Thread: Iraq/Dinar News. 09/05 to 01/14/07

Adster is usually on in the early a.m. where I'm at EST...Mike is in my time zone with no set 'popping' in schedule! lol!

WHAT HAPPENED AT THAT PRESS CONFERENCE TODAY GOSH DARN-IT!

What is this IMF meeting about today?
Can somebody translate this into English:

August 2, 2006
Country: Iraq

Title: First and Second Reviews Under the Stand-By Arrangement, Financing Assurances Review, and Request for Waiver of Nonobservance and Applicability of Performance Criteria.

Hi,

As there is not much going on present I thought give us something to chat a bout especially those on the other side of the water when you wake up.

Do we all still think the dinar will peg at sometime in the future by one method or another, is this a cast iron certainty, I know we have discussed all the reasons why etc and that it would be desvestating for the Iraqi people if it does not and the longer it goes on the worse their inflation will become.

Forgive me, I am just having a negative day and am thinking the worst, just had a look at my pile of dinar and thought this is still worth peanuts but tomorrow or next week or next month it could be worth megabucks.

Very hard on the brain.

Fortune
Iraq: No deposit, no returns
Tuesday August 1, 3:49 pm ET
By Abrahm Lustgarten


It took two pickup trucks to cart away $950,000 when armed robbers looted the state-owned Rafidain Bank in Baghdad in July.
With the Iraqi currency trading at 1,477 dinars to the dollar and inflation running at 53%, more and more cash is needed to make ends meet as the three-year-old war grinds on. Some banks, such as the Iraq Middle East Investment Bank, have also experienced a cash-flow problem as depositors either leave the country or lose confidence in the safety of their money.

Still, the dinar, once valued at about $3, has remained relatively stable since it was reissued without Saddam Hussein's portrait in 2003.

"The macroeconomic framework has held together well, despite serious strains on the broader environment," says Ahmed Saeed, the U.S. Treasury's deputy assistant secretary for the Middle East. "Not to say that things are perfect."

The Iraqi stock exchange now lists 96 companies. Registered businesses have more than quadrupled since 2003. And oil production, the pillar of Iraq's economy, jumped 8% in June, to 2.2 million barrels a day, the highest level in almost two years.

I edited the post and removed the last statement, but for you that want to read it its in the link below! - Radz

http://biz.yahoo.com/hftn/060801/080...2603.html?.v=1

it appears that "yahoo" news is slightly behind the power curve and posting old info IMO

Yes, i was about to delete it after i posted it. Cause its basically only old news! Sorry

"Why Peg?
The reasons to peg a currency are linked to stability. Especially in today's developing nations, a country may decide to peg its currency to create a stable atmosphere for foreign investment. With a peg the investor will always know what his/her investment value is, and therefore will not have to worry about daily fluctuations. A pegged currency can also help to lower inflation rates and generate demand, which results from greater confidence in the stability of the currency.

Fixed regimes, however, can often lead to severe financial crises since a peg is difficult to maintain in the long run. This was seen in the Mexican (1995), Asian and Russian (1997) financial crises: an attempt to maintain a high value of the local currency to the peg resulted in the currencies eventually becoming overvalued. This meant that the governments could no longer meet the demands to convert the local currency into the foreign currency at the pegged rate. With speculation and panic, investors scrambled to get out their money and convert it into foreign currency before the local currency was devalued against the peg; foreign reserve supplies eventually became depleted. In Mexico's case, the government was forced to devalue the peso by 30%. In Thailand, the government eventually had to allow the currency to float, and by the end of 1997, the bhat had lost its value by 50% as the market's demand and supply readjusted the value of the local currency.

Countries with pegs are often associated with having unsophisticated capital markets and weak regulating institutions. The peg is therefore there to help create stability in such an environment. It takes a stronger system as well as a mature market to maintain a float. When a country is forced to devalue its currency, it is also required to proceed with some form of economic reform, like implementing greater transparency, in an effort to strengthen its financial institutions.

Some governments may choose to have a "floating," or "crawling" peg, whereby the government reassesses the value of the peg periodically and then changes the peg rate accordingly. Usually the change is devaluation, but one that is controlled so that market panic is avoided. This method is often used in the transition from a peg to a floating regime, and it allows the government to "save face" by not being forced to devalue in an uncontrollable crisis.

Although the peg has worked in creating global trade and monetary stability, it was used only at a time when all the major economies were a part of it. And while a floating regime is not without its flaws, it has proven to be a more efficient means of determining the long term value of a currency and creating equilibrium in the international market."
http://www.investopedia.com/articles/03/020603.asp

Based off of this, would a "high value" be considered $1.12? Especially compared to some of the neighboring, oil producing countries to Iraq that have even higher values?

The political stability, despite improving yet slow than many Govts would had wished for, is a matter of greater concern at the current state of events surrounding that region. The value would arrive with each passing day as well as each dying day for locals getting killed by bombs and not by bills of IDs...

This is a war torn country unlike that of Kuwait and Afghanistan... here is a recovery facing odds at all fronts and especially from within and so long as the insurgents are hanging around and not completely eliminated, we have again...Iran and Syria with Al Qaeda looming around, the situatiion of Iraq is still precarious, let alone a prosperous outlook in the near future as pretty remote.... the struggle and success is gaining but slow may just be an understatement to snailspeed!



There you are...better polish that car you have in the garage.... it has a better outlook I'm sure esp. with one of value....


Perfect Investment Polishing Slick cars....

very well put Yogi....this country is hard to figure out.....all you see daily by the news media are the killings,bombings etc. ....there is more in the background going on then that...just isn't reported as often because it does'nt make for "entertaining" news....still,progress is being made...although as u said at a snails speed.....GO DINARS...Pat

BAGHDAD, Aug 2 (Reuters) - Iraq's central bank offers a beacon of stability in a country on the brink of civil war, but the governor is still forced to use safe houses for meetings with guests too scared to visit his headquarters downtown.

Sinan al-Shabibi makes light of the bank's location a few blocks from Haifa Street, one of the most dangerous places in Baghdad. But many prefer to avoid the narrow road that leads to the bank, fearing it is too easy for potential kidnappers to block.

"It is very difficult. In many cases we see a lot of people outside. We designate a house or something like that and see them," he told Reuters in a recent interview in his third floor office, overlooking an internal courtyard.

The central bank is on Rasheed Street, long Baghdad's financial centre, and next to its old headquarters, badly damaged during the 2003 U.S.-led invasion to topple Saddam Hussein and from which his son Qusay allegedly stole $1 billion on the eve of war.

Approached through a bustling market, the bank remains in the heart of the city, in contrast to most government operations which have moved to the heavily fortified Green Zone on the other side of the Tigris river.

"It is very difficult to work somewhere else. All the banks are here and all the staff. We can always have alternative offices, but it is better to be with the staff of the bank," said Shabibi, who spent 11 years at the United Nations and was Iraqi Minister of Planning from 1977 to 1980.

The guardian of Iraq's new currency, the central bank was re- created by U.S. occupiers in the image of a modern institution with its independence enshrined in law.

NEW APPROACH

It now conducts daily foreign currency auctions, in which the Iraqi dinar has maintained striking stability at around 1,475 dinar to the dollar despite an Iraqi inflation rate of 52.5 percent year-on-year in June.

Shabibi says there is no intervention to keep the dinar strong. Nor is there a black market currency price, indicating the official exchange rate reflects real dinar purchasing power.

The very model of a modern monetary policy maker, Shabibi said: "The most important objective of the central bank is the preservation of price stability. That is why we are concerned and monitoring the (inflation) situation."

Interest rates were raised to 12 from 10 percent in July and Shabibi said in the interview further action might be needed.

All this marks a sea change from the mismanagement the central bank endured under Saddam, whose government used its overdraft at the bank to print money while saddling it with debts that were never paid.

Shabibi said a recent audit of the bank by accountants Ernst and Young, which has not been published yet, gave it a clean bill of health from corruption, but exposed the costs of years of abuse.

"It opened our eyes to what kind of losses we had in operations and to losses from outside our operations, which were put on our balance sheet, and that is not fair," he said.

The same treatment was meted out to state-owned lenders Rasheed Bank and Rafidian Bank, which the central bank must now restructure in cooperation with the ministry of finance.

Shabibi said changes to create the healthy banking system needed for economic progress in Iraq would happen soon.

But he declined to be more specific, displaying a gift for sidestepping questions that he claimed to have learned from the former chairman of the Federal Reserve.

"We had some technical assistance from Alan Greenspan in being vague," he said.

http://www.alertnet.org/thenews/newsdesk/L02107786.htm