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Posted by Admin on 11/29/2005, 7:10 pm New Iraqi Dinar Future Forecast By Shajee Iraq is not the only oil producing country having huge oil reserves; remind you, there are good numbers of other oil producing countries, which are also floating on oil like Iraq, having sufficient untapped huge oil reserves. Iraq even under UN Sanctions during Saddam regime was a regular oil exporting country. Hence, the message “Iraq floating on huge oil reserves” is irrelevant, whenever evaluating future trend of New Iraqi Dinar. Now the very important factor to consider is, Trillions of inflated Old Iraqi Dinar in circulation has been equally replaced by NID, the result is; inflation has been totally brought forward in the current economy of Iraq. Comparing NID with other oil producing countries; Look at Libya under similar conditions of UN Sanctions as of Iraq, has maintained its high value, by good currency management. Recovery of value of currencies after war; In case of Kuwait its currency recovered after the war to the level of pre-war value of 1991. In case of Iraq, do not look at the value of Old Iraqi Dinar of USD: 3.25 before 1991 war, Old Iraqi Dinar was grossly damaged during the period from 1991 to 2003 by Saddam’s currency miss-management, as of today, now you have to simply look for the street value of Old ID, before the US attack in April-2003, this will be the correct street value, the maximum value the NID can achieve. Hence Iraq currency can only recover to the extent of pre-war value of 2003 that too under normal economic conditions. Forecast for future value of NID is; If you look at the Central Bank of Iraq official NID exchange rate, remained constant for quite some time at 1,460 to US Dollar, last rate quoted was 1,475 to a dollar, NID has moved towards the south direction instead of moving in the north direction for recovery towards pre-war levels of 2003. Iraq currency can only move above the pre-war April-2003 levels, until and unless deflation of Iraq currency starts. Many decades have passed; we have been hearing reports of inflation and never heard of deflation in any country. In the past, we have seen with Economic growth in any country, at the same time inflation hangs around, when there is increase in price of consumer goods; you say inflation and inflation is usually caused by surplus printing of currency notes to full fill the financial needs of any country’s administrative expenses in their local currencies. In simple terms: In case of Iraq, if you say street value of one NID was 31 cents in March-2003, now we have to see how many years it will take to return to normal economic conditions, until that day to come, normal business conditions are achieved, during this duration of normal activity recovery, with the economic growth in Iraq, if prices of daily consumers goods index goes up, in that case NID will hit below 31 cents the street value of March-2003 level. CBI exchange rate is a regime managed exchange rate, an official control exchange rate to be followed by authorized commercial banks in Iraq for all nature of on going daily business transactions routed through banking channels. CBI daily exchange rate is not a free floating rate. When the currency is under regime managed control exchange rate, you will find Free Floating exchange rate at the money changer counter on Baghdad streets. The correct indicator is money changer exchange rate, the real floating rate, which covers instant real demand and supply positions, as and when Iraq business activity starts returning to normal, street value of NID will improve and find its functional level. For Money changer exchange rate at Baghdad Street visit:- Comment from Admin:
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Board Administrator
Posted by Shajee on 11/16/2005, 3:50 pm, in reply to "Re: Iraqi dinar investment"
It is observed number of websites promoting sale of New Iraqi Dinar (NID) drive you to the north using a common words of natural resources, Iraq floating on huge oil reserves.
Actually if you see, Iraq Oil Exports quantity has dropped down after the war; it will take some time to return at prewar 2003 levels.
Like Iran and Venezuela, Iraq currency was grossly mismanaged by excess over printing of currency notes; same brought in to circulation causing hyper inflation, resulted low market value of these currencies what we see it today.
Recovery of value of currency after the war is based on simple physic law; water finds its own level, such as land/ground water table will always attain its level what ever you do.
Simply find out what was the actual street value of Old Iraqi Dinar, just before USA declared war with Iraq in April-2003, that will the correct value, NID can achieve which has grossly brought forward the inflation already imbedded in Old currency.
When there is increase in price of goods; it is called inflation
When there is decrease in price of goods; it is called deflation
I asked one of my fiends when NID will peg to USD, he replied NID is already pegged indirectly with a dollar, for the reason Central Bank of Iraq (CBI) is officially announce daily exchange rate of NID to a USD, based on daily auction rate, if you see it physically all Import Export Bills are been negotiated at the counters of authorized banks in Iraq at the official daily exchange rate announced by CBI.
For Central Bank of Iraq Daily price Bulletin buying and selling visit http://www.cbiraq.org/cbs6.htm
where you will find NID exchange rates for US Dollar, European Euro, Pound Sterling, Japanese Yen and others
For different types managed exchange rates visit
http://fx.sauder.ubc.ca/currency_list.html#I
NID may not peg with US Dollar and remain under regime control as other countries listed in website
http://www.taifco.com
Thanks for the thoughtful post and information.
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