Iraqi Economy Is Fueling Talk Of An Iraqi Dinar Revaluation

[MrRich]

2011/01/26

Iraq is anticipating to undergo a interval of massive financial growth supported by an increase in foreign investment in oil production and also infrastructure. For a foreign investor, Iraq is a beautiful proposition because it has a 30m strong inhabitants and also an educated workforce.. Iraq is extremely enticing to overseas investors as outsiders can own Iraqi businesses outright, they’ve a fixed tax price of 25% and most significantly, they can to send back earnings as they see fit.

Despite the fact that President Barack Obama officially confirmed the end of US combat operations in Iraq, it may take a while before the country returns to a being a peaceable and also stable place. There remains to be political instability and also violence.

Underlying this volatility, Iraq is in fact a potential economic powerhouse, and also it’s going to gradually but surely return to after thirty years of flat or no growth and also unrest.

Signs of financial recovery originated in 2009, when Iraq gave away twelve new oil production contracts to worldwide oil production businesses. Iraq has the very best percentage of undeveloped oil fields. Most of Iraq’s oil fields are within the south of the country within the Shia controlled neighbourhood, the place there’s relative stability. This is extremely positive for the foreign oil companies and also for oil production because it won’t be hampered by any political unrest or instability.

Iraq has the fourth largest oil reserves on earth after Saudi Arabia, Venezuela and Iran. Current daily production is estimated at 2.5 million barrels a day, which doesn’t make them one of the largest oil producers in the world.

All these new oil manufacturing contracts would be a major boost to the shaky financial system and also will also give a sizeable flow of foreign investment into the country’s neglected oil infrastructure.

Oil production in Iraq is projected to increase to much more than 10 million barrels per day by 2020. By this date, it is anticipated that Iraq could be 1 of the leading oil suppliers, second only to Saudi Arabia and Russia. If right this moment’s oil prices remained constant, this can drastically enhance Iraq’s probable revenue from oil. At this manufacturing charge they will expect oil revenues to be $280 billion a year, a enormous increase from the recent stage of $70 billion a year. Oil cash from the increasing oil manufacturing is underlying the development in Iraq, as it is catching as much as meet the pent-up demand for homes and improved infrastructure.

With political stability and also good administration of this huge development charge in Iraq, the nation has the possibility to be 1 of the wealthiest within the region and to become a huge player on the international oil platform. At the rate of growth in oil production, Iraq’s GDP may well quadruple per capita, as the increase in revenues from oil will convert Iraq from having a financial deficit to having expected financial reserves in excess of an estimated $350 billion. This would put Iraq on an equal footing with its close oil production neighbours like Kuwait, Saudi Arabia and UAE. It can after that not require to borrow from the International financial fund to keep the country going.

1 of the most important points affecting Iraq’s growth could be increasing its nationwide safety and stability. Iraq’s economic growth is prone to be affected by domestic politics and political instability. They are anticipating a possible new oil regulation, which will imply that speculators will see unsure periods in front as the legal and also regulatory situation for the oil business is absolutely unpredictable.

In order to produce the increase in oil manufacturing, Iraq will want to confirm its foreign buyers that it’s fully commited to providing the right infrastructure.

Revaluation of the brand new Iraqi Dinar

Iraq’s currency is the Iraqi Dinar and also is traded under the currency code as IQD. The Central Financial institution of Iraq introduced in 2010 that they were planning to change the denomination of the Iqd, to make money transactions easier. The intention is to drop 3 zeros from the nominal value of items, but maintaining the actual value of the dinar the same. What this means is that the one thousand IQD (pre redenomination) and also the one dinar (publish redenomination) would be valued as the same amount in US dollars.

Even although the announcement was made in December and was expected to take place by the end of 2010. There is still no indications of this occurring and also no supplementary announcements have been made by the central bank. The present exchange rate between Iraqi dinar and the USD is 1167 dinar to a dollar. There was great volatility within the rate of exchange of the Iqd, as currency investors have been buying dinars and relying on the likelihood of a revaluation in the close to future. .

The New Iraqi Dinar (IQD) isn’t yet traded on the open foreign exchange market but you may acquire IQD through a overseas alternate foreign money trader or from a banking institution. Some of them will buy it back from you but the quote might be at a discount. Since the iraqi dinar is not being actively traded, the liquidity of this foreign currency is quite low.

Foreign currency traders have been expecting a revaluation of the Iraqi dinar for 7 years. The Iqd is projected to be revalued alongside the same foundation that the Kuwaiti dinar was revalued after the 1st Gulf War. At that point in time, the Kuwaiti Dinar fell from its pre war levels. When oil production restarted. The currency regained all its original worth. Traders holding the Kuwaiti dinar at the time saw profits of over 3000% on their cash. This larger anticipated profit has created massive expectations that on the revaluation of the Iraqi dinar and also quite so much of people are hoping that this shall be an investment with an very excessive return.

With the improvement in GDP, fiscal stability within the improving Iraqi economy. Economic professionals are expecting to see the Iqd to be revalued to more efficiently value the underlying economy. This revaluation has been expected for some time, however will occur when all of the nation’s challenges have been met. In the event you intend to make investments within the Iraqi dinar, just remember like any other trade, the value can increase besides decrease.

ARTICLE LINK

Enoch8 (One Dinar) Commentary:

Here is a bit of a teaser to this post…..

There are at least 2 key statements in this post, that stand out like beacons, the first of which, would increase the the Nominal Exchange Rate by 7 times…..and the Real Exchange Rate, (which is 4 times that of the Nominal), also by 7 times.

{That is 28 times the current 1170, nominal rate, ( Roughly, 1 US to 41.79 IQD), which would still not be the actual RV Rate, because additional factors of Supply and Demand, would not yet be factored into, the real world and internal market demands, and the actual M2.}

1. “At the rate of growth in oil production, Iraq’s GDP may well quadruple per capita, as the increase in revenues from oil will convert Iraq from having a financial deficit to having expected financial reserves in excess of an estimated $350 billion.”

This in fact, would have effectively, removed one of the zeros from the “Nominal Value of Items”, as expressed in item 2, without any further removal of currency from the M2

The second, takes the M2 into consideration and says the plan is to remove 3 zeros from the “Nominal Value of Items”. That means to remove 3 zeros from the sticker price on the store shelves and the Consumer Price Index. It also has to do with an proportionate adjustment of the M2, relative to increases in market demand for currency, in population growth, increased value in lifestyle, increased consumer demand and need for additional currency, increases in Multi International Corporate Reserves and holdings, and increases in the World Banking demands, for International Treasuries and Reserves, in trade stability, etc. This would more than likely have the same effect as removal of at least the second zero, if not more.

2. “The intention is to drop 3 zeros from the nominal value of items, but maintaining the actual value of the dinar the same. What this means is that the one thousand IQD (pre redenomination) and also the one dinar (publish redenomination) would be valued as the same amount in US dollars.”

All that would remain, to achieve the remaining zero….. depends on how fast CBI can draw down the existing M2, by removal of many of the larger IQD hard notes, from circulation.

The overall effect of that plan, would easily revive values to 1000 times the Nominal Rate, which would be $.86 as of 2009 and also the Real IMF Rate by 1000 that would be $3.42, as of Dec. 2009.

Edited January 27, 2011 by MrRich

[dflake]

Very well laid out and informative. Thank you.

[Iraqi Queen]

Wow, Mr. Rich,

Fabulous morning read! Thank You!

[andy3978]

I'm a little confused on this renewed talk of lopping 3 zeros.

So 1 million Dinars, after the lop would leave the investor with 1,000 Dinars? And if thats the case and it's 1USD=1IQD, that investment would be worth $1,000 USD? Is this correct?

so if this is the correct line of thinking, if the exchange rate went to 1USD=3.5IQD, then the investor would have $3,500 USD after exchanging it (not counting a spread? Is this correct?

If so, the lop sounds like a dream-shattering event to investors.

[easyrider]

I'm a little confused on this renewed talk of lopping 3 zeros.

So 1 million Dinars, after the lop would leave the investor with 1,000 Dinars? And if thats the case and it's 1USD=1IQD, that investment would be worth $1,000 USD? Is this correct?

so if this is the correct line of thinking, if the exchange rate went to 1USD=3.5IQD, then the investor would have $3,500 USD after exchanging it (not counting a spread? Is this correct?

If so, the lop sounds like a dream-shattering event to investors.

no LOP!! this has ben discussed numerous times they cannot afford to LOP due to foreign investments and Iraq wanted to be well known internationally and welcome businesses and companies so with that said there will be NO LOP. Am i aying its not possible of course not but very very unlikely this country would be a disgrace to LOP with what they have.

[detroitjazzman]

I'm a little confused on this renewed talk of lopping 3 zeros.

So 1 million Dinars, after the lop would leave the investor with 1,000 Dinars? And if thats the case and it's 1USD=1IQD, that investment would be worth $1,000 USD? Is this correct?

so if this is the correct line of thinking, if the exchange rate went to 1USD=3.5IQD, then the investor would have $3,500 USD after exchanging it (not counting a spread? Is this correct?

If so, the lop sounds like a dream-shattering event to investors.

Where you see comments that say the equalivet of removing of the zero's.......Think removing the larger denomination bills from circulation. Not much changes in terms of the value of the currency that you have in your possession. Those 1K 10K and 25K notes you turn in will be destroyed. just that simple. If that's all you have to worry about....welcome to a worry free life. just saying.

Edited January 27, 2011 by detroitjazzman

[andy3978]

Where you see comments that say the equalivet of removing of the zero's.......Think removing the larger denomination bills from circulation. Not much changes in terms of the value of the currency that you have in your possession. Those 1K 10K and 25K notes you turn in will be destroyed. just that simple. If that's all you have to worry about....welcome to a worry free life. just saying.

I'm sorry to say but mathematics was never my strong suit. Let me put it another way (and please remember I am numerically challenged!) If I own 1 million dinars and they do, I'll use the term LOP--I'm pretty sure thats what the original article in this thread was referring to...and the IQD is RV'd at 1USD=1IQD, then upon cashing in I would have $1million USD?

[detroitjazzman]

I'm sorry to say but mathematics was never my strong suit. Let me put it another way (and please remember I am numerically challenged!) If I own 1 million dinars and they do, I'll use the term LOP--I'm pretty sure thats what the original article in this thread was referring to...and the IQD is RV'd at 1USD=1IQD, then upon cashing in I would have $1million USD?

That's it....thought you said you didn't understand numbers...you seem to count money pretty good. just saying

[Slaydadea]

Thanks for going the extra mile Scooby Doo! Very informative and encouraging!

[andy3978]

That's it....thought you said you didn't understand numbers...you seem to count money pretty good. just saying

I wanted to be certain I understood. I have heard people saying things to the effect of if there's a lop and 3 zeros are removed then 1 mil IQD is actually considered 1,000 IQD, then at a rate of lets say 3.5 then the whole investment is worth only $3500. See where I'm coming from with this? If that were the case it would be very disappointing.

So if removing 3 zeros isnt going to affect things, why are people screaming that it's such a bad thing? I mean if 1 mil IQD is still going to be 1 mil IQD post-lop who cares?

[MrRich]

I wanted to be certain I understood. I have heard people saying things to the effect of if there's a lop and 3 zeros are removed then 1 mil IQD is actually considered 1,000 IQD, then at a rate of lets say 3.5 then the whole investment is worth only $3500. See where I'm coming from with this? If that were the case it would be very disappointing.

So if removing 3 zeros isnt going to affect things, why are people screaming that it's such a bad thing? I mean if 1 mil IQD is still going to be 1 mil IQD post-lop who cares?

A conventional lop where the old currency is replaced by new currency would be a bad thing, but what is thought to be happening here is not a conventional lop. I'm almost certain Enoch8 isn't a lopster.

[gregg450]

Thanks for your input. I hope it is correct.

[Halo9678]

This is a very interesting read! My thanks to Mr. Rich, this is looking better and better every day. While I can't say that this investment has been all fun and games, I can say that I have developed a new found respect for numbers, politics, information and communication. I gotta admit though the "3.42USD" rate was substantiated and quite possible. All we need now is for Iraq to get it together and make it happen. In the mean time, I suggest we continue to refine our plans for our future and NOT quit or jobs just yet. Best of luck to all and happy hunting. Godspeed and GO RV

(Is it me or has "GO RV" become something of a greeting-rallying call... Something akin to "GERONIMO!!! GO-RV-GO!!!)

[Patty B]

Mr. Rich, Thanks so much for this post, I always enjoy readng what you have to say and your opinion. You put a lot of work into this post and it's much appreciated!

Edited January 27, 2011 by Patty B

[andy3978]

I got into this investment about a year or maybe a little less time ago. A friend clued me in on it. He gave me some basic info and told me to look into it for myself. Well I did. Took a while to sift through the BS vs. fact. Coming from a background of Poly Sci & ME affairs I wasnt totally naive to the geopolitical aspects affecting the situation.

After looking into it I saw an opportunity. The clincher to me was that for a minimal investment it has the potential to allow me to retire. It's one of those things where you see it as 'too good to be true' and a scam...yet when it does hit, it leaves you with suicidal thoughts as to why I didnt do it. I threw a couple grand at it, with the justification that a) I spend more money than that on eating out over the coarse of the year. putting up that money wouldnt hurt me if I lost all of it. c) I can always exchange it back into the bank if I need to. d) if it totally tanks I can write it off on my taxes as an investment loss.

The only think that sits a little unsettled in my stomach is maybe Murphy's Law being in play. The way I see it, s**t like this doesnt happen to me! Even though I am first in line, someone else always gets the promotion; I sit at this slot machine and lose but someone sits next to me and hits the jackpot, etc, etc...

I am so hungry for this words cannot begin to explain. I have not and will not quit my job, but once the RV comes (and its a good one) I surely will. I dunno, just venting a little but it appears to be so damn close I can taste it.

Like this morning I had Forex up and the USD/IQD is always on my top line. For whatever reason it wasnt but I didnt notice. I see the bid/ask and it's around 1.3xx I just about fell on the floor, then I realize it is the USD/EUR that was up there. Sorry for the rant here folks. Just that I always see stuff like this happening to others and never me. BUT...sometimes people catch a break once in a while, right?

[Captjohn]

I'm sorry to say but mathematics was never my strong suit. Let me put it another way (and please remember I am numerically challenged!) If I own 1 million dinars and they do, I'll use the term LOP--I'm pretty sure thats what the original article in this thread was referring to...and the IQD is RV'd at 1USD=1IQD, then upon cashing in I would have $1million USD?

You are correct. Another way of looking at the statement of "dropping three zeros" is that it refers to retiring (taking in by the CBI and destroying) the bills with three zeros; 25,000, 10,000, and 5,000. Their value after RV, however, would remain intact.

[MrRich]

Mr. Rich, Thanks so much for this post, I always enjoy readng what you have to say and your opinion. You put a lot of work into this post and it's much appreciated!

Thanks Patty, but this was a copy and paste from DD. The top part is an article from an investment website and the bottom part is analysis on the article from a guy known as Enoch8 who is highly regarded in the dinar world.

[cautiouslyhopeful]

Scooby Doo, I too have learned much from your posts. Thank you.

That brings me to a question.... when the RV occurs, what will happen to this forum? (maybe this is a question for Adam) Will everyone just drop out, close the site?? On one hand I am ready for the RV to happen now, on the other..... I have grown accustomed to the interactions (minus the bashing) here and the learning about Iraq and its people. hmm.

Anyway, thanks again Scooby Doo.

[ThePhantomRider]

I'd guess there would be flurries of activity for a while, but eventually it will be a ghost town. There will be a point where the owner will not have enough activity (or care) to keep the site up.

I know I'll probably pop in once or twice to see the joy and funny stuff, but that will be it.

TPR