just a Question?

[bummer]

Hello everyone, I don't post very much as I am not very well versed in the area of world economics or foreign currency. I am also afraid to put something out there and be laughed at or bashed for my lack of knowledge, but I am here EVERYDAY reading and learning as much as I can. Now my question is simply is there any truth to the IQD being worth $3.22 to the USD prior to the devaluation of the currency? If so was that rate internationally recognized? I am asking this because if this is the case and their currency was worth that one day then the next day was all of a sudden worthless, is it not a possibility that it could "magically" just be restored to it's previous value? If iraq could support the currency value back then, then why could they not support such a value now? If this was not the internationally recognized rate then what was? Please be kind with your responses I am not implying anything here just trying to explore this point a little.

[umbertino]

Quote

Now my question is simply is there any truth to the IQD being worth $3.22 to the USD prior to the devaluation of the currency? If so was that rate internationally recognized?

End Quote

1) Yes 2) No

Value went through various stages including the $3.22 rate... Can't really remember if it was exactly that right before total devaluation.

Edited July 27, 2011 by umbertino

[hoopdog]

Hello everyone, I don't post very much as I am not very well versed in the area of world economics or foreign currency. I am also afraid to put something out there and be laughed at or bashed for my lack of knowledge, but I am here EVERYDAY reading and learning as much as I can. Now my question is simply is there any truth to the IQD being worth $3.22 to the USD prior to the devaluation of the currency? If so was that rate internationally recognized? I am asking this because if this is the case and their currency was worth that one day then the next day was all of a sudden worthless, is it not a possibility that it could "magically" just be restored to it's previous value? If iraq could support the currency value back then, then why could they not support such a value now? If this was not the internationally recognized rate then what was? Please be kind with your responses I am not implying anything here just trying to explore this point a little.

The top sites selling Iraqi Dinars bring up the topic of the previous Iraqi Dinar Exchange Rate. They are referring to 1982 when Saddam Hussein set the Iraqi Dinar Exchange Rate at $3.22 USD, what they don't tell you is that the old Iraqi Dinar could not be traded in the open market and the over inflated Dinar exchange rate was not tested on the world currency exchange market! Saddam simply 'made up' the value, it wasn't real!

[chara55]

Yes the Dinar was worth $3.22 BUUUTTTT..... It was never recognized by anyone but Sadam the IMF never did,and no other countries did either. COULD it go back and stay at that level AND be recognized ,SURE COULD Just have to turn in next Week same time same channel.....Hope this helped

God Bless

Goooooo R vvvvvvvvvvvvvvvvvv

[jg167]

Hello everyone, I don't post very much as I am not very well versed in the area of world economics or foreign currency. I am also afraid to put something out there and be laughed at or bashed for my lack of knowledge, but I am here EVERYDAY reading and learning as much as I can. Now my question is simply is there any truth to the IQD being worth $3.22 to the USD prior to the devaluation of the currency? If so was that rate internationally recognized? I am asking this because if this is the case and their currency was worth that one day then the next day was all of a sudden worthless, ....

This is where you go wrong. The dinar wasn't just one day devalued from $3.22 to $0.000086 . This devaluation occurred quickly but still over a few years (something like 1990-1995) due to Saddam printing trillions of dinars in a futile attempt to finance his regime and wars with a failing economy and UN sanctions etc. Read it all directly from the source, the Central Bank of Iraq http://cbi.iq/index.php?pid=History . And don't be afraid to ask questions!

[jg167]

Yes the Dinar was worth $3.22 BUUUTTTT..... It was never recognized by anyone but Sadam the IMF never did,and no other countries did either. COULD it go back and stay at that level AND be recognized ,SURE COULD

How? M2 is a 1000x if not 2 or 3000x what it was back then. GDP is about the same (and of course growing).

When a pegged currency is changed (an RV) it is to bring the value of M2 into line with the economy, to make the exchange rate of the two currencies match the ratio of the values of the two underlying economies.

[coldwarvet]

jg167 is correct. The major unanswered question, however, is how to measure/value the assets of the underlying economies. If the assets on the current CBI balance sheet, based on the fiat currency valuation system, are the sole assets used to set the currency value, AND IF the public statements of people like Mohammed Saleh are factual, then a very low RV, no RV at all, or an RD is in the cards.

Given the growing unrest of the Iraqi people, however, I doubt that an RD would in any way substantially satisfy their needs and concerns, and may in fact exacerbate the domestic unrest. I suspect that's why you've seen no substantive action on an RD or RV thus far. They're still arguing about its potential effects. The artciles we read are their attempt to sway public opinion. Given the repetitiveness of the articles' content, it appears they haven't been successful so far.

However, if Iraq is planning on including its natural resource reserves, such as oil and natural gas, in the equation, then the outcome of the situation will depend on how much value they attach to those resources, and how aggressively they intend to monetize them. As I've said in previous posts, Iraq would have much less exposure if this is done in concert with other nations' RV'ing their own currencies. I personally believe that the tale will be told when Iraq finally emerges from Chapter 7. What they do after that will, in large part, tell us where they intend to go.

[DINARV77]

Hello everyone, I don't post very much as I am not very well versed in the area of world economics or foreign currency. I am also afraid to put something out there and be laughed at or bashed for my lack of knowledge, but I am here EVERYDAY reading and learning as much as I can. Now my question is simply is there any truth to the IQD being worth $3.22 to the USD prior to the devaluation of the currency? If so was that rate internationally recognized? I am asking this because if this is the case and their currency was worth that one day then the next day was all of a sudden worthless, is it not a possibility that it could "magically" just be restored to it's previous value? If iraq could support the currency value back then, then why could they not support such a value now? If this was not the internationally recognized rate then what was? Please be kind with your responses I am not implying anything here just trying to explore this point a little.

Well, it seems impossible that it will just go back pre 3.22 days in this new modern setting and global times.

Ill be happy if it hits .10c -.85c is more realistic really. Kinda like the Kuwaiti dinar, but who knows right ??

Just as long as we all have some were in the game playing iraqi ball!!

GO DINARS !

[bummer]

Thanks everyone for your insight. Greatly appreciated!

Thanks everyone for your insight. Greatly appreciated!

[jg167]

However, if Iraq is planning on including its natural resource reserves, such as oil and natural gas, in the equation, then the outcome of the situation will depend on how much value they attach to those resources, and how aggressively they intend to monetize them. As I've said in previous posts, Iraq would have much less exposure if this is done in concert with other nations' RV'ing their own currencies. I personally believe that the tale will be told when Iraq finally emerges from Chapter 7. What they do after that will, in large part, tell us where they intend to go.

I've never understood this idea of monetizing natural resources. The value of the money supply is chasing after the value of GDP. If you artificially raise the value of the money supply, no matter what the rationalization for such an action, and GDP doesn't change that is instant inflation if not hyper-inflation.

[jmw]

How? M2 is a 1000x if not 2 or 3000x what it was back then. GDP is about the same (and of course growing).

When a pegged currency is changed (an RV) it is to bring the value of M2 into line with the economy, to make the exchange rate of the two currencies match the ratio of the values of the two underlying economies.

Correct and very well said!...some people only want to compare what the rate used to be to what the rate is now without looking at or comparing the fundamentals of the economy...specifically money supply and GDP....