IMF Suggests Stable Iraqi Dinar

A report on Monday by the International Monetary Fund (IMF) suggests that the Iraqi dinar is currently fairly valued at 1170 dinars to the US dollar:

The CBI [Central Bank of Iraq] will continue to aim at keeping inflation low, predominantly by maintaining a stable exchange rate. The low level and the relative stability of inflation do not suggest any significant over- or under-valuation of the Iraqi dinar. Also, a stable exchange rate continues to provide a solid anchor for the public’s expectations in an otherwise highly uncertain environment and in an economy with a very low level of financial intermediation.

The report continues, “Meanwhile, the CBI will continue to keep its policy interest rate positive in real terms. To enhance mobilization of domestic financing, limitations on state-owned banks’ use of government deposits for investing in Treasury bills have been reduced, while the pension fund has also been allowed to invest in Treasury bills and to participate in auctions directly.

It also allows for the possibility of an upward drift in the value of the dinar over the years:

Staff supports the CBI’s policy of managing the exchange rate of the Iraqi dinar to keep inflation low. A stable exchange rate continues to provide a solid anchor for the public’s expectations in an otherwise highly uncertain environment. Over time, rising oil revenues could put upward pressure on the real exchange rate, which would warrant allowing greater exchange rate flexibility.

The full document can be downloaded by clicking here.

5 Responses to IMF Suggests Stable Iraqi Dinar

  1. Stew April 5, 2011 at 8:05 am #

    LOL… is a sudden 100,000 to 400,000% increase, as predicted by the gurus… is that an “upward drift over years”?

  2. LZ April 14, 2011 at 3:23 am #

    Stew,
    Have you seen the recent articles on re- denominating the dinar?

    http://www.alsumaria.tv/en/Economics-News-Iraq/3-62912-Iraq-Central-Bank-to-remove-three-zeroes-from-Iraqi-Dinar.html

  3. Stew April 14, 2011 at 8:20 am #

    Yep… they have that same article at the top of this site now too.
    Amazing how many people still think this means a big RV.

  4. LZ April 16, 2011 at 7:47 am #

    Stew,
    do you think its possible to lop and revalue? Say they lop and rv to $3.22, that means we would get 3.22% profit…minus all the fees?

  5. jc January 2, 2012 at 3:56 am #

    No it means every dinar you have will be worth $3.22 american