Kap's Arabic Translator looks at "Dinar will not be used in oil sales" article 1/9/2012

[Saved]

I sent my Arabic Translator friend the recent article titled...

"Iraq Dinar will not be used in oil sales - 08-01-2012"

Here is his comments...

Hi Kap,

Did take a look at the article (sorry for the delay) and they are basically saying that they are not going to use the Dinar to sell Iraqi Oil because countries that are purchasing oil from Iraq could use the fact that it is being sold in Dinars to get the oil very cheaply and leverage an unfair advantage in the market. They are worried that these countries are going to stockpile Dinars and then use them to buy the oil. This makes complete sense to me, because if you have a worthless Dinar at an exchange rate of 1 to 1170, then why would I pay for oil in Dollars when I can go pay $1,000 for example and get about a million Dinars and then save money by using that Dinar that I got so cheaply to buy much more oil than I would be able to using Dollars?

It works out to Iraq's advantage also because the Dollar is so much stronger and worth much more to them, so it sounds better saying that we had 2 billion dollars in oil sales than 2 billion dinars in sales and so converting 2 billion dollars into dinars gives you a ton more Dinars.

The rest of the article talks about the plan to remove the 3 zeros and how they are working on it and that it will be beneficial to them (all the same stuff we already know about the 3 zeros plan).

Then the last part of the article talks about how the IMF asked them to reduce their budget from 115 billion dollars to 100 billion because they already anticipate a 14 billion dollar deficit due to the lower price of oil expected, and so that would eliminate any deficit and leave them with at least an extra 1 billion dollars. Then, they even mention what I said earlier about why the Iraqi government doesn't like to deal in Dinars because of their low value.

Overall, an informative article but nothing that we didn't already know really. Will continue to hope that they get this done soon, truly for their sake!

--------------

I want to comment on this...

Why would the CBI put this article out unless they are revaluing the currency? This to me is just more confirmation we are correct that a revaluation is, infact, the plan. Any other idea such as a redenomination, or LOP would not warrent such an article.

[captl1]

Great article thanks for the post. Just helps confirm my opinion on the outcome...Great Job!

[lotsofdinar]

Sorry, I can't see anything in this article that would suggest it has anything to do with an RV. Could you explain it to me?

[tim5400]

lets do this rv by the 15th......so we dont waste another year listening to the children of iraq arguing between themselves

[mrref]

Sorry, I can't see anything in this article that would suggest it has anything to do with an RV. Could you explain it to me?

Read it again and if you still don't understand what you are reading then read it again..

[simon8957]

lotsofdinar this is my take..right or wrong. There has been some question for sometime if oil contracts were being paid in dinar or US dollars. The fact they are paying in dollars is potentialy good news, as well as them coming out and saying they don't like to trade in dinars. Eventually they will have to switch to dinars if they wish to become a power house in the middle east. However for them to become this powerhouse if you will they will need to RV....hope that help a bit...cheers to ya!!!

[socko]

I THOUGHT I READ AWHILE BACK IN ONE OF SCOOTERS POST... THAT ALL THE WORLDS OIL USE BOUGHT AND SOLD IN US DOLLARS. IF THIS IS TRUE THAN OTHER COUNTRIES CAN NOT STOCK PILE DINAR. JUST SAYING

[lotsofdinar]

Yeah. All oil is sold in U.S. dollars. That's why this didn't make any sense.

[only 1-25k dinar]

Now, I am confused.....I have heard the reason the US would buy back our invested dinar is to use it to purchase our oil?

Otherwise, will they have to return it to Iraq and then Iraq will have to have the money to buy it all back??? Yes, I am now

very confused, not just confused.... :blink:

[lotsofdinar]

Only 1, welcome to the Dinar zone. lol

[only 1-25k dinar]

Man lots, I guess so.....just when I think I understand something, it changes around and It feels like I am going in circles - ugh

[JayP]

Now, I am confused.....I have heard the reason the US would buy back our invested dinar is to use it to purchase our oil?

Otherwise, will they have to return it to Iraq and then Iraq will have to have the money to buy it all back??? Yes, I am now

very confused, not just confused.... :blink:

You hit the nail on the head here. This is why that theory is nothing more than just that... a theory or rumor at best. That is something that has been said for years, but no proof has ever been brought forward to show that to be correct or factual, and this article only supports that rumor was not true. In my opinion, there is nothing here to show that a RV is required, or will happen. What I take from this article is that they were asked to reduce their budget by 15 billion based on oil price speculation, and if it should go down as expected, they would have a budget surplus this way.

It is said that the article discusses the deletion of the 3 zeros, which is a redenomination. A redenomination would contract the money supply, and bring the value of the Dinar somewhere near the USD. This makes sense if the article then goes on to mention how they do not like to use the Dinar due to the current value. If they redenominated, that would bring a new and higher rate to the Dinar. In either case though, they will continue to use the USD for Oil sales though in my opinion.

The important thing to note here, is that they specifically talk about the deletion of the zeros which is a redenomination, not a revaluation. They make no mention of an RV, or any implication of that in this article.

[only 1-25k dinar]

Thanks J, so you believe in your opinion of course, that it is going to RD instead of RV?

[jupitergirl]

You hit the nail on the head here. This is why that theory is nothing more than just that... a theory or rumor at best. That is something that has been said for years, but no proof has ever been brought forward to show that to be correct or factual, and this article only supports that rumor was not true. In my opinion, there is nothing here to show that a RV is required, or will happen. What I take from this article is that they were asked to reduce their budget by 15 billion based on oil price speculation, and if it should go down as expected, they would have a budget surplus this way.

It is said that the article discusses the deletion of the 3 zeros, which is a redenomination. A redenomination would contract the money supply, and bring the value of the Dinar somewhere near the USD. This makes sense if the article then goes on to mention how they do not like to use the Dinar due to the current value. If they redenominated, that would bring a new and higher rate to the Dinar. In either case though, they will continue to use the USD for Oil sales though in my opinion.

The important thing to note here, is that they specifically talk about the deletion of the zeros which is a redenomination, not a revaluation. They make no mention of an RV, or any implication of that in this article.

JayP Question for you. In all the articles I have read I have never seen the word redenomination used by Shabbibi or Saleh. Shabbibi used the term at his presentaion in Washinton D.C. at the COC after being asked about a redenomination. I find that very...curious. Any thoughts?

[JayP]

Thanks J, so you believe in your opinion of course, that it is going to RD instead of RV?

Well, I am glad that you asked that. To be honest, all I can do is hope that they do not Rd, and IF that was to happen, that they would introduce a new rate with the new notes that would do better than break even for us to give us some return on our investment. I am hoping that they will find another way to reduce the supply, or to gradually increase the exchange rate, but who really knows. All I can say for certain though, is what the CBI has been quoted as saying, what the financial indicators show, and what the CBI Annual Bulletins show. It is showing at last check that they have 26.8 Trillion outside of the banks, and that the CBI has stated their desire to redenominate and bring the exchange rate around the dollar. The real question is, will they actually follow through with that. Shabibi seems intent on making that happen, but the Govt of Iraq has stated their concerns with counterfeiting, or corruption in the banking system in that process, so I continue to hope that they do not follow through, or get the cooperation from the govt for those plans.

Keep positive, and keep hoping, but the important thing is to know what to be looking for, or looking at, and not get too caught up in misinterpretations of what the CBI is really saying. It will only make it harder to follow things, and see where we really stand in our investment.

[lotsofdinar]

The problem with interpreting this stuff is that old saying, "If all you have is a hammer, everything looks like a nail." Most folks bought into the Dinar because they were told it was about to revalue, so they interpret every article with that presupposition. But that could be wrong. It's best to read the articles for what they are, rather than what we want them to say. A lot less stressful.

[only 1-25k dinar]

Thank you for this discussion....It is very hard to understand alot of these articles, so I read most of the comments

to see what others opinions of them are. Try very hard to stay objective and not go off in lala land of just reading

into them what I want them to say. I do admit, it is not an easy task!!!

[JayP]

The problem with interpreting this stuff is that old saying, "If all you have is a hammer, everything looks like a nail." Most folks bought into the Dinar because they were told it was about to revalue, so they interpret every article with that presupposition. But that could be wrong. It's best to read the articles for what they are, rather than what we want them to say. A lot less stressful.

Well said!!!

Edited January 10, 2012 by JayP

[JayP]

JayP Question for you. In all the articles I have read I have never seen the word redenomination used by Shabbibi or Saleh. Shabbibi used the term at his presentaion in Washinton D.C. at the COC after being asked about a redenomination. I find that very...curious. Any thoughts?

Hi jupitergirl! sorry.. I responded, but something happened that deleted my response.. Yes, you are correct about that. I do think that they are very careful, especially Shabibi, in what he says. He certainly chooses his words very carefully. One thing that he will say though, is the deletion of the zeros. They have been quite clear about what that process is, regardless of what some other names out there want to tell people. They have specifically stated a 25K dinar will be 25 dinars worth 21 USD, or in more recent articles, that 50K would be 50 dinars worth 43 USD.

Of course, they have also discussed the concerns with the corruption in the banking system, and counterfeiting that may occur in the process, and I agree that it is a valid concern. This is one thing that I hope will help them re-think these plans, or they find the need to gradually increase the rate in the short term based on their needs, so that regardless of the outcome, we will still come out ahead.

[jupitergirl]

Hi jupitergirl! sorry.. I responded, but something happened that deleted my response.. Yes, you are correct about that. I do think that they are very careful, especially Shabibi, in what he says. He certainly chooses his words very carefully. One thing that he will say though, is the deletion of the zeros. They have been quite clear about what that process is, regardless of what some other names out there want to tell people. They have specifically stated a 25K dinar will be 25 dinars worth 21 USD, or in more recent articles, that 50K would be 50 dinars worth 43 USD.

Of course, they have also discussed the concerns with the corruption in the banking system, and counterfeiting that may occur in the process, and I agree that it is a valid concern. This is one thing that I hope will help them re-think these plans, or they find the need to gradually increase the rate in the short term based on their needs, so that regardless of the outcome, we will still come out ahead.

Thanks for your comments! Going a bit off topic here.....With the growth of reserves at the cbi in recent years don't you think Shabs could use some of that money to retire a good bit of dinar at current rates? 60 billion dollars is more than twice the value of the dinar outstanding ( i have read that all dinar outstanding is worth 26 bill usd ). They could atleast double the value of the currency with cover right? Thoughts....

[JayP]

Thanks for your comments! Going a bit off topic here.....With the growth of reserves at the cbi in recent years don't you think Shabs could use some of that money to retire a good bit of dinar at current rates? 60 billion dollars is more than twice the value of the dinar outstanding ( i have read that all dinar outstanding is worth 26 bill usd ). They could atleast double the value of the currency with cover right? Thoughts....

Excellent point Jupitergirl! Yes, they recently announced their reserves to be 60B. At last check the supply was 26.8T which would be about 23B, so yes they could double and still fall within the 60B. They have repeatedly stated they have the strongest currency in the region, and that they desire to be that way. This is because of this reason that they are backed 100% by their foreign exchange reserves. If they doubled in value, they would still be within that 60 with room still in there!

[DEESEAN]

A little help here..... Wouldn't make more sense to RV at 1 to 1 since "oil sales are in US". If there is no RV won't Iraq be completely taken over by the dollar since the bulk of their economy is backed by oil. probably a dum question but it makes sense to me.