So far, Iraq has paid $41 billion dollars to Kuwait. According to Iraqi Foreign Minister Hoosyar Zebari, Baghdad is committed to paying the rest of the remaining $11 billion in compensation to Kuwait, and expects to pay off all of its debts by 2015. http://rudaw.net/english/business/07072013
  3. Interesting.... currency class war: damaged dinar notes result in bribery, injustice | عربي | کوردی niqash | Waheed Ghanim | Basra | 04.07.2013 It is mostly Iraq's poor and pensioners who are burdened with damaged bank notes. Exchange shops, bank cashiers and savvy housewives are doing big business as they deal with Iraq’s dodgy, damaged, low-denomination notes - for a price. The losers? Pensioners and low-income earners who end up with cash they can barely use. Every two months Makiya, a 65-year-old Iraqi woman, travels a long way to pick up her pension in cash. She lives 40 kilometres out of Basra and the journey is a difficult one for her. And then to her chagrin, whenever she gets her pension, it mostly comes in low-denomination notes that are damaged, torn or otherwise destroyed. "The people who come to collect their pensions are not treated the same way as others,” Makiya complains. “To get clean, undamaged bank notes you have to pay the bankers a bribe.” Additionally Makiya says that if anybody complains about the IQD3,000 that is usually deducted from the payments by the bankers –a service fee taken for no apparent reason, she says - they are punished by being given even more of the damaged or distressed banknotes. “And then when you get the damaged bank notes you can’t do anything with them because nobody accepts this money,” Makiya says. The descriptions “talef” and “naqes” are often used by people like Makiya when they talk about money. Respectively the words mean damaged and missing and are terms used to describe the smaller notes – the IQD1,000 notes and the half and quarter dinar notes – that those who can’t afford to pay for better, bigger banknotes end up with. And there’s big business being done around the damaged bank notes in Iraq. Yousef Nafea has an exchange shop in Basra’s central Ashar market and he’s well known for his proficiency at fixing the damaged notes; he says he mostly uses transparent sellotape and that he heats it slightly to make the repairs invisible. Visiting him, one immediately notices the piles of notes on his desk. "I fix the damaged one, half and quarter dinar banknotes and sometimes I fix the hundred and the IQD1,000 banknotes too,” he explains. “If I am asked to fix the US$100 note then I have to take great care. Fixing these notes requires that the tape is cut in a special way so it doesn’t look like the bank note was damaged at all.” This kind of repair business is also done by local housewives. Rabab Hussein is one of them and she says she uses sellotape and clear nail polish. “The bank notes are often not only damaged, they are also dirty,” Hussein says. “And they’re ugly. And they’re not good quality, which is why they get damaged so easily,” she concludes. After the 2003 US-led invasion of Iraq that toppled Saddam Hussein’s government, new currency was introduced and the bank notes were printed by a British company, De La Rue. Despite repeated calls for the bank notes to be reissued and the currency to be re-denominated, this has yet to happen. Hamid Ghani, the manager of the Iraqi Investment Bank’s branch in Basra believes that a vicious circle of profiteering has developed because of the damaged bank notes in smaller denominations. “The exchange shops make agreements with the bankers – and in some cases, with the bank managers – to replace the smaller notes with bigger ones, in return for a service fee,” Ghani explains. “The service fee is deposited at the bank, in the exchange shop owner’s account. He then withdraws that money in larger, undamaged denominations. In some cases, this equals millions of Iraqi dinars.” Indeed, exchanging one’s smaller bank notes for larger ones at local exchange shops – at a rate of IQD8,000 per million dinars – is common practice today. An example is provided by one local, Ahmad Nofal, who arrives at an exchange shop with two large bags stuffed with Iraqi dinar notes, denominations of one dinar and a quarter dinar. “We usually do this when we receive our salaries. We exchange these for bigger notes because the smaller notes are a hassle to carry around and if they’re damaged, we pay for that with our own money,” Nofal explained. After only a little research into this area, it is easy to conclude that when it comes to Iraqi currency, there are two social classes here. Those who earn good money and end up with clean notes like the red IQD25,000. And those who do not earn much and who are left with dirty and damaged notes in small, useless denominations. As Ayad Bader Sayah, another Basra exchange shop owner, tells NIQASH: "Customers who have accounts at the government banks come to an agreement with the cashiers and bankers and they are able to return the damaged, smaller notes and get IQD10,000 and IQD25,000 notes in return. Then the damaged bank notes are redistributed to those who can’t afford to pay for cleaner money, like the pensioners and low income families.” Although he himself makes some profit in this area, Sayah doesn’t seem that enthused about the business model. “We always hear that the central bank is going to replace the old bank notes but up until now, nothing has happened,” he notes. “And We’re not really happy with the profit we’re making,” he says, “because we know the poorest citizens are paying the price.” http://www.niqash.org/articles/?id=3244
  4. Boo.... http://www.wealthdaily.com/articles/the-future-of-the-iraqi-dinar/4424
  5. Iraq's central bank has eased restrictions on the sale of dollars in a step likely to boost the dinar currency, officials said on Tuesday. The central bank tightened rules in April over who could participate in its daily dollar auctions and the amount they could buy, seeking to stabilise the dinar and stem the illicit transfer of US currency to neighbouring countries under sanctions. Reversing those moves on Tuesday, the central bank said it would double lenders' weekly share of cash and allow them to determine the price, which was previously fixed at 1,189 dinars to the dollar. Iraq is recovering from decades of war and sanctions, and its economy is still very centralised. Oil accounts for 95 percent of government revenues. The latest easing of restrictions also mean traders taking part in the central bank's dollar auctions will no longer be subject to money transfer quotas. The steps were taken because the dinar-dollar exchange rate is now stable and better implementation of anti-money laundering regulations will prevent dollars being sold on to countries under sanctions, Deputy Central Bank Governor Mudher Kasim said. "We passed through a difficult experiment for a year but this experiment ended with a success," Kasim told Reuters. The dinar had come under strong downward pressure from traders snapping up dollars to sell on to Syria and Iran. But measures designed to stop the trade drove up the value of the US currency in the Iraqi market, hurting local businesses reliant on dollars to buy foreign imports. The easing of the controls "will strengthen the dinar and eliminate the difference between the official and the secondary market price," said Waleed Eedi, head of the central bank's statistics and research department. In May, the central bank allowed dollars to be sold at a fixed rate through two state-run banks, helping to push the dollar down from 1,280 dinars to 1,210 dinars and closing the gap between the official rate and the market price. http://www.brecorder.com/money-a-banking/198/1244283/
  6. lol...they have it, but it stands for Australian Broadcasting Corp
  7. Here is a link to a video discussing this story: http://www.presstv.ir/detail/212827.html
  8. There are so many interpretations concerning the identity of the "Babylon" of Revelation....people just falsely reinterpret Scripture to fit current events. This currency revalue has nothing to do with it!!
  9. Although it might be neat to think about, everything doesn't need to be tied to the Bible. Countries revalue currencies all the time. This doesn't mean Iraq should be viewed as "Babylon"
  10. I hope not...I would think if they keep waiting that it will drive speculation through the roof!
  11. here is the article from another post yesterday: * State Bank of Vietnam plans to increase dong to dollar value August 15th, 2011 11:06 am · Posted in NEWS (Iraq & World Currency) Vietnam’s bank notes VietFinanceNews.com – The State Bank of Vietnam plans to increase the value of the Vietnamese dong against the US dollar over the next four months in a bid to protect the value of the domestic currency, State Bank Governor Nguyen Van Binh told Sai Gon Economic Times this week. “Since February, the real value of Vietnamese dong has risen slightly,” Binh said. “If necessary, the central bank will consider further adjustment of the exchange rate,” he added. “The primary target of foreign exchange policy is to stabilise the dong and keep it under control, not to fix it. Confidence in the domestic currency has been fading and we must immediately restore that confidence, which is vital to economic stability.” Binh advised the public that holding onto the dong was the best policy to keep people from flocking to invest in gold and to reduce dollarisation of the economy. Strategies to protect the dong would include deposit interest rate reform that created predictable interest rates at levels of around 14 percent for dong deposits and 2 percent for US dollar deposits, he said. http://www.vietfinan...se-dong-to.html Read more:
  12. Slight, yes. But even an increase of a few cents would be worth thousands of dollars in investors pockets.
  13. Just clicked the info button on the tv and it says it is about 3 families affected by the war in Iraq.
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