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Does Iraq actually have to raise the value?


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"Everybody has been saying for years that they have to, but in reality, they can leave it just like it is if they want."

 

 

YEP, they're in no rush to trade internationally --- they're getting enough revenue from the oil right now.

They can keep on like this for the next FIVE YEARS.

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Yes, Ground Hog Day for the next 5 years. Get use to everyone.

 

 

"Everybody has been saying for years that they have to, but in reality, they can leave it just like it is if they want."

 

 

YEP, they're in no rush to trade internationally --- they're getting enough revenue from the oil right now.

They can keep on like this for the next FIVE YEARS.

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Yes I am as excited as the rest of you about the passing of the budget.  Guru's are coming out of the woodwork already giving their thoughts.  Let's look at this with open eyes and not just with tunnel vision wanting and hoping for an RV.  

 

Does Iraq really have to raise the value of the Dinar?  

 

Everybody has been saying for years that they have to, but in reality, they can leave it just like it is if they want.  I don't know why people say that they must raise the value to trade internationally.  Haven't they been trading internationally anyways?  Importing foreign goods and exporting oil?  Iraq was not left in the cold for the past 12 years and not been able to import what they need for their country.  Yes, they did this with the rate at 1166 being pegged to the USD.  All they do is use the USD to make the transactions in USD, or another countries currency like the Euro or the GBP.  There are ways to get around just raising the value of their country's Dinar.

 

Now, with that being said, let's look at the other side of the coin.  Iraq has stated they do want to have a more valuable currency.  They have stated in the past, they want their currency to be in line with Kuwaits and even possibly have the strongest currency in the region.  Is this possible?  Yes.  Will it happen tomorrow?  Who knows.  The only things anyone can be sure of is that the current government of Iraq is doing an awesome job and doing what they promised their citizens, in the time frame that was given to them.  For this, we are all giddy and excited, including me.  I agree that for them to have the strongest currency in the region, they will at some point have to raise the value of the Dinar.  How this will be achieved is anyones guess.   Anyone that says they know how they will do it is lying.  Can they RI back to pre-war value? Certainly.  Could they come out at 1-1? Yes.  Could they come out at .10? yes.  

 

The point I am trying to make is this.  When we get excited over something happening, we as humans tend to focused on what will happen next.  We make bad decisions, like buying more Dinar or putting it in lay-a-way, knowing that if it doesn't happen within a given time we will ruin what we have, ie: mortgage payment, electric, groceries.  Let's just stay focused on being happy we are where we are today with this.  The budget has passed and we know we can do nothing to speed up the plans, whatever they may be, of the Iraqi government or the CBI.  They control it, they know hwere they are going and what they have to do to get there.

 

Be Patient and it will come.  Being greedy and in a hurry will only hurt you now and in the long run.  I am hoping as all of us are that the RV will come ASAP, Now, Soon, In the Coming Days, lol.  Just be patient and spend time with your family and friends.  Don't let the wait take control of your life.  God has his plan for all of us, we just don't know what his plan is.  Thank you for reading my thoughts.

 

Good read my friend, my thoughts exactly!

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The point I am trying to make is this.  When we get excited over something happening, we as humans tend to focused on what will happen next.  We make bad decisions, like buying more Dinar or putting it in lay-a-way, knowing that if it doesn't happen within a given time we will ruin what we have, ie: mortgage payment, electric, groceries.  Let's just stay focused on being happy we are where we are today with this.  The budget has passed and we know we can do nothing to speed up the plans, whatever they may be, of the Iraqi government or the CBI.  They control it, they know hwere they are going and what they have to do to get there.

 

Be Patient and it will come.  Being greedy and in a hurry will only hurt you now and in the long run.  

 

That part of us that "wants," can cancel out that part of our brain that has rational caution. Well said skrappyone.

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I'm not going to try to pretend to udnerstand world economics and stuff but no they don't have to raise the value. There are countries with weaker currencies than the Dinar, not many but there are a few. Heck Vietnam is quie a bit weaker than the Dinar and they actually do more business, use their own currency and have a much more thriving economy than Iraq, they have a catfishing and rice industry, you have manufacturing moving there so if Vietnam can operate and grow an economy on a weak currency why can't Iraq?

 

Also, I don't think this is the case with Iraq, but many countries do intentionally keep their currency value low because it makes people want to trade with them because their money or the dollar in many cases will go further. Look at a country like China who keeps their currency low. Even Vietnam for the past couple years has been intentionally devaluaing their currency.

 

I have yet to hear a good, logical, or factual explaination for why a country would "have to" raise the value or their currency. Sure China gets pressue to stop artificially keeping their currency low but nobody could care less about Iraq, at least currently.

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i respectfully disagree with OP's take on the situation in iraq, very respectfully.  iraq must undergo monetary reform, this is evidenced by the fact that they are running a major deficit.  their peg to the dollar prevents them from being able to take control of its economy especially when hit with a monetary crisis.  they have no room or tolerance for anything negative happening on a macroeconomic scale.  currently their entire economy is subject to the oil based decisions of other nations and thereby are enslaved to other peoples' policies.  they have no ability whatsoever to stabilize their economy against macroeconomic influences.  

 

additionally iraq suffers from its access to the global capital markets.  the size of a nation's capital markets is directly proportional to the size of its economy.  read more here.  their financial and investment structure are weak and regulations are troubling.  at their current rate, how do they prevent themselves from going under without currency reform?  without an increase in purchasing power?  the peg to the dollar will continue to slaughter iraq because all things remaining the same, their cost will increase but their deficits will increase as well.  the goi has implemented austere measures against their budget but how long can they continue running like this, trimming and trimming and trimming the fat?  

 

in a nutshell, their capital program does not support their fiscal needs.  

 

so i completely disagree.  iraq need to find increased value in their capital program in order to meet their needs and they will not be able to get it from external capital markets, local banks etc.  one of the few places they can get it to stay afloat is by their currency's exchange rate which is has been deemed by the World Bank as currently at a NOMINAL rate.  

 

nominal - (of a price or amount of money) very small; far below the real value or cost.

Edited by TrinityeXchange
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i respectfully disagree with OP's take on the situation in iraq, very respectfully.  iraq must undergo monetary reform, this is evidenced by the fact that they are running a major deficit.  their peg to the dollar prevents them from being able to take control of its economy especially when hit with a monetary crisis.  they have no room or tolerance for anything negative happening on a macroeconomic scale.  currently their entire economy is subject to the oil based decisions of other nations and thereby are enslaved to other peoples' policies.  they have no ability whatsoever to stabilize their economy against macroeconomic influences.  

 

additionally iraq suffers from its access to the global capital markets.  the size of a nation's capital markets is directly proportional to the size of its economy.  read more here.  their financial and investment structure are weak and regulations are troubling.  at their current rate, how do they prevent themselves from going under without currency reform?  without an increase in purchasing power?  the peg to the dollar will continue to slaughter iraq because all things remaining the same, their cost will increase but their deficits will increase as well.  the goi has implemented austere measures against their budget but how long can they continue running like this, trimming and trimming and trimming the fat?  

 

in a nutshell, their capital program does not support their fiscal needs.  

 

so i completely disagree.  iraq need to find increased value in their capital program in order to meet their needs and they will not be able to get it from external capital markets, local banks etc.  one of the few places they can get it to stay afloat is by their currency's exchange rate which is has been deemed by the World Bank as currently at a NOMINAL rate.  

 

nominal - (of a price or amount of money) very small; far below the real value or cost.

While everything you said may be true you can't just create wealth out of thin air and say we would be better off if we had a stronger currency so lets flick a switch and make it happen. If that were the case every country in the world would be doing that every day and one upping each ohter.

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This is what makes Iraq unique. Their currency is presently undervalued. This is from the mouth of the world Bank. They are not creating wealth out of thin air. They already have wealth. It is not reflected in its currency however. The benefit of keeping the value of the currency low is so that Iraq can rebuild its infrastructure for cheap. However they have waited to long and economic troubles have hit the country. Half of Iraq should have been rebuilt by now but Maliki hindered it's progress.

Edited by TrinityeXchange
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This is pretty good thread...I just view it as very complex issue and since a fiat currency can be valued out of thin air, TX's opinion is as valid as the others.  It is a combination and as SW said, going international requires an internationally traded currency.  As far as Vietnam goes, their wealth potential does not come close to Iraq's, and they have had decades to develop their economic infrastructure where Iraq hasn't...however, I believe there is an overall CBI plan on monetary reform, but the timing of monetary reform is a moving target affected by the aforementioned macroeconomic influences on Iraq coupled with the political environment.  Definitely making moves to improve internal issues within Iraq so that infrastructure can be built up (this can occur more quickly than you would think imo...just takes an influx of capital), but they are currently at a relative standstill regarding dealing with macroeconomic influences on the country.  It is interesting to watch...this is a hobby basically imo, just one that can perhaps at some time be profitable (hopefully not like painting where you work on the hobby becomes valuable only after you kick the bucket as it were).  Just my thoughts on things as they stand, they'll probably change tomorrow...lol...thanks for everyones thoughts tho!

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