Exchange Rate Will Increase

[Stalyn]

An alternative to the flexible exchange rate policy might have been the adoption, at least initially, of a fixed exchange rate managed through a currency board. Postwar Bosnia and Montenegro both have stable currencies today, thanks to currency boards linked to the euro. Iraq could have established one with the dinar linked to the dollar, the euro, or an index based on both. This would have required considerable hard currency reserves, perhaps unrealistic amounts under the circumstances. Several considerations determine the effectiveness of the nominal exchange rate in dealing with real shocks. As a general rule, movements in the nominal exchange rate translate into changes in the real exchange rate only if real wages are flexible and if the pass-through of exchange rate movements into domestic prices and wages are low. These are conditions likely to prevail in Iraq as reconstruction proceeds.

[Stalyn]

I don't see why Iraq is at risk of hyperinflation. Hyperinflation (weimer style, or argentine style) usually occurs when a government spends more than it takes in, and runs the printing presses (borrows from the central bank) to make up the difference. As inflation accelerates, the government has to run the presses faster and faster to continue to fill its coffers. Iraq should not have that problem -- higher oil revenues = higher external reserves, so any domestic money creation ought to be backed by a solid external asset (it won't be printing more dinars and thus spreading the same set of dollar reserves ever thinner). The budget should be fully funded out of revenue/ aid. that should limit the risk of hyper-inflation, as it is normally defined. I do think there is a risk that higher than expected oil revenues will lead to a real appreciation of the currency.

[danpeg]

Agreed. However if there is no security, there will be no oil revenues and Iraq may choose to print money in order to pay their current debt and the cost of reconstruction. However if oil revenue is constant and high enough, I see no reason for hyperinflation.

[fsm75]

Agreed. However if there is no security, there will be no oil revenues and Iraq may choose to print money in order to pay their current debt and the cost of reconstruction. However if oil revenue is constant and high enough, I see no reason for hyperinflation.
The good news is many countries are agreeing to significant cuts in Iraq's debt. I think they will refrain from printing more money to handle costs. That would put the country back in the same position and this whole thing would have been for naught.

[Stalyn]

"It is most important to first build a sound economic infrastructure and legal system."

The quantity of base money could be affected only altering the amount of currency in circulation, a very inefficient process given uncertainties over the amount of outstanding currency and the demand for currency. Without an active bond market, the CBI was forced to control the money supply (and indirectly the exchange rate) through its buying and selling of dollars. This resulted in a fairly volatile dinar/dollar rate. Several factors are severely restraining the activities of the state banks. In particular the debt overhang and the attachment risk on assets by creditors are making it impossible for the public sector banks to perform international banking functions. I do believe that the financial sector is way ahead of schedule than what the CPA predicted. Iraq will recover and at a much faster pace seeing that they want a better life. As quality of life improves for the Iraqi people they will spend ten times more than what they are spending right now and appreciation of the Dinar will soar.

[Marilyn]

Nice analysis - I agree, the Central Bank of Iraq is independent and will not become the printing press for the Iraqi government like it was under Saddam.
The CPA was well aware of the monetary problems Iraq was having and made that change along with the currency exchange that was so badly needed, to eliminate the counterfeits and Saddam's ugly mug. CBI governor Shabibi has stated that he does not want a fixed rate nor does he want the "shock therapy" to the finanacial system that the CPA suggested. He may stick to his guns and open with the 1460 and let the market drive it up on it's own.
Not the most popular theory but one I've seen him repeat a few times. He wants "slow, steady growth".
Of course this contradicts my own feelings that it should rightfully open at .31 to restore the Iraqi's to wholeness. I also wonder how much smoke people are blowing in order to slow down the raging dinar train... :confused:

[Geoff]

I believe the CBI will be as independent as the IMF and World Bank allows it to be. Let's not be under any illusions here. Shabibi will do what he's told to do. The Iraqi government (and its people) will take their marching orders from the IMF and WB. Another exercise in social engineering for profit. They will dictate the economy, social policy...you name it. Both the IMF and WB have deplorable histories...Brazil and Haiti being a couple of more recent examples. Corporations profit, people don't. What happens in Iraq with these loan sharks running the show...it's anybody's guess. It would seem to me that a return to prewar value for the dinar would be a fair and sensible thing to do. If the IMF or WB wanted my advice, that's what I'd give them. But I don't expect them to be asking me anytime soon :rolleyes:

[RogerL]

CBI governor Shabibi has stated that he does not want a fixed rate nor does he want the "shock therapy" to the finanacial system that the CPA suggested. He may stick to his guns and open with the 1460 and let the market drive it up on it's own.
...
Of course this contradicts my own feelings that it should rightfully open at .31 to restore the Iraqi's to wholeness.

As much as it pains me to say it, there is evidence that the initial exchange rate will be roughly around that 1460 per US dollar. The reason for this is the country's budget, which was estimated at an exchange rate of 1500:1. Because there's no organized method for taxing its citizens, i.e. no income tax, no IRS-equivalent, etc., the amount the government has to spend is related to their oil revenues which is directly based on the US dollar.

I've seen reports that Iraq takes in somewhere around $8 billion in oil revenues per year. $8 billion at an exchange rate of 1460:1 is equivalent to 11.68 trillion dinars. Since the budget spends most, if not all of that, the 2004 budget is probably somewhere around that amount in dinars. Now set the exchange rate at $.30/dinar, or 3.3 dinars/dollar. That 11.68 trillion is now only 26.4 billion dinars derived from that oil revenue. That's a factor of over 400:1 reduction in available money to spend on the budget. Either the government would have to borrow like crazy to cover that enormous budget deficit or it would have to inflate the currency, neither a very appealing approach.

How would they fix it? That's a very complicated question that I don't have the answers to. They could try to reduce their foreign debt and encourage foreign investment in Iraq, which would in turn reduce their budget outlays. Loans from the IMF are another possibility. One big solution would be to introduce an income tax, which would help to transfer their budget from a dollar-based revenue base to a dinar-based one. But who knows what's best?

My guess is that they'll introduce that 1460:1 rate and allow supply and demand forces to solve their problems for them. As the economy grows at high double-digit rates, I suspect S&D issues will in turn strengthen the dinar at a fairly rapid clip.

I really hope I'm wrong. Like everybody else, I'd love to see that $.30/dinar rate. Fortunately, there's evidence that could happen, too. I think the dinar is undervalued at the moment since Iraqis use their dollars to buy foreign goods, things they couldn't afford if they tried to pay with dinars (not that that's legal yet). Their standard of living shouldn't be a mere $300 a year based on their natural resources while their neighbors live with $30-40,000 a year incomes. The major stumbling block to a $.30/dinar rate is the budget. I hope they creatively find ways to fix that problem.

[Henry]

This is complicated, but, isn't it true that the more the dinar is worth against the dollar, the more dollars the US will have to pay to Iraq for certain trade items? Won't this bring in much, much more dollars?

[ROB5891]

hey henry, a co-worker of mine just told me that he heard on a news station that the dinar will be replaced the euro or the dollar. HAS ANYONE HEARD OF THIS?

[RogerL]

This is complicated, but, isn't it true that the more the dinar is worth against the dollar, the more dollars the US will have to pay to Iraq for certain trade items? Won't this bring in much, much more dollars?

All else being equal, yes, since it makes Iraqi products more expensive to Americans. However, things not all being equal, the answer is maybe.

Oil is Iraq's major export and all trading in oil is done in US dollars, not in dinars. At current rates, a barrel of oil getting $40 can be converted to roughly 58,000 dinars. With a higher exchange rate, you get far fewer dinars per dollar. If oil had been traded in Iraqi dinars, then they'd get a lot more dollars. But since the price is set in dollars, they don't get more.

For other products like dates, demand is elastic. A strong dinar means expensive dates. Higher prices usually mean fewer dates sold. Whether that means more dollars depends on how elastic the demand is.

Countries looking to export more usually prefer their currencies to be weaker. Importing countries prefer a strong currency. The effect for Iraq would be that Iraqis can afford modern, Western products a lot more. You'll see a lot of people with even more cell phones, cars, etc. But the actual loss in oil revenue could offset much of that. Iraq would have to offset that loss in oil revenue by increasing production, something they find very difficult to do right now. At the moment, every barrel of oil produced is quickly sold since demand is outstripping supply.

[Henry]

No, haven't heard anything like this, and I wouldn't go any further with this, just hearsay.

[RogerL]

hey henry, a co-worker of mine just told me that he heard on a news station that the dinar will be replaced the euro or the dollar. HAS ANYONE HEARD OF THIS?

While anything is possible, it's not likely to happen. It's not a good idea for a country to use the currency of countries with very dissimilar economies. America and Europe are very big net oil importers while Iraq is a big net oil exporter. It would make more sense for Iraq to switch to the Kuwaiti dinar or the Saudi riyal than to the dollar or Euro, though that's not likely to happen either.

[Henry]

RogerL, what do you think about the dinar opening at what it closed before the overthrow of Hussien? Wouldn't it seem fair to the Iraqi citizens to give them back what they had before the US got there?

[RogerL]

RogerL, what do you think about the dinar opening at what it closed before the overthrow of Hussien? Wouldn't it seem fair to the Iraqi citizens to give them back what they had before the US got there?

It would certainly be more fair to the Iraqi people to do so, but there's no guarantee. When the coalition went into Iraq, they discovered that the infrastructure was far worse than they had imagined before they arrived. Rebuilding isn't quite what I'd call what's going on in Iraq right now. Building is more like it. The brief war didn't destroy that much.

Because conditions were far worse than thought, that $.31 or $.33 (whichever it was) rate that existed before the invasion was far better than the dinar deserved.

Right now, I'd say that economic conditions are better than before the invasion. Power generation is higher, more schools are built, all hospitals are running, and pay is much higher than before. All this is encouraging. But is it good enough to warrant $.31/dinar?

Now the politicians and bankers know all this. I'm sure they'll try as hard as they can to restore the wealth of the Iraqi people, but they have to face economic realities. If they can find a way, they will. In the long run, I think it's a virtual certainty Iraqis, and in turn the dinar, will do well. To me, it's just a matter of how long. Can Shabibi, Allawi, and the finance minister work miracles? Let's hope. <fingers crossed>

[fsm75]

hey henry, a co-worker of mine just told me that he heard on a news station that the dinar will be replaced the euro or the dollar. HAS ANYONE HEARD OF THIS?
While it should be considered, the idea that Iraq's goverment would change the currency should also be sensibly analyzed. It does not make sense that Iraq would adopt another currency. Let's consider it with minimal analysis:

1) Why would the country spend millions (115M) to create a currency they want discard?

2) Iraq is trying to build foreign investors' faith in their system. Another currency change would undermine their efforts. Besides, the dinar has increased considerably in value in the last few months alone. What reason do they have to revamp the currency? They need to show stability. Ask yourself, does changing currency promote a stable image? No.

[Henry]

It would certainly be more fair to the Iraqi people to do so, but there's no guarantee. When the coalition went into Iraq, they discovered that the infrastructure was far worse than they had imagined before they arrived. Rebuilding isn't quite what I'd call what's going on in Iraq right now. Building is more like it. The brief war didn't destroy that much.

Because conditions were far worse than thought, that $.31 or $.33 (whichever it was) rate that existed before the invasion was far better than the dinar deserved.

Right now, I'd say that economic conditions are better than before the invasion. Power generation is higher, more schools are built, all hospitals are running, and pay is much higher than before. All this is encouraging. But is it good enough to warrant $.31/dinar?

Now the politicians and bankers know all this. I'm sure they'll try as hard as they can to restore the wealth of the Iraqi people, but they have to face economic realities. If they can find a way, they will. In the long run, I think it's a virtual certainty Iraqis, and in turn the dinar, will do well. To me, it's just a matter of how long. Can Shabibi, Allawi, and the finance minister work miracles? Let's hope. <fingers crossed>
Thanks RogerL. Your post seem to be some of the most knowledgeable I have read. You must have stayed in a Holiday Inn Express last night. No, really, thanks for your input!

[Jared]

hey henry, a co-worker of mine just told me that he heard on a news station that the dinar will be replaced the euro or the dollar. HAS ANYONE HEARD OF THIS?

I did hear it on a news break, but it was not to replace the dinar, it was being looked at to peg the dinar against to create a market value. They are looking at many options right now and pegging the dollar or euro or a combination of those have been talked about for several months now.

Jared :wave:

[Jared]

Right now, I'd say that economic conditions are better than before the invasion. Power generation is higher, more schools are built, all hospitals are running, and pay is much higher than before. All this is encouraging. But is it good enough to warrant $.31/dinar?


I think it is strong enough to warrant .31/dinar. Pre invasion it was not worth that amount when you consider 56% of Iraqi dinars were counterfeit. That was something known for years which also made the dinar slide down. Now with the CBI keeping tabs on dinars made, and a much more secure dinar they should be able to move forward. With real leadership there is no reason why their economy shouldn't flourish. They were the date leader before '91 having almost a 90% lock on the date industry. It will take some years for that to build back up as well as their other agricultural goods but I think they've got a good foundation to start on. It all just takes time......

Jared :wave:

[jcsaves]

Hi Jared,

More good insight. Thanks. We have several people in the office, buying dinar, who always ask me about the latest. Most of what I tell them comes from this forum. Keep feedin us,

Later

[Jerry]

So I'm agreeing with him just for good luck points :D

[InterestedButSkeptical]

While it should be considered, the idea that Iraq's goverment would change the currency should also be sensibly analyzed. It does not make sense that Iraq would adopt another currency. Let's consider it with minimal analysis:

1) Why would the country spend millions (115M) to create a currency they want discard?

2) Iraq is trying to build foreign investors' faith in their system. Another currency change would undermine their efforts. Besides, the dinar has increased considerably in value in the last few months alone. What reason do they have to revamp the currency? They need to show stability. Ask yourself, does changing currency promote a stable image? No.


What about national pride? The new currency is called the "Bremer dinar" throughout the Arab world. When a new Iraqi regime is elected in 2005 (assuming all goes according to plan), they will in all likelihood be Shi'ites. Is no one on the board worried that one of their first official acts might be to issue new currency untainted by what they see as the "occupation" in order to assert and demonstrate for the world Iraq's status as a sovereign nation? The points you raise are completely valid, rationale reasons for not issuing new currency, but what about the more irrational reasons of national pride and identity? And if that happens, will dinar holders outside Iraq be left holding the equivalent of Confederate dollars unless they can somehow find their way back to Iraq to change them out?

Another concern I have (and forgive me if this is stated crudely but it is more of an intuition than a solid reasoned analysis): Surely there must be some postulate of currency law that says that if an appreciation in currency value would make millionaires out of so many holders of that currency, then that appreciation in value will not occur. I mean, we're not talking about a stock here-we're talking about a medium of exchange that is in the hands of millions of people. Isn't there some sort of supply/demand dynamic at work that will prevent the sort of price gains that some on this board are so giddy about (one poster is already thinking out loud about ways to "give back" to Iraq once his ship comes in and he makes his millions--might not want to spend it till you get it, you know what I mean?)? Besides, I read an article (and this was touched on in a previous post) that said that an appreciation in the dinar's value would vastly increase the new government's deficit.

Trust me, I want to believe this will work. Just throwing these thoughts out for other opinions.

[Snook Man]

"I've seen reports that Iraq takes in somewhere around $8 billion in oil revenues per year."

Just did a quick search on the web and found that as of either March or May of this year the export value was 8 billion. Note that figure is for this year. I also found reference to a pre war export level of @ 2.2 Million bbl per day. At todays value that is quite a bit more than 8 billion a year. 32 billion at $40 a bbl, 19.2 at a sustainable level of $24. Wether the Dinar is at 1450 or 1, the value of those exports will remain the same. It's all a matter of perspective.

[InterestedButSkeptical]

how would it increase the goverments deficit? when everyone cashs in there all gona buy homes,cars,etc,,etc,,i think what your trying to do is convince yourself not to spend any money and buy dinars more then your trying to convince us that its not a good idea..lol and there not gona change the currency again..i dont know where that rumor started from but it needs to die out allready plus there is NO such law the kuwaiti dinar is proof of that.

As for the increased deficit if the dinar goes up in value, don't take my word for it:

From "Iraq's Botched Currency Reform," Central Banking 14 (3): 39-45 (February 2004) by Steve Hanke and Matt Sekerke (Johns Hopkins University, Baltimore, Maryland, USA)
at http://www.pwc.com/extweb/newcoweb.nsf/docid/C11698DD3B8DDFFB85256E630069E4A4?OpenDocument:

"The 2004 budget prepared by the Ministry of Finance and the Ministry of Planning does not rely on debt issuance or the CBI (Central Bank of Iraq]'s printing presses. But the budget is highly sensitive to the dinar exchange rate. The 2004 budget is prepared on the assumption that the dinar exchange rate will be 1500 to the dollar. . . . This is an extremely important assumption, because most of the government's revenues are in dollars, and most expenditures are in dinars.

"If the dinar continues to appreciate against the dollar—as it has in recent months due to returning demand for the dinar and the resulting sales of dollars for dinars—the budget balance will deteriorate. If the central bank is not to cover the deficit, how will resulting shortfalls be met?

[AND]...

"Recent movements in the dinar exchange rate have demonstrated the very real nature of the government's foreign exchange risk. Driven higher by speculation in neighbouring countries, the dinar, which floundered at about 2,000 to the dollar when the CPA's currency exchange began in mid-October, zoomed past the budget's 1,500-per-dollar estimate to 1,000 per buck shortly after the Saddam dinar ceased to be legal tender on January 15.

"(The dinar's excursion into the stratosphere was aided, as it were, by an intervention by the central bank on the wrong side of the market, doing much for the credibility of central bank governor Sinan al-Shabibi's "managed float".)

"What sort of damage does this do to the budget? Well, a dinar at 1,200:1 increases the budget deficit by roughly four trillion dinars for each of the next three years, and a 1,000:1 rate opens the annual gaps by about six trillion dinars. Needless to say, these shortfalls will more than exhaust Iraq's present financing sources."

As for changing currency...it's not a rumor (i.e., I don't claim any inside information), it's just a concern...there's a difference. Kuwait has little to do with this situation...no issues of national sovereignty and pride. (And actually, even Kuwait changed its currency after the Gulf War and its liberation--from http://www.e.gov.kw/Default.aspx?pageId=7: "After liberating Kuwait, the fourth issue of Kuwaiti currency was carried out on March 24, 1991, with new and different colors in order to prevent the enemy from using the stolen Kuwaiti banknotes.")

[Blake]

What about national pride? The new currency is called the "Bremer dinar" throughout the Arab world. When a new Iraqi regime is elected in 2005 (assuming all goes according to plan), they will in all likelihood be Shi'ites. Is no one on the board worried that one of their first official acts might be to issue new currency untainted by what they see as the "occupation" in order to assert and demonstrate for the world Iraq's status as a sovereign nation? The points you raise are completely valid, rationale reasons for not issuing new currency, but what about the more irrational reasons of national pride and identity? And if that happens, will dinar holders outside Iraq be left holding the equivalent of Confederate dollars unless they can somehow find their way back to Iraq to change them out? These are all concerns that have been discussed one hundred times over here and at the old T&B site. I don't have time to repeat the thorough discussion we've had countless times, but I'm honestly not worried about that happening. Just stick around a bit, and I think you'll see the amount of information we bring in.
Surely there must be some postulate of currency law that says that if an appreciation in currency value would make millionaires out of so many holders of that currency, then that appreciation in value will not occur. Although the situations are a little different, what would you say to the fact that alot of people who invested in the Kuwaiti Dinar in 1991 made boatloads of money when the currency appreciated from $.06 to $3.40 after Saddamn was ousted?

Besides, I read an article (and this was touched on in a previous post) that said that an appreciation in the dinar's value would vastly increase the new government's deficit.

Trust me, I want to believe this will work. Just throwing these thoughts out for other opinions.We have all read and analyzed that PWC article about a month or 2 ago, trust me we're all on top of this. What the PWC article fails to consider is that most countries hold reserves of foreign currencies as a hedge to prevent such a budget deficit from occurring. As the exchange rate of the dinar increases, Iraq would just exchange their budgets held in dollars to dinar's, very similar to how individuals would.

Jared could explain it better.

[Blake]

If that currency were pegged to something tangible AND valuable, the statement MAY be accurate in some cases. Might you be overlooking the fact that adding a potentially weak currency to an already weak currency would only dilute the currency? No I am not overlooking that fact at all. That is a separate point from what I am discussing.

My explanation is taken from Jared's thorough discussion on the subject about a month ago. It's just what I remember from that. Hopefully, Jared will find this and chime in again to thoroughly explain that point.


I am an attorney, not a currency trader, so of course I would tend to agree that an economist's opinion on the dinar is more valuable than mine. But one thing I have seen through our research is that statements of some economists from esteemed universities such as Yale (DeRosa) have been proven to be inaccurate b/c they comment on an issue using just general rules without having investigated the particular situation in Iraq.


Again, hopefully Jared or RogerL can comment on this...

[kvb]

I should probably stay out of this, but it seems that Notre Dame is very aggressive in attacking other's opininons.

I think I can probably trust what he's saying because he seems knowledgable and an educated experienced currency trader.

I can also believe him because alot of individuals who are overly qualified tend to speak to others who don't quite have the education they have as lesser kind of people and attack them in their thoughts and ideas......


This is a nice way of saying: "NotreDame, I enjoy your insight, input, and knowledge. However I don't enjoy how speak about others."

[InterestedButSkeptical]

Although the situations are a little different, what would you say to the fact that alot of people who invested in the Kuwaiti Dinar in 1991 made boatloads of money when the currency appreciated from $.06 to $3.40 after Saddamn was ousted?


Point well taken. And that seems to be the strongest selling point for this investment. However, Kuwait's dinar was probably at or near $3.40 at the time of the invasion by Iraq (Aug 1990) and Kuwait's fairly intact infrastructure allowed it in relatively short order to rebound back to that level. The Iraq situation in Iraq is 100 times more complex than Kuwait, where the problem was simply one of rebuilding capacity, versus (as it is in Iraq) solving sticky sociological/ethnic/religious/political issues. Better analogies might be the deutschmark or the yen in 1945 (or the Reichsmark in 1918, which became so devalued by the 1920s that people were carting it around in wheelbarrows). I'm not anti-investment here...I just fall into the camp that this is a very long term play--3 years, 5 years, 10 years? And runaway inflation can kill a currency. Look what happen to the Brazilian Real.

People make a lot of the oil reserves but I can point to mineral rich countries in Africa or South America who can't get their act together enough to capitalize on their riches.

We have all read and analyzed that PWC article about a month or 2 ago, trust me we're all on top of this. What the PWC article fails to consider is that most countries hold reserves of foreign currencies as a hedge to prevent such a budget deficit from occurring. As the exchange rate of the dinar increases, Iraq would just exchange their budgets held in dollars to dinar's, very similar to how individuals would.

That doesn't figure. To simply an example: if Iraq has $2 US in reserves , and 1500 dinar in expenses, and the exchange rate is 1500 dinar to 1 dollar, then it can get 3000 dinar of buying power from its two dollars of reserves, and it will have a surplus of 1500 dinar (i.e. 3000 dinar reserves less 1500 dinar expenses). But if the exchange rate goes to say 500 dinar to 1 dollar, then those same 2 dollars buy 1000 dinar, which means a budget deficit of (-500) dinar (1000 dinar reserves less 1500 dinar expenses). In other words, no matter how many dollars you have in your reserve--they won't buy as much dinar-denominated "stuff" if the dinar is rising.

Again, I'm not saying I'm not going to buy any; but if I do I'll put it in a safe deposit box, check the headlines occasionally, and maybe in a decade I'll reap the benefits of the Iraqi Experiment. There seem to be too many pressures on it NOT appreciating rapidly to meet the dreams of those on the board who believe it will be trading at 30 cents/dinar as soon as it goes on world markets. Money-changers and speculators might bid it up but the Amex or Morgan Stanley office down the street isn't going to touch it until it stabilizes, I would think. And the pressure on the Iraq government to keep the value stable at 1500 is substantial, which I think was one point of the PWC article.

[Blake]

Point well taken. And that seems to be the strongest selling point for this investment. However, Kuwait's dinar was probably at or near $3.40 at the time of the invasion by Iraq (Aug 1990) and Kuwait's fairly intact infrastructure allowed it in relatively short order to rebound back to that level. The Iraq situation in Iraq is 100 times more complex than Kuwait, where the problem was simply one of rebuilding capacity, versus (as it is in Iraq) solving sticky sociological/ethnic/religious/political issues. That is why i said the scenarios were a bit different.

People make a lot of the oil reserves but I can point to mineral rich countries in Africa or South America who can't get their act together enough to capitalize on their riches. But, I would say the track record of Iraq in being able to produce oil, even under Saddamn, is much better than those countries. Additionally, there are several positive aspects present in the Iraqi dinar situation that were not present in those countries.

I agree with you that it is not such an automatic bet the dinar will open at $.33. I agree that it may take some time, but i do recognize the valid points made in support of it opening at $.33. I think a lot remains to be seen how this plays out. That doesn't figure. To simply an example: if Iraq has $2 US in reserves , and 1500 dinar in expenses, and the exchange rate is 1500 dinar to 1 dollar, then it can get 3000 dinar of buying power from its two dollars of reserves, and it will have a surplus of 1500 dinar (i.e. 3000 dinar reserves less 1500 dinar expenses). But if the exchange rate goes to say 500 dinar to 1 dollar, then those same 2 dollars buy 1000 dinar, which means a budget deficit of (-500) dinar (1000 dinar reserves less 1500 dinar expenses). In other words, no matter how many dollars you have in your reserve--they won't buy as much dinar-denominated "stuff" if the dinar is rising.
That's not what I meant, and it's my fault for explaining it in that fashion. Again, this was taken from memory of a thorough explanation Jared gave.

Hopefully, Jared can reiterate his thoughts on the matter....

[kvb]

Does this thought only accure if it's pegged to the dollar? Would this whole idea be changed if it's pegged in a 'batch' such as the dollar, oil, etc....

[Blake]

Does this thought only accure if it's pegged to the dollar? Would this whole idea be changed if it's pegged in a 'batch' such as the dollar, oil, etc....No, that's a separate issue than what me and InterestedButSkeptical are discussing.

[Blake]

That doesn't figure. To simply an example: if Iraq has $2 US in reserves , and 1500 dinar in expenses, and the exchange rate is 1500 dinar to 1 dollar, then it can get 3000 dinar of buying power from its two dollars of reserves, and it will have a surplus of 1500 dinar (i.e. 3000 dinar reserves less 1500 dinar expenses). But if the exchange rate goes to say 500 dinar to 1 dollar, then those same 2 dollars buy 1000 dinar, which means a budget deficit of (-500) dinar (1000 dinar reserves less 1500 dinar expenses). In other words, no matter how many dollars you have in your reserve--they won't buy as much dinar-denominated "stuff" if the dinar is rising. Ok, to take another stab at clarifying what I meant....My whole point was that the Iraq Gov't would start exchanging those budget dollars into dinars as soon as the dinar begins to appreciate, well before the exchange rate gets to 500 to 1.


This would curb the creation of any such sort of substantial deficit, would it not?


Is there some rule that the Iraqi gov't must continue to hold their budget reserve in dollars? As I understand it, that is just the current policy to hold the budget reserves in U.S. Dollars because it has been a much more stable currency than the iraqi dinar is presently. However, if the dinar begins to appreciate once it opens on the FOREX market and as the country becomes more stable, what stops the Iraqi gov't from abandoning that "dollar policy" as it would no longer be that intelligent??

[InterestedButSkeptical]

Ok, to take another stab at clarifying what I meant....My whole point was that the Iraq Gov't would start exchanging those budget dollars into dinars as soon as the dinar begins to appreciate, well before the exchange rate gets to 500 to 1.


This would curb the creation of any such sort of substantial deficit, would it not?


Is there some rule that the Iraqi gov't must continue to hold their budget reserve in dollars? As I understand it, that is just the current policy to hold the budget reserves in U.S. Dollars because it has been a much more stable currency than the iraqi dinar is presently. However, if the dinar begins to appreciate once it opens on the FOREX market and as the country becomes more stable, what stops the Iraqi gov't from abandoning that "dollar policy" as it would no longer be that intelligent??

That's an excellent question; unfortunately I am an amateur in these matters and don't have a definitive answer. But here's my thinking on that: When a central bank starts buying up its own currency (think of the Fed, for instance) it puts pressure on that currency--shrinks the money supply and causes rising interest rates (i.e., the currency is more valuable because there's less of it around), which also makes the currency more valuable vis-a-vis other currencies. The problem is that if the central bank of iraq started using their dollar reserves to buy dinars, that alone would probably drive the dinar's value up--causing the very problem they were trying to hedge against by selling dollars and buying dinars. They're kind of in a catch-22.

Relevant to this question may be a fact I read lately--that something like half of the Bremer dinars have actually left Iraq already--i.e., they are in the hands of speculators and foreigners (we might know a few...). In short, there's already a tight dinar supply. Maybe that will keep the central bank from buying up dinars for its own purposes if its goal is to keep the dinar at approx 1500:1 exchange rate with the dollar.

This really gets into areas of monetary policy that I don't know enough about--restricting the monetary supply to control inflation; pegging the value of your currency to other currencies or to a floating exchange rate, etc. But I think your question and my response touches on the article's point--the central bank is very interested in managing the exchange rate of the dinar (to ensure the government can pay for its obligations), and yet it will be difficult for the central bank to control the market exchange rate of the dinar (i.e. "manage the float") because (1) it lacks the sophistication to do this with precision and (2) it can only manage the float by buying and selling dinars--i.e., it lacks other indirect methods of managing the float such as interest rate adjustments like the Fed uses (there is simply no developed banking system in Iraq making loans yet on the scale to make controlling the cost of credit an effective money supply control measure). So the temptation to meet the budget by printing more money will be huge--hence the risk of inflation.

And now I am swimming way too far from the dock for my own safety!

[Jared]

That doesn't figure. To simply an example: if Iraq has $2 US in reserves , and 1500 dinar in expenses, and the exchange rate is 1500 dinar to 1 dollar, then it can get 3000 dinar of buying power from its two dollars of reserves, and it will have a surplus of 1500 dinar (i.e. 3000 dinar reserves less 1500 dinar expenses). But if the exchange rate goes to say 500 dinar to 1 dollar, then those same 2 dollars buy 1000 dinar, which means a budget deficit of (-500) dinar (1000 dinar reserves less 1500 dinar expenses). In other words, no matter how many dollars you have in your reserve--they won't buy as much dinar-denominated "stuff" if the dinar is rising.


How is it that your expenses stay the same in this example? That of course would not happen. If the dinar was lets say 100:1 and I need a box of pens that costs me 100 dinar. Now the dinar goes up to 50:1, do you think the pens will still cost me 100 dinar? Of course not, the price would drop to 50. As your currency rises, your expenses lower. Maybe not as fast as this example, but they would go down. Otherwise, if the dinar hit 1:1 you pay $100 for a box of pens.

Now, for those Iraqi's that are salaried on a dollar scale but are paid in dinars, when the dinar rises, it will cost them fewer dinars to match the salary. Once at or past the 1:1 they would no longer base it on the dollared salary.

Granted there will be a few expenses that may run an even course, but expenses would not match what you have put in above. There are a great number of factors that go into this. Someone from the WB would be better able to explain it than the simple examples we've used.

Jared :wave:

[Jared]

Also keep in mind that the biggest problem the CBI will face is currency speculators. If it comes out at 1500:1 there will be a buying frenzy, at .31 there would also be a frenzy but there would be much fewer dinars in play as opposed to the former.

Received an interesting email today where the person asked "what if they did come out on the float at $3.20, whould that not thwart the new speculators?"

I think it would considering the dinar had a tough time keeping that spot many years ago. There would be more of a sell off than buying but none of the dinars in reserve would probably need to be used. As their economy builds, they could buy back dinars. Once the oil is flowing as normal, they will be bringing in 2.5-3B per month. Just take a % of that and buy the dinars back slowly. Now I personally don't think this will happen and would need to continually change my pants for about a month if it did, but I see no problem with them coming out at .20 - .31.

Jared :wave:

[RogerL]

Also keep in mind that the biggest problem the CBI will face is currency speculators.Of course this will only happen if the dinar comes out at a floating rate. If it comes out as a pegged currency, there won't be much in the way of speculation as the central bank or currency board, if there is one, will be dedicated to maintaining that exchange rate.

[Jared]

I appreciate what you're attempting to do here, yet using the logic you've chosen, a loaf of bread would still be a nickel. "That ain't happenin'".

I chose that as an illustration that expenses would not be fixed not to be taken as an economic study.


It doesn't matter what the commodity is, simple economics still comes into play... SUPPLY v. DEMAND.

True, but if the dinar comes out higher, there will be less demand.


In this case, we are talking about the currency of a nation attempting to turn on a dime. Therefore, we have to look at the big picture, macro, micro, and global economics.

Is it turning on a dime when it hasn't been given an offical world market value?


As a global generality, expenses aren't fixed, yet they remain in a range until one can find measures to cut expenses. Expenses aren't going to cut themselves simply by changing the value of a currency. Fluctuations in one country can be determined by the desired resources in another. P/L are fixed to fluctuating expenses +/- cost of goods, production, and market price which is generally determined by supply/demand.

Thanks, that's the point I was making above, expenses are not fixed as the example he gave. I also stated that there are many factors that fall into play that only a select few know about at this point. By that I mean only a few know what numbers to plug into the formulas.

Jared :wave:

[Jared]

Of course this will only happen if the dinar comes out at a floating rate. If it comes out as a pegged currency, there won't be much in the way of speculation as the central bank or currency board, if there is one, will be dedicated to maintaining that exchange rate.

It may keep the short term specs out but the long term ones I think will still go after it.

Jared :wave:

[toemaas]

If that happens, I'm sure the day that I see a photo in the USA TODAY of someone putting dinar in their bicycle spokes, is the day I'll know what you look like.

I think most on this board will agree that you bring useful information and thoughts to ponder which is great, that's what this is all about, :D . However, I can't help but notice a lot of your posts seam to end with some sort of condescension :confused: . Seems to take away from the otherwise great info you are posting :wave:

[wilsonm24]

I think a more important question to ask is how is the deficit calculated. Is it in dollars, dinar, euro, hell even yen?

Let me explain a little bit.

If the US government says you owe us 10 billion dollars, they don't want 14.60 trillion (think my math is messed up but close enough) dinar they want their money in dollars. So if the dinar improves to even 146:1 then the Iraqi government just improved their wealth currently in their treasury drastically. This would in fact make it much easier for them to pay off their deficit.

Sure the amount of dollars they have in their treasury would depreciate but what do they care their whole economy needs to be based on the dinar anyways, and for thier economy to succeed the government especially needs to show confidence in the dinar.

[Blake]

If the US government says you owe us 10 billion dollars, they don't want 14.60 trillion (think my math is messed up but close enough) dinar they want their money in dollars. So if the dinar improves to even 146:1 then the Iraqi government just improved their wealth currently in their treasury drastically. This would in fact make it much easier for them to pay off their deficit.An extremely big factor is that 75-90% of the Iraq's foreign debt is very likely to be forgiven, so hopefully it make that issue moot.

[kvb]

So is it a consenus that everyone thinks it will not hit 1:1 within the next 2 years?

[Blake]

So is it a consenus that everyone thinks it will not hit 1:1 within the next 2 years?No one knows. that is too far to project. there are too many factors to consider and that have to play out to make any sort of consensus judgement one way or the other.

[Jared]

So is it a consenus that everyone thinks it will not hit 1:1 within the next 2 years?

It could, but the formula is big and the bean counters are not giving us anything to fill the abc's and xyz's with. Once they come out and the formula is known it will be easier to project some future values.

Jared :wave:

[Wolverine]

I don't beleive that 1:1 within two years is farfetched. Keep in mind that before the gulf war it was comparable to Kuwaiti Dinar. The possibility of Iraq's economy becoming as stable,etc. (if not more so) , as it was that time, is certainly not unattainable,in my opinion. As Blake stated so accurately "no one knows" and if they do they're not telling. :rolleye03

[Wolverine]

Alright! there's Jared ! If I have to chose a prediction, I, for the record, I am going with Jared's !! :happy26:

[RogerL]

I don't beleive that 1:1 within two years is farfetched. Keep in mind that before the gulf war it was comparable to Kuwaiti Dinar. The possibility of Iraq's economy becoming as stable,etc. (if not more so) , as it was that time, is certainly not unattainable,in my opinion. As Blake stated so accurately "no one knows" and if they do they're not telling. :rolleye03 There are two problems with comparing the current dinar with the exchange rate pre-Gulf War. The first is that the economy is not nearly the same as it was then. Perhas it can attain the same strength, but it will take a very long time. It's also possible that Iraq wasn't really as strong as we thought it was back then. Just as when the coalition entered Iraq last March, they were stunned at the lack of infrastructure that had been assumed to be in place.

The second problem with the comparison is the amount of currency in the economy. If someone can point out that the number of dinars in 1980 was the same as the number of dinars now, then I can say that it can approach that same exchange rate. But say there are a hundred times the amount of dinars today compared to 1980. In that case, I'd say there's no realistic way it could reach that pre-war exchange rate.

As for 1:1, who knows? I think two years is unrealistic, but as Jared says, we're grasping at straws since we have almost no facts available to us. Anyone who does have the facts isn't talking.

[Wolverine]

Just curious, is the number of dollars, Yen, British Pounds, Kuwaiti dinar, etc .,in circulation, the same as it was in 1980 ?

[Jeffrey]

Let me preface by saying I am not an economist by any measure of the word.

But it is my understanding that there were HUGE amounts of the Saddam Dinar that had been minted and was in circulation before the last war and the change to the New ID. From what I have read, everytime he needed money, he just printed more.

Would it have made any sense to print that much in the NID? I wouldnt think so. I saw somewhere how much of the NID was printed but cant find it now.

I dont know the answers ...maybe someone else might? :confused:

[RogerL]

Just curious, is the number of dollars, Yen, British Pounds, Kuwaiti dinar, etc .,in circulation, the same as it was in 1980 ?
No, the amount is not the same, but the money supply has to grow along with economic growth. If you have more money without the economic growth, you have inflation. If you have economic growth without money supply growth, you have deflation. If they grow together, you have a robust economy.

My point was that if there's no way the economy is 100 times stronger than it was in 1980 if there is 100 times more currency. With a lot more currency and a much smaller economy, you're looking at seriously devalued dinars.

Now I don't know if that 100 figure is accurate. It's just used as an example. Money supply growth and economic growth isn't necessarily a 1:1 relationship, but there is a very high correlation. What we do know is that Saddam opened up the printing presses in the 1990's, creating serious inflation. So a large increase in dinars accompanied by a much smaller economy gets you a nearly worthless dinar.

[Wolverine]

The world may, in fact,have overestimated the economy of Iraq back then as well as the existing infrastructure. Oil reserves, agriculture exports, and overall wealth of the country, however, lead me to believe the currency was not greatly exagerated. As for economic recovery, I cannot put into words the phenomenal strides of progress I witnessed my last couple of months there. The mainstream media does not tell you the good news coming from Iraq , I assume, because it could potetially make, presidential hopeful, John Kerry look bad for having voted for , or against or for or or against or was it FOR before it was Against ?!!? :drunk:

[Robbie]

I'm new to this forum and am glad there are others who are as interested in researching the Dinar as I am.

I have a question concerning how the Iraqi Dinar could change overnight on Aug 18th from 1461/1 to .33

My main thought is that it would make every Iraqi a rich person overnight.
Consider for example an Iraqi making approximately $20 per month as I have read is not uncommon for some.

This $20 is now being paid to him in Iraqi Dinar, as the CPA wanted to install the new currency. That $20 is worth 29,220 Dinars at this moment. Over the last six months this Iraqi may have saved up 33,000 Iraqi Dinars(in cash under his bed or in a bank).

If on Aug 18th the Iraqi Dinar suddenly becomes worth 33 cents he now has $10,000. Doesn't that seem a little too sudden and drastic to occur. Imagine if an Iraqi had a million dinar saved. He would have $330,000. Mayhem would erupt on the streets of Iraq with people attempting to get any Iraqi Dinars to be found. A vast increase in wealth like this does not seem possible for the country as a whole.

I'm not trying to be pessimistic(as I am a Dinar owner and would love a change overnight), but instead feel that this will be more of a gradual process hopefully ending with everyone making a lot of money. Lemme know if you think my math or thinking is flawed.

[AK Boy]

Robbie,

That's the gamble Bro'. There are probably a "handfull" of people that know what will become of the Dinar. All we can do is feed off each other's ideas and speculation. I did find this article buried in the Truck & Barter Blog. It sounds as if it was intended to be informative, but really says nothing new. Take a look and let me know if you concur. I do agree with you. This whole scenario seems like it would make a lot of Iraqis (and others) very wealthy, very quickly. But again, look at neighboring Kuwait (again)...they are absolutely loaded and they have nothing near the resource base that Iraq has. Remember, we are investing in the "future" of Iraq. These poor soles were subjugated to that evil bastard for many years. I think if they has not been, they would be right there with the Saudis and Kuwaitis. This would be more of a "correction" than anything else. The article that I wished to share is at this link...

http://www.msnbc.msn.com/id/5648755/

***I apologize if this has already been posted, but can't read all the threads to be sure. ;)

[Potogold]

I too believe the Dinar will soar; however, my concern is how will we be able to convert to U. S. $? I can find no exchange making a market in Denars.

[Potogold]

I don't see why Iraq is at risk of hyperinflation. Hyperinflation (weimer style, or argentine style) usually occurs when a government spends more than it takes in, and runs the printing presses (borrows from the central bank) to make up the difference. As inflation accelerates, the government has to run the presses faster and faster to continue to fill its coffers. Iraq should not have that problem -- higher oil revenues = higher external reserves, so any domestic money creation ought to be backed by a solid external asset (it won't be printing more dinars and thus spreading the same set of dollar reserves ever thinner). The budget should be fully funded out of revenue/ aid. that should limit the risk of hyper-inflation, as it is normally defined. I do think there is a risk that higher than expected oil revenues will lead to a real appreciation of the currency.
The potential in buying the Dinar is phenomenal. The potential of going from a few hundred dollars to millions of dollars is real. We saw something similar to this happen in 1979 and 80, with gold and silver. Silver went from less than $3.00 an ounce to $50.00 an ounce. Was silver worth that much? No, definitely not, but the DEMAND was there, and that is what is building on the Dinar. Demand, so you will see the Dinar soar. :lmao:

[Wolverine]

I too believe the Dinar will soar; however, my concern is how will we be able to convert to U. S. $? I can find no exchange making a market in Denars.

I just saw another thread on this site with alot of useful input on exchange. The dinar have not yet opened for international exchange, once they do most any mainstream bank that exchanges other foreign currency will exchange them for you, no problem man. don't worry be happy! :wave:

[RogerL]

If on Aug 18th the Iraqi Dinar suddenly becomes worth 33 cents he now has $10,000. Doesn't that seem a little too sudden and drastic to occur. Imagine if an Iraqi had a million dinar saved. He would have $330,000. Mayhem would erupt on the streets of Iraq with people attempting to get any Iraqi Dinars to be found. A vast increase in wealth like this does not seem possible for the country as a whole.I don't think it's that easy to accumulate a million dinar. If somebody's being paid 29,000 dinar/month, it would take them almost three years to accumulate a million dinars. And that assumes they don't spend anything in all that time, so it would likely take far more than three years.

If I were an Iraqi who suddenly found he had $10,000, that would probably buy a nice, small car. So it doesn't seem too unreasonable to me. Considering that these people had an exchange rate of $0.31/dinar before the invasion would simply mean re-establishing previous wealth. Granted, that wealth was illusory since the economy didn't warrant that $0.31/dinar, but nobody outside Iraq knew that.

As for mayhem, it's not likely to happen since after the exchange rate is set, it's too late to accumulate dinar. Those who have it will keep it. Anyone who is trying to accumulate it would have to pay quite a bit in foreign currency to get it. Many in Iraq are holding dinar for the first time, but many others are still holding US dollars. Those who have dinar can now afford many products from abroad, vastly improving their standard of living to that of the countries surrounding them.

These are possibilities if it actually does come at that exchange rate. I'm not saying it will or that it won't. I'm hoping it does, but I'm not sure how they'll manage it and maintain it. The truth is that I don't have any idea when or how much it will come out at.

[Wolverine]

The potential in buying the Dinar is phenomenal. The potential of going from a few hundred dollars to millions of dollars is real. We saw something similar to this happen in 1979 and 80, with gold and silver. Silver went from less than $3.00 an ounce to $50.00 an ounce. Was silver worth that much? No, definitely not, but the DEMAND was there, and that is what is building on the Dinar. Demand, so you will see the Dinar soar. :lmao:
Actually the silver situation you're speaking of was due to the, now infamous, Hunt brothers cornering the silver market which got them into trouble along with making themselves and others alot of $$$ and being in a large part responsible for several present day securities & exchange laws.
There are however several concrete ( currencies of countries in similar situations) examples to confirm what you are stating as fact!! :happy26:

[Blake]

Considering that these people had an exchange rate of $0.31/$1 before the invasion would simply mean re-establishing previous wealth. Granted, that wealth was illusory since the economy didn't warrant that $0.31/$1, but nobody outside Iraq knew that.The one concern I find in that very logical argument, which has troubled me, is that....didn't wealthy Iraqi's prior to the U.S. invasion last year hold their savings in U.S. dollars, either in bank accounts outside Iraq or otherwise, due to the rampant inflation in Iraq with the dinar caused by Saddamn through the 90's?

Any thoughts??

[RogerL]

The one concern I find in that very logical argument, which has troubled me, is that....didn't wealthy Iraqi's prior to the U.S. invasion last year hold their savings in U.S. dollars, either outside Iraq or otherwise, due to the rampant inflation in Iraq with the dinar caused by Saddamn through the 90's?Don't have any idea who was holding what. Inflation was pretty high during the 90's, so it's logical many were holding dollars instead.

[Blake]

So wouldn't that kinda put a damper on our theory?

[Potogold]

lowest i seen so far today 1,433.87 IQD to the dollar
Would you mind telling us where you got the quote?
Thanks

[RogerL]

So wouldn't that kinda put a damper on our theory?Not necessarily. The number of dinars in March 2003 is similar to the number available now since the old Saddam dinars were converted to Bremer dinars in October. So somebody was holding all those dinars. Maybe most of them were held by Saddam and his associates, but they were there. By re-establishing the old exchange rate, national wealth would be re-established. That may mean some individuals would have a whole lot more money than they did 17 months ago, but overall, the amount of wealth would be similar to what it was then.

[Blake]

Not necessarily. The number of dinars in March 2003 is similar to the number available now since the old Saddam dinars were converted to Bremer dinars in October. So somebody was holding all those dinars. Maybe most of them were held by Saddam and his associates, but they were there. By re-establishing the old exchange rate, national wealth would be re-established. That may mean some individuals would have a whole lot more money than they did 17 months ago, but overall, the amount of wealth would be similar to what it was then.cool, thanks Roger.

But I should have been more clear, I actually meant that point in conjunction with the realization once the Iraqi economy was opened to the world, and it was seen that the dinar was overvalued at $.31 pre-invasion, had me doubting whether $.31 is instantly attainable when it opens.

[Robbie]

RogerL

Very good points, however to someone making $20 a month $10,000 is like receiving a million for us. I do see the possiblity for a $.33/dinar rate sometime in the future, but an overnight change seems to much to handle. The entire way the country is currently operating would have to change overnight. Salaries, prices for goods, etc... would immediately have to be changed. If this is planned it is being done very secretively, to the extent that almost all Iraqis do not know. Therefore, it would come as a surprise to them also. Many Kuwaiti's have also invested in Dinar and the rumor has not been heard by me in Kuwait. The only reason for the secrecy would be to avoid a mad dash to buy Dinars prior to the 18th.

Kuwait's rapid recovery was based on the fact that a strong validated economy with a large oil output was firmly in place before the invasion. Iraq is not very close to establishing an economy like Kuwait's.

By mayhem I meant that massive looting and robbery would break out across the country. Arab countries(I am in Kuwait) use money changers throughout the country for people to exchange cash, they don't just use banks. All of these money changers would have at least 1 million if not more Iraqi Dinars on hand. Many could easily have millions of Dinars. Don't you think that all of these rogue militias, kidnap experts, and simply unemployed citizens would quickly take to robbing these small unprotected stores. Houses would be broken into also as most Iraqis I'm sure are storing their savings in cash and not in banks as they very much so are a cash society.

I personally cannot speculate on when I think the Dinar will become traded internationally, but have a feeling it will not happen this soon. And for Iraq I think a gradual increase would be much more secure in a country that presently is not very secure at all. I am keeping my fingers crossed and will definetly check the news the moment I wake up on the 18th. The real question I can only answer is whether or not I should buy more before the 18th.

[RET]

Ok, for those of you who think the dinar will not open up above .30 . . . what's is your GUESS that it might open up at? .01? .05? .10? Just being curious on your speculation.

[Wolverine]

Most money changers I dealt with in Kuwait were well armed (w/ exception of the airport which is of course a secure area). A Kuwaiti definition of Gun Control: rattling off your AK47 for innocent fun and not hitting someone elses camel !! :lmao:

[Marilyn]

Bumping this discussion from July 2004, to the top...

[Javabear]

Has anyone else considered that fact that a country full of millionaires would take alot of steam out of the insurgency and enhance stability?

[Marilyn]

The Iraqis will not become millionaires. They will simply have the wealth restored to them that was taken away at the start of the war.

[shotgunsusie]

The Iraqis will not become millionaires. They will simply have the wealth restored to them that was taken away at the start of the war.


do i hear an echo again??

this is a repeat performance of this info. AGAIN
read the forum. it took me 2 days to read all history, follow links, read some more.
do your own research, we did.

- susie ..... gets it and has brain damage

[Stash]

Wow, Good job bumping this to the top. Roger and others understanding of this situation is well worth the read. Thanks

[Marilyn]

Glad you liked it! :happy64:

[Marilyn]

I have been in Iraq for two years and never heard the Dinar called "Bremar's Dinar."

PELICAN

Yea, it's interesting. It was used right after the exchange but stopped soon after. This dialogue is from last year...

[Javabear]

Here on the ground in Iraq it is not uncommon to meet Iraqi's with 3 or 4 Million dinar in their pocket. By my math, if the dinar pegs at .41, that makes a lot of millionaires.

[BigE]

Here on the ground in Iraq it is not uncommon to meet Iraqi's with 3 or 4 Million dinar in their pocket. By my math, if the dinar pegs at .41, that makes a lot of millionaires.
no it won't don't you think the average business man will raise the prices to make a bigger buck.....go buy a soda in Baghdad then buy a Soda in Kuwait City, or a car. The increase will give their business buying power for imports and their citizens more buypower when the travel to other countries, imagine carrying that wad of money to germany. Airlines are starting to fly, and they need to be able to exchange cash.