Central bank: a plan to raise the exchange rate of the Iraqi dinar

[dontlop]

In addition to the money borrowed by Iraq during the 1980s, Iraq has had compensation claims made for reparations of damage inflicted during the invasion and occupation of Kuwait during 1990 and 1991. The United Nations Compensation Commission (UNCC) was responsible for processing and collecting such claims as authorized by UNSCR 692. The OFF program provided that 30 percent of Iraq’s oil sales would be used to settle compensation claims authorized by the UNCC. This figure was reduced to 25 percent in December 2000 and was set at 5 percent when oil exports resumed after OIF. As of 7 May 2004, claims totaling $266 billion have been adjudicated and claims worth $48 billion have been awarded by the UNCC. Additional claims worth $83 billion need to be resolved.

Another source of potential financial obligations accrued by Iraq since 1990 were contracts signed with countries such as Russia, UAE, Egypt, China, France, and the Netherlands mainly in the energy and telecommunications sectors. Because of UN Sanctions during the period, the contracts were not executed. It is uncertain if these contracts will be honored in the future.

Iraq’s total foreign debt compared to GDP from 1989 until 2003 was not sustainable (Figure 12). Iraq was borrowing much faster than it was producing for over a decade (see Figure 13).

 

Balance of Payments/Exchange Rates

The Balance of Payments (BoP) is an account of all transactions between one country and all other countries—transactions that are measured in terms of receipts and payments. From the US perspective, a receipt represents any dollars flowing into the country or any transaction that require the exchange of foreign currency into dollars. A payment represents dollars flowing out of the country or any transaction that requires the conversion of dollars into some other currency. The CBI Department of Research and Statistics provided statistics on Iraq’s Balance of Payments, which are summarized (Figures 14 and 15).

Exchange rates are important during these transactions because they represent the linkage between one country and its partners in the global economy. Exchange rates affect the relative price of goods being traded (exports and imports), the valuation of assets, and the yield on those assets. The CBI pegged its official rate between $3 to 3.38 per dinar in the 1970s. The last official exchange rate of $3.11 per dinar was set in 1982. During the 1970s the official and market rates generally corresponded and by 1980 the country had $35 billion in foreign exchange reserves. Because of the war with Iran that figure had fallen to $2 billion by 1987. The currency depreciated rapidly in the unofficial market during the Iraq-Iran war and after the first Gulf War the pace of depreciation increased further. During 1997 to 2003, the exchange rate fluctuated between 1500 -2000ID per $1 and was fairly steady at about 1950 ID to $1 in recent years. Although the Regime did not alter the official exchange rate after 1983, it acknowledged the rate differential in 1999 by allowing state run banks to exchange hard currency at the rate of 2000 ID to $1.According to the statistical bulletin published by CBI (Figure 16) the numbers projected by sources in the US are consistent, with numbers reported internally. It is important to note that the validity and reliability of the data provided by CBI has not yet been evaluated.

Edited May 26, 2013 by dontlop

[keepmwlknfny]

iraq had less than 2 billion in reserves since 1985 ..yet the dinars value was $3.22 in 1990 ..

its the external debt of a nation that destroys its currency ,, nothing else ..

its got to be paid in  foriegn currency or goods and services .. all external debt . domestic debt can simply be paid out in dinars backed by  nothing  but goods and services just like every other country

And a country that pegs its currency must be willing to spend its reserves to buy back offers or it must devalue its currency.......

 

Your statement of the 3 dollar rate in 1990 was its black market rate......3 times higher then its official recognized rate.....

 

BTW......do you know their money supply numbers for 1990?

[dontlop]

_{Iraq Economic Data (1989-2003)}

_{Regime Finance and Procurement - Annex D}

_{https://www.cia.gov/library/reports/general-reports-1/iraq_wmd_2004/chap2_annxD.html}

 

https://www.cia.gov/library/reports/general-reports-1/iraq_wmd_2004/chap2.html

[skeptic1138]

The last official exchange rate of $3.11 per dinar was set in 1982. During the 1970s the official and market rates generally corresponded and by 1980 the country had $35 billion in foreign exchange reserves. Because of the war with Iran that figure had fallen to $2 billion by 1987. The currency depreciated rapidly in the unofficial market during the Iraq-Iran war and after the first Gulf War the pace of depreciation increased further. During 1997 to 2003, the exchange rate fluctuated between 1500 -2000ID per $1 and was fairly steady at about 1950 ID to $1 in recent years. Although the Regime did not alter the official exchange rate after 1983, it acknowledged the rate differential in 1999 by allowing state run banks to exchange hard currency at the rate of 2000 ID to $1.According to the statistical bulletin published by CBI (Figure 16) the numbers projected by sources in the US are consistent, with numbers reported internally. It is important to note that the validity and reliability of the data provided by CBI has not yet been evaluated.

You don't say where you are pasting this from, but it clearly contradicts your previous assertion that the dinar value was $3.22 in 1990 with only 2B USD in reserves as it says the currency depreciated rapidly (so from the 3.22 value) during the war with Iran which was 1980 to 1988.  It supports the 2B in reserves, but not the $3.22 value.  So if the money supply was held constant during that period just based on the decline in reserves I'd guess the rate dropped to < $0.20 (35B to 2B is a factor of 17) and if Saddam was printing like one might guess it would have been in the pennies by then, falling (as your post says) to 2000 to 1 in 1997. The CBI claims it was 3000 to 1 by 1995.

 

So isn't the upshot of all this that for a pegged currency the rate IS basically determined by the ratio of the money supply to their reserves?

Edited May 26, 2013 by skeptic1138

[keepmwlknfny]

You don't say where you are pasting this from, but it clearly contradicts your previous assertion that the dinar value was $3.22 in 1990 with only 2B USD in reserves as it says the currency depreciated rapidly (so from the 3.22 value) during the war with Iran which was 1980 to 1988.  It supports the 2B in reserves, but not the $3.22 value.  So if the money supply was held constant during that period just based on the decline in reserves I'd guess the rate dropped to < $0.20 (35B to 2B is a factor of 17) and if Saddam was printing like one might guess it would have been in the pennies by then, falling (as your post says) to 2000 to 1 in 1997. The CBI claims it was 3000 to 1 by 1995.

 

So isn't the upshot of all this that for a pegged currency the rate IS basically determined by the ratio of the money supply to the reserves to which the currency is pegged?

I would say it surely is related.......dont know it it absolutely has to be 1 for 1 or 100% backing, but it seems for pegged currencies there is a definate relationship......

And if you go through the US fed/treasury website, i did find material stating that pegged currencies values depend heavily on its reserves backing it. So 8 dont think we are just making it up.....

[skeptic1138]

I would say it surely is related.......dont know it it absolutely has to be 1 for 1 or 100% backing, but it seems for pegged currencies there is a definate relationship......

And if you go through the US fed/treasury website, i did find material stating that pegged currencies values depend heavily on its reserves backing it. So 8 dont think we are just making it up.....

Indeed there is certainly some fudge factor.  Kuwait for example looks to back M1 but not always M2 while Iraq at least currently backs M2.  I think that makes sense as the difference between M1 and M2 are funds that are not as liquid due to constraints on withdrawal as M1 which can be withdrawn on demand.

 

You can check out the ratio of M2 to reserves of many countries at the world bank's data site.  So if the value is 1.0 (as it is for Iraq) that means M2 in dollars equals reserves (converted to) dollars.  If its less than 1 that means more reserves, if its greater it means less reserves.  Kuwait is 3.4, and their M2 is about 3x their M1 (i.e. lots more complex banking instruments than in Iraq were M2 is only 15% or so greater than M1). You will see for floating currencies the ratio can be huge, but for pegged its pretty close to 1 (though taking into account M1 and M2 and which one they back). I couldn't find a similar data set using M1 unfortunately.

Edited May 26, 2013 by skeptic1138

[keepmwlknfny]

Indeed there is certainly some fudge factor.  Kuwait for example looks to back M1 but not always M2 while Iraq at least currently backs M2.  I think that makes sense as the difference between M1 and M2 are funds that are not as liquid due to constraints on withdrawal as M1 which can be withdrawn on demand. You can check out the ratio of M2 to reserves of many countries at the world bank's data site.  So if the value is 1.0 (as it is for Iraq) that means M2 in dollars equals reserves (converted to) dollars.  If its less than 1 that means more reserves, if its greater it means less reserves.  Kuwait is 3.4, and their M2 is about 3x their M1 (i.e. lots more complex banking instruments than in Iraq were M2 is only 15% or so greater than M1). You will see for floating currencies the ratio can be huge, but for pegged its pretty close to 1 (though taking into account M1 and M2 and which one they back). I couldn't find a similar data set using M1 unfortunately.

Yessir! Thats also why I think were are SOL unless the CBI changes its monetary policy to a float.....

[hammer911]

Well JMO, But when it says......Finance Committee that an action plan will begin to apply early next June, would be enough to raise the exchange rate of the Iraqi dinar against the U.S. dollar."  That says to me the rate is gonna go up.. And when we EXCHANGE, We will get more...Like I said, JMO... GO RV!!!~~~

[zigmeister]

I wish 

 

Well JMO, But when it says......Finance Committee that an action plan will begin to apply early next June, would be enough to raise the exchange rate of the Iraqi dinar against the U.S. dollar."  That says to me the rate is gonna go up.. And when we EXCHANGE, We will get more...Like I said, JMO... GO RV!!!~~~

I wish it were true, but in this instance they are speaking of the Iraqi dinar vs the dollar within Iraq, not internationally.  Now when they speak the dinar will rise against all currencies we have something going.  We look for that kind of heads up......right now, it is about the homestead.

[unirod]

Then Zig if what you say is correct. Than anyone with electronic Dinar in Iraq is going to benefit. I say Hooraayy I hedged this investment the right way!!! My ISX holdings will no doubt benefit also!!!

[uncirculd]

As much as I hate to admit it , I think they're just talking about an increase in the street rate to match the bank rate . There's been a few articles talking about how just that small difference is causing alot of problems right now. However I still believe it will re-value eventually 1 to 1 but that is just my opinion , maybe I'm wrong.

I can say for sure they are NOT broadcasting an RV to the world.  So, I don't see the excitement.

[yota691]

Central Bank implemented a plan in next June to raise the exchange rate of the Iraqi dinar

Baghdad / follow-up justice - 05/27/2013 - 11:29 pm | Readers: 21

A member of the parliamentary Finance Committee that the central bank told us that he will implement a new plan to raise the value of the Iraqi dinar exchange either the U.S. dollar.

A member of the Committee Faleh Djiashi's (IMN) "The central bank told the Finance Committee representative that an action plan will begin to apply early next June, will be capable of lifting Iraqi dinar exchange rate against the U.S. dollar." And added that "the central bank works to reduce the number of Companies that deal with it and put the money in the auction, which will reduce the value of the dollar and reliance on monetary policy open without procedures and controls are complex and open wide field in front of the government banks. "and announced that the Finance Committee for the formation of a small committee composed of three deputies to monitor Srvaldanar Iraq against the dollar, stressing The practical measures undertaken by the central bank last week led to address the problem gradually. was parliament may ضيفت week current governor of the Central Bank and the Agency Abdul Basit Turki and discussed with him the reasons for the high price of the dollar against the dinar.

 

[Darin]

Thanks Yota!

 

This article states raise the exchange rate. Still could mean market rate, but wouldn't be surprised to see the official rate change as a potential solution.

[zul]

Some understand what's economically possible.

They don't have enough foreign reverses to rv to a penny even if they abandoned their policy of stability and decided to bump the rate.

 

Yep...they dont have enough fiat currency,  debt,  IOUs, err.. i mean dollar, which is backed by nothing,  to back their currency for a RV 

Edited May 27, 2013 by zul

[dontlop]

Yep...they dont have enough fiat currency,  debt,  IOUs, err.. i mean dollar, which is backed by nothing,  to back their currency for a RV 

yep  they ran out of debt at the debt store... the united states has enough though .. they can buy back all their currency  with foriegn currency if everyone decides to  exchange it into foriegn currency ..

 

as soon as iraq rvs .. everyone will want to take that new valuable currency and exchange it in for debt riddin dollars or failing euros ..

Edited May 27, 2013 by dontlop

[MyLadiesDaddy]

Central Bank implemented a plan in next June to raise the exchange rate of the Iraqi dinar

Baghdad / follow-up justice - 05/27/2013 - 11:29 pm | Readers: 21

Read more: http://dinarvets.com/forums/index.php?/topic/149671-central-bank-a-plan-to-raise-the-exchange-rate-of-the-iraqi-dinar/page-7#ixzz2UzXAiryp

 

Ya just gotta love Yota, don't say much, Just comes in here with the 

 

truth and knocks the lobbisters dead. 

 

Some of them, are like our friend Keep, and are simply implying logic where 

 

logic doesn't apply. They have good points but I think they may be missing 

 

a much larger picture. The spiritual aspect of all this. 

 

Others, and I wont mention any fake computer names, are in my opinion 

 

                    GOVERNMENT HACKS 

 

If one were to think that there could be such a dramatic increase in the 

 

value of the dinar and that the government would not only be monitoring 

 

web sites like this one looking for people violating laws; ie insider trading; 

 

and such then one would be living in fantasy land. 

 

I can assure you that some of these so call lobbisters are exactly that.

 

They are watching and also I feel that it is there job to try and dissuade as

 

many as possible from this investment. The devils hands are hard at work. 

 

In either case we will soon know what is what.  

[vomer]

It is June 1st.  We watch the clock tick down to the moment of truth.  Tuh DUH DUH DUH drum roll please.

[skeptic1138]

 

 

Others, and I wont mention any fake computer names, are in my opinion 

 

                    GOVERNMENT HACKS 

 

If one were to think that there could be such a dramatic increase in the 

 

value of the dinar and that the government would not only be monitoring 

 

web sites like this one looking for people violating laws; ie insider trading; 

 

and such then one would be living in fantasy land. 

 

I can assure you that some of these so call lobbisters are exactly that.

 

They are watching and also I feel that it is there job to try and dissuade as

 

many as possible from this investment. The devils hands are hard at work. 

 

In either case we will soon know what is what.  

It would be insider trading if you work for the CBI and that seems very unlikely for anyone posting here.  Even granting the feds do some strange things, why would they be watching web sites like this one, or trying to dissuade folks from buying dinar?  Why would they care one way or the other?  I think this is just you wanting to rationalize away anything contrary to your get rich scheme so without any evidence you just lump anyone posting against your dream as a government hack.  Its classic.   And "we will soon know.." if only it were true. I assure you june will pass and there will be no RV.  Will that lead you to even consider the logic showing its not possible?  I'd guess no, as you are fully committed to your bias that you will be rich from buying dinar.  Its nothing personal.  You seem like a nice guy (your picture with, I assume, your daughter is great), but you have blinders on wrt the possibilities around the IQD.

Edited June 1, 2013 by skeptic1138

[zigmeister]

It would be insider trading if you work for the CBI and that seems very unlikely for anyone posting here.  Even granting the feds do some strange things, why would they be watching web sites like this one, or trying to dissuade folks from buying dinar?  Why would they care one way or the other?  I think this is just you wanting to rationalize away anything contrary to your get rich scheme so without any evidence you just lump anyone posting against your dream as a government hack.  Its classic.   And "we will soon know.." if only it were true. I assure you june will pass and there will be no RV.  Will that lead you to even consider the logic showing its not possible?  I'd guess no, as you are fully committed to your bias that you will be rich from buying dinar.  Its nothing personal.  You seem like a nice guy (your picture with, I assume, your daughter is great), but you have blinders on wrt the possibilities around the IQD.

Did you mention whether you held dinar?  You guys all sound alike I can't remember.

[vomer]

Looks to me like he was talking more about lopsters than those who blindly believe in a major RV.  I bumped you up a plus, Daddy.

[skeptic1138]

Did you mention whether you held dinar?  You guys all sound alike I can't remember.

2+2 still equals 4, no matter what investments one happens to hold.

[rockfl9]

yep  they ran out of debt at the debt store... the united states has enough though .. they can buy back all their currency  with foriegn currency if everyone decides to  exchange it into foriegn currency ..

 

as soon as iraq rvs .. everyone will want to take that new valuable currency and exchange it in for debt riddin dollars or failing euros ..

Dontlop???:: You are going to hang on to your solid as black gold dinars,right!

[imgesing]

It says EXCHANGE..... ... But its getting interesting..

Makes no difference because both are inter-related... Yet, I am sure everyone here knows that or they would look foolish to argue the point.

[MyLadiesDaddy]

It would be insider trading if you work for the CBI and that seems very unlikely for anyone posting here.  Even granting the feds do some strange things, why would they be watching web sites like this one, or trying to dissuade folks from buying dinar?  Why would they care one way or the other?  I think this is just you wanting to rationalize away anything contrary to your get rich scheme so without any evidence you just lump anyone posting against your dream as a government hack.  Its classic.   And "we will soon know.." if only it were true. I assure you june will pass and there will be no RV.  Will that lead you to even consider the logic showing its not possible?  I'd guess no, as you are fully committed to your bias that you will be rich from buying dinar.  Its nothing personal.  You seem like a nice guy (your picture with, I assume, your daughter is great), but you have blinders on wrt the possibilities around the IQD.

 

It would also be insider trading if someone here were to know someone who

 

works at the CBI and passed along information pertaining to a sudden increase 

 

in its value. And I do know of one person here who knows someone who works 

 

for the CBI. 

 

Watching websites and trying to dissuade people are two completely different 

 

points. The first one I have already answered. As to the second that is just as

 

simple, your socialist politicians know full well that it is much more difficult to 

 

enslave people of means. The fact that Mr. Bush even made it possible for the 

 

average Joe to buy dinar would drive them mad.  At best now all they can hope for 

 

is to collect the taxes off the few who aren't smart enough to take there money 

 

offshore. A concept I'm sure you disagree with as well. 

 

As far as knowing soon, well that seems clear. If Iraq doesn't do something soon

 

to change the course it is now on, yes we will see that country fall to pieces. 

 

As to my, "getting rich" , you need to know that I am already the richest man on 

 

earth. I have been given the keys to the kingdom of heaven and the power of God

 

himself lives within me. What more can I desire? 

 

To serve the one who created all things, and to do as he ordered me to do.

 

Mark 16:15-18

 

15And he said unto them, Go ye into all the world, and preach the gospel to every creature. 16He that believeth and is baptized shall be saved; but he that believeth not shall be damned. 17And these signs shall follow them that believe; In my name shall they cast out devils; they shall speak with new tongues; 18They shall take up serpents; and if they drink any deadly thing, it shall not hurt them; they shall lay hands on the sick, and they shall recover

 

​It is difficult to, "kick against the pricks", to live a life with no hope.

 

You see the real question here is, why do you make it your life's desire to

 

destroy the hopes or those here? What is it about us that makes you so passionate?

 

In my life only one thing drives a man so strongly against the tide, money.

 

Is it money being paid to you that moves you? Pray tell us what moves you?

 

And why!  

[skeptic1138]

 

You see the real question here is, why do you make it your life's desire to

 

destroy the hopes or those here? What is it about us that makes you so passionate?

 

In my life only one thing drives a man so strongly against the tide, money.

 

Is it money being paid to you that moves you? Pray tell us what moves you?

 

And why!  

I have stated in other threads that I think confirmation bias and most people's inability to recognize it in themselves (we ALL are prey to it) is a big problem in our society as it gets in the way of rational decision making especially on complex issues.  An RV of the IQD is in comparison a pretty simple issue so an easy one to point out.  Its easy and doesn't take that much time.  Where do you get this "life's  desire" stuff?  See you have built a whole persona around just the fact that I claim an RV is impossible.  You know next to nothing else about me, but that hasn't stopped you from filling in whatever supports your view.

 

If someone's hope is false, isn't it good for them to find that out?  Browse through the selling thread and see the folks that are selling due to needing the money, so clearly the put money into this folly that they could not afford.