Core inflation in Iraq was falling to 7.3% on an annual basis in September

[patriotic party girl]

17/10/2011 | (Voice of Iraq) - (Reuters) central bank official said on Monday that Iraq's core annual inflation rate fell to 7.3 percent in September from 7.6 percent in August. This decline is due mainly to falling home prices by the announcement of a government project with Hanwha Engineering & Construction, South Korea would cost $ 7.3 billion to build 100 thousand apartments in the context of a wider plan to build a million homes. The appearance of Qasim, deputy central bank governor, told Reuters by telephone "gave the government announced a project to build a million houses impression occurrence of a significant change in the housing market. " Kassem said that inflation also declined because of falling import prices and transportation costs. And excluded from core inflation in fuel costs. Iraq is trying to slowly rebuild its economy with recovering from decades of war and sanctions. is dominated by oil production on the economy and accounts for about 95 percent of government revenue. said Rafie al-Issawi, Minister of Finance this month that Iraq aims to keep inflation at five per percent in 2012. The Central Bureau of Statistics in Iraq calculates the rate of inflation.

http://www.sotaliraq.com/business.php?id=4358

[jas428]

So everything we've heard about inflation increasing and thus encouraging the RV has just been de-bunked. It actually decreased this month!

[patriotic party girl]

So everything we've heard about inflation increasing and thus encouraging the RV has just been de-bunked. It actually decreased this month!

I just don,t know what to think anymore

[VIZIOIRAQI]

Core annual inflation rate fell to 7.3 percent in September from 7.6 percent in August

17/10/2011 | (Voice of Iraq) - (Reuters) central bank official said on Monday that Iraq's core annual inflation rate fell to 7.3 percent in September from 7.6 percent in August. This decline is due mainly to falling home prices by the announcement of a government project with Hanwha Engineering & Construction, South Korea would cost $ 7.3 billion to build 100 thousand apartments in the context of a wider plan to build a million homes. The appearance of Qasim, deputy central bank governor, told Reuters by telephone "gave the government announced a project to build a million houses impression occurrence of a significant change in the housing market. " Kassem said that inflation also declined because of falling import prices and transportation costs. And excluded from core inflation in fuel costs. Iraq is trying to slowly rebuild its economy with recovering from decades of war and sanctions. is dominated by oil production on the economy and accounts for about 95 percent of government revenue. said Rafie al-Issawi, Minister of Finance this month that Iraq aims to keep inflation at five per percent in 2012. The Central Bureau of Statistics in Iraq calculates the rate of inflation.

http://translate.goo...php%3Fid%3D4358

[Perspective2011]

Even more of a reason NOT to LOP.

[mrex]

This is good news. As Iraq continues to buy back more of it's currency and less and less currency exists in circulation, inflation is bound to decrease. This could all be in preparation for an RV.

[dhardage]

This is good news. As Iraq continues to buy back more of it's currency and less and less currency exists in circulation, inflation is bound to decrease. This could all be in preparation for an RV.

Ok, now I am confused (again). I remember Adam saying that inflation was our friend and as inflation rose, we were getting closer to the RV. Are you saying that a decreasing inflation rate brings us closer? Anyone know which is correct?

[Dalite]

This is good news. As Iraq continues to buy back more of it's currency and less and less currency exists in circulation, inflation is bound to decrease. This could all be in preparation for an RV.

That may be all well and good, if:

If Iraq was buying back more of it's currency, it would have to use another currency to make the purchase.

The other currency would come from Iraq's foreign reserves

The foreign reserves would shrink in proportion to the amount of dinar being purchased.

The amount of Dinar in circulation would shrink in proportion to the shrinking of the foreign reserves.

Neither are doing so. Both foreign reserves and dinar in circulation are increasing.

Maybe you can help us out a little here.

The Foreign Reserves are GROWING; not shrinking.

How can they use foreign reserves to buy back dinar and have the foreign reserves grow.

Ok, now I am confused (again). I remember Adam saying that inflation was our friend and as inflation rose, we were getting closer to the RV. Are you saying that a decreasing inflation rate brings us closer? Anyone know which is correct?

Morning dh,

Inflation is good (for us) if it goes above 10% and takes the plan to RD off the table.

Rising inflation may force minor adjustments to the exchange rate.

Those two points are backed by historical data.

Beyond that is speculation.

For a redenomination to be successful, the country must get hyperinflation under control (Iraq has) and show a history of keeping it below double digits (iraq has).

Reducing inflation further below the danger zone, if anything, makes an RD more of a possibility; if it makes it through Parliament.

We continue to watch; and wait.

[dhardage]

That may be all well and good, if:

If Iraq was buying back more of it's currency, it would have to use another currency to make the purchase.

The other currency would come from Iraq's foreign reserves

The foreign reserves would shrink in proportion to the amount of dinar being purchased.

The amount of Dinar in circulation would shrink in proportion to the shrinking of the foreign reserves.

Neither are doing so. Both foreign reserves and dinar in circulation are increasing.

Maybe you can help us out a little here.

The Foreign Reserves are GROWING; not shrinking.

How can they use foreign reserves to buy back dinar and have the foreign reserves grow.

Morning dh,

Inflation is good (for us) if it goes above 10% and takes the plan to RD off the table.

Rising inflation may force minor adjustments to the exchange rate.

Those two points are backed by historical data.

Beyond that is speculation.

For a redenomination to be successful, the country must get hyperinflation under control (Iraq has) and show a history of keeping it below double digits (iraq has).

Reducing inflation further below the danger zone, if anything, makes an RD more of a possibility; if it makes it through Parliament.

We continue to watch; and wait.

THANKS Dalite!!

[Darin]

That may be all well and good, if:

If Iraq was buying back more of it's currency, it would have to use another currency to make the purchase.

The other currency would come from Iraq's foreign reserves

The foreign reserves would shrink in proportion to the amount of dinar being purchased.

The amount of Dinar in circulation would shrink in proportion to the shrinking of the foreign reserves.

Neither are doing so. Both foreign reserves and dinar in circulation are increasing.

Maybe you can help us out a little here.

The Foreign Reserves are GROWING; not shrinking.

How can they use foreign reserves to buy back dinar and have the foreign reserves grow.

Morning dh,

Inflation is good (for us) if it goes above 10% and takes the plan to RD off the table.

Rising inflation may force minor adjustments to the exchange rate.

Those two points are backed by historical data.

Beyond that is speculation.

For a redenomination to be successful, the country must get hyperinflation under control (Iraq has) and show a history of keeping it below double digits (iraq has).

Reducing inflation further below the danger zone, if anything, makes an RD more of a possibility; if it makes it through Parliament.

We continue to watch; and wait.

I'm going to represent a simple equatoin here to help create a visual:

M = Money Supply

E = Exchange Rate

R = Foreign Cash Reserves

M*E=R

Using simple #s, I'll put in an example:

50T(M)*0.001(E) = $50B®

M & R are increasing because E (Exchange rate) is remaining constant.

But, what if you keep M (Money Supply) constant & R (Foreign cash reserves) is increasing? What happens to E?

E would increase......

For example 50T(M)*x(E)=$100B ®

E would have to equal 0.002 (Exchange rate)

So, if M (Money Supply) & R (Reserves) have been increasing over the years.... Why do they suppress the appreciation of the exchange rate? In fact, it has remained at 1170 for quite some time. All changes have been very minor prior to that as well.

Has their GDP not grown since the rate changed to 1170?

Has their production not increased since than? I know that Crude exports have gone up.

What about the fact that the dollar has lost value over that period of time & will continue to do so?

Which leads me to my own theory:

M (Money Supply) is manipulated to maintain a balance of the equation. 60T would equal 60B, 70T would equal 70B & so forth. (Note: T = trillion, B = billion)

All while maintaining E as a constant.

They simply may have an account, which they can deposit or withdraw IQD which becomes an increase or decrease of liabilities. If their reserves decrease, they with draw IQD from the account reducing M (Money Supply). If their reserves increase, they deposit IQD... All this would simply be done to maintain a stable rate of exchange.

Okay - here is another interesting thing to think about...

6.38 Trillion - was the initial release of issued currency. 2 Trillion allocated to reserves. 1:1 Exchange from Old regime to the N-IQD. 150:1 from the Swiss

Articles state they've reached 31 trillion in circulation present day. (31T - 6.38T = 24.62) In the past 7 years, they've printed @ minimum 24.62 Trillion to let their money supply expand to 31. This does not include exchanging old soiled bills for fresh bills.. (Which would likely be a necessity over the span of 7 years). 24.62/7 = 3.517T of new currency issued on top of what may be required for exchange of soiled for fresh.

Now, inflation has dropped & remained pretty low... Which means a lot of the expansion to their money supply was based upon something they could clearly back up 100% with their current exchange rate at the time. Usually the money supply expands when inflation is on the rise or running rampant, but in this scenario, inflation is low yet they continue to expand their money supply. (Well, at least this is how the books represent it..) So, my question is, why? Why expand something that you know will cause problems when you could simply increase the value. Why do they wish to maintain a 1170 rate for so long?

[Dalite]

Darin,

Currently, reserves are increasing, and exchange rate is not. Reserves have increased at least 8 billion USD this year to make them back the exchange rate 110%.

The currency auctions is the account they use to maintain the exchange rate and to keep the inflation low. If they had a slush fund, the balance sheet would show wild swings between circulation, and vault cash, which currently equal around 30 trillion.

They maintain 1170 to mark time until the country is stable enough to attract long term investors. Most of what is there is oil mercs and other short term soldier of fortune investors. As the security and stability increase and are maintained, the rate can be allowed to rise; unless forced to do so to offset inflation, an then in small incremental raises in value.

Shabibi has always had 2 concerns; inflation and stability/ security.

He can control inflation; it falls in his court.

The GOI has the security and stability responsibilities, and Maliki has no concern for providing either, or raising the value of the dinar.

Until there is stability and security to allow expansion that may warrant an increase in value, we will keep hearing Okie saying It's Done and 'Nuff Said.

How many years has he been saying that already?

[Darin]

Darin,

Currently, reserves are increasing, and exchange rate is not. Reserves have increased at least 8 billion USD this year to make them back the exchange rate 110%.

The currency auctions is the account they use to maintain the exchange rate and to keep the inflation low. If they had a slush fund, the balance sheet would show wild swings between circulation, and vault cash, which currently equal around 30 trillion.

They maintain 1170 to mark time until the country is stable enough to attract long term investors. Most of what is there is oil mercs and other short term soldier of fortune investors. As the security and stability increase and are maintained, the rate can be allowed to rise; unless forced to do so to offset inflation, an then in small incremental raises in value.

Shabibi has always had 2 concerns; inflation and stability/ security.

He can control inflation; it falls in his court.

The GOI has the security and stability responsibilities, and Maliki has no concern for providing either, or raising the value of the dinar.

Until there is stability and security to allow expansion that may warrant an increase in value, we will keep hearing Okie saying It's Done and 'Nuff Said.

How many years has he been saying that already?

The slush fund I'm visualizing would be an anonymous account... Maybe appear as a business account as where money goes in & out all to manipulate the rate. Some sort of tool like this is required to help maintain the exchange rate... This is just a theory.

How would a simple stable currency exchange rate attract long-term investors? I know stability is good, but, what about an exchange rate that continues to appreciate in value? Wouldn't that be more appealing?

I would also argue that security & stability would come with a better economy.. A currency that is showing to be rising in value would help by stimulating the economy. Job creation reduced poverty, unemployment, and instability. The GOI can implement an income tax policy to generate additional revenue... As the new workers begin working, they'll begin spending... Now we can tax items as well (More tax revenue). Now the terroristic organizations are able to recruit less people to work for them as they have a way to support their family. I've read stories how some are so desperate they give up their own life to get paid by these groups..

Reducing that, would be beneficial... So, we're stuck in a catch-22 situation.

Catch-22 because they can't appreciate the exchange rate, because the economy is not ready or able to sustain it. They can't increase production, job growth, GDP, because the they can't successfully get wealth to the people. I think they're waiting to reach that "sweet spot." Where the economy can handle it, while, the security is there.

[Dalite]

The slush fund I'm visualizing would be an anonymous account... Maybe appear as a business account as where money goes in & out all to manipulate the rate. Some sort of tool like this is required to help maintain the exchange rate... This is just a theory.

How would a simple stable currency exchange rate attract long-term investors? I know stability is good, but, what about an exchange rate that continues to appreciate in value? Wouldn't that be more appealing?

I would also argue that security & stability would come with a better economy.. A currency that is showing to be rising in value would help by stimulating the economy. Job creation reduced poverty, unemployment, and instability. The GOI can implement an income tax policy to generate additional revenue... As the new workers begin working, they'll begin spending... Now we can tax items as well (More tax revenue). Now the terroristic organizations are able to recruit less people to work for them as they have a way to support their family. I've read stories how some are so desperate they give up their own life to get paid by these groups..

Reducing that, would be beneficial... So, we're stuck in a catch-22 situation.

Catch-22 because they can't appreciate the exchange rate, because the economy is not ready or able to sustain it. They can't increase production, job growth, GDP, because the they can't successfully get wealth to the people. I think they're waiting to reach that "sweet spot." Where the economy can handle it, while, the security is there.

While I doubt there is a slush fund for that purpose, there is one supposedly setup with the FRBNY to hold the 13 dinar commissions from cash sales and transfers abroad of dinar sold to the CBI For dollars.

A stable exchange rate for currency that is properly valued produces a better environment for future growth than magnifying the bad aspects of past hyperinflation.

Shabibi's plan in parliament is just a means of answering your question by yielding a strong currency with plenty of room to grow in value, while being easier to back, manage, and conduct cash transactions with.

I believe you realized this long ago, and enjoy playing Devil's Advocate; which you do quite well.

That is not meant in a disrespectful way. Your posts show a lot of thought and bring up great questions. But, they mostly reinforce the need that Shabibi feels to ReDenominate.

[Darin]

While I doubt there is a slush fund for that purpose, there is one supposedly setup with the FRBNY to hold the 13 dinar commissions from cash sales and transfers abroad of dinar sold to the CBI For dollars.

A stable exchange rate for currency that is properly valued produces a better environment for future growth than magnifying the bad aspects of past hyperinflation.

Shabibi's plan in parliament is just a means of answering your question by yielding a strong currency with plenty of room to grow in value, while being easier to back, manage, and conduct cash transactions with.

I believe you realized this long ago, and enjoy playing Devil's Advocate; which you do quite well.

That is not meant in a disrespectful way. Your posts show a lot of thought and bring up great questions. But, they mostly reinforce the need that Shabibi feels to ReDenominate.

Your right, I do love the role of Devil's Advocate!

Doesn't really answer why stable is better than a rate that is appreciating.

In a global recession, I may wish to look for safe investments or investments that will yield returns (even if long-term).

I may see an exchange rate as a indication of success. I may also notice that the history of that exchange rate being constant means a slow moving economy.

However, if a currency was appreciating in value, I would assume it is being successful and growing.

A growing or emerging market would be more appealing than a stagnant one. Would you not agree? I would have to assume that a rising currency would indicate success.

Any big company with a close eye on their region will only see a R/D as a monetary illusion. Which it basically is, a revenue-netural event to make their currency more appealing. The only immediate positive impact it will have is to ease cash transactions within the market place when the lower denominations are introduced & released. As the 000s are phased out, the lower denominations will be more dominant. But, will it really decrease the dollarization threat, or worsen it?

USD seems like a safe-haven route in these type of situations... The people know it is accepted everywhere (Even in other countries). They know the market places accept it. And it reduces the headache of having to deal with 3+ different currencies, 3+ different prices, etc. etc.

Long story short: We desire to see one outcome, but we fail to see how it will work correctly in detail.

We hope to not see another outcome: And we don't see how the people benfit, only the banks...

[Dalite]

It's not a mater of stable VS rising.

It is a matter of avoiding adding appreciable value to currency that still carries the remnants of past hyperinflation.

That is like letting the Genie out of the Bottle, then taking an industrial garbage compactor to the bottle, until it's reduced to dust.

Once done, it is impossible to reverse if the affects are negative.

Significantly increasing the value of a highly inflated money supply which is pegged to a relatively stable one does not, and will not produce desirable results.

It becomes a choice between giving the currency strength, removing past negative aspects and prepping the economy for growth VS runaway inflation requiring the need to add more zeros in an attempt to recapture enough purchasing power to keep the currency effective.

A properly valued currency of manageable volume will grow a heck of a lot faster than one that is so bloated and overvalued that not only can it not stay out of it's own way, it is avoided like the plague by the rest of the world while it is an accident looking for a place to happen.

Iraq is not my home, so what helps them isn't expected to help me.

By the same token, I can chose to disregard what would benefit them and only pursue thought processes that produce an outcome that benefits me.

If it helps me, and destroys them, I can still hope for it to happen. The question is, will they help me at their expense

Either way, all I can do is hope. The action part of the process depends on them.

Plus, I like to see the DV community give you plusses for defending something that you already know has a very slim probability of happening.

Everyone loves an underdog.

[Darin]

I love how you so arrogantly believe what you post is 100% fact. And for those that preach re-denomination, I find much humor in how they appear to do so much due diligence in research on articles, stats, etc. Where was this type of mentality before you purchased yourself? I bet they wouldn't be here today if that was the case, right? Maybe, maybe not, can't turn back the hands on a clock to find out for sure.

So when other members ask, "Lopsters, why are you here if you believe it will re-denominate?" They normally give a response... "We believe that after the re-denomination (LOP) that the value of the IQD will appreciate potentially as high as $3.00 or more." This is another knee-slapping mentality I love to see... I would argue that what you hope to see in that result won't happen. Face it, be prepared to lose 40% or more of what you initially invested upon a re-denomination. We paid premiums to receive this exotic currency, we will likely pay premiums to exchange it back to USD. The value of what we hold won't change, but the process of selling it back will create a loss.

If I fully believed that the IQD was going to R/D (1000:1), I would put my holdings on E-bay and recoup as much of my money back as I could. Because you never know, they may just shut down their borders and do what they did in 2004 all over again... How can we rely on currency dealers to exchange IQD after a R/D? Most banks no longer deal with it... Pretty sure we couldn't just fly to that country ourselves as we would be carrying to much. The costs alone would make it not worth the trip.

Inflation pushed their money supply to require the 000s. However, upon the 2004 exchange, they also were able to write off a lot of the old regime IQD because they shut down the borders. The % of actual counterfeit currency was much lower than expected. The old currency was than dipped in red ink & burned in furnaces. It is likely their money supply took a huge drop from this process, even with exchanging old regime for new at 1:1.

Now, the intiial print & release was 6.38 Trillion. 2 Trillion allocated to reserves. Still a pretty high money supply, but no where near the 31 trillion we see in the media today. To reach that figure, they had to print 3.517 Trillion per year & issue it to their local economy. If you were to figure in they had to exchange soiled bills for new bills, they nearly had to print what they did in 2004 each year following. As the money supply expanded, they likely had to print even more to exchange the soiled for new. I would estimate at minimum they were printing 5 Trillion per year to replace soild for fresh & to expand their $ supply.

I would have to argue it would be foolish to flood the market with that much IQD when you know it would only lead to a re-denomination. Unless, they knew they were going to R/D from the start. Would you argue that even in 2004 they knew they were going to have to re-denominate? I bet you wouldn't... Otherwise you would have to admit you were a fool for jumping in on this even from the get-go. How many jumbo jets did it take to ship in those 6.38 Trillion? How much did it cost? How long did it take to ship? How long did it take to print? Pretty sure with 50,000++ boots on the ground, we would have some pretty good rumors of new IQD being flown in, within the recent years.

Now, they've been claiming R/D as early as 2006, but as of recently, they articles become more abundant. For what cause? Suppress speculation? Education campaign? It appears many still are uncertain on what will happen even with the articles.. Since they've been spouting off this RD articles, they have sure done a great job of informing a lot of people using terms like "soon" to make us think it were to happen in the very near immediate future. We hear soon in March, late June, and probably many other times. Guess What!? We're in mid October and waiting to see how this R/D will play out. The CBI may have their plan, but the GOI may have different plans.. Where is the hold-up? Who is our ally?

You can't continue to cry wolf and expect people to believe you every time.... Soon, credibility will be lost and no one will trust you.. I will believe the R/D is official when I see an Official Government Document stating the full details of the plan, process, and date of implementation. Until than, I remain skeptical.

[dhardage]

Dalite.........Darrin..........Do I feel a group hug coming on?

[Dalite]

Dalite.........Darrin..........Do I feel a group hug coming on?

I don't think it would help at this point.

It's like the 26th week after the Sweeps; all reruns.

Are you keeping the Blender ready?

[dhardage]

I don't think it would help at this point.

It's like the 26th week after the Sweeps; all reruns.

Are you keeping the Blender ready?

ABSOLUTELY!!!! *Hands Dalite a perfect Margarita, with perhaps a bit too much tequila, and puts a red umbrella in it*