Categorized | Banking & Finance

Iraq: $58bn in Currency Reserves, Should Redenominate Soon

Iraq: $58bn in Currency Reserves, Should Redenominate Soon

The deputy governor of Iraq’s central bank has announced that foreign currency reserves have risen to close to $58 billion, and are expected to increase further thanks to a rise in oil revenues.

Mudher Kasim said higher global oil prices could result in a budget surplus for 2011.

Reuters quotes him as saying, “(The amount of reserves) has gradually increased since the beginning of last year, when it was $40 billion. Now it is close to $58 billion”, while AlsumariaTV puts the opening figure at $50 billion.

Last October, Kasim had put reserves at around $50 billion, with 45 percent held in dollars, 45 percent in euros and 10 percent mainly in gold and British pounds.

Iraq earned $34.1 billion in oil revenue, an increase of $8.7 billion, or 34 percent, over budgeted revenue, in the first five months of this year, Deputy Prime Minister Hussain Al-Shahristani said in June.

The deputy governor said inflation — which quickened to 7.1 percent in July from 6.4 percent in June — was under control but being monitored carefully.

Iraq, battered by years of war and economic sanctions, depends mainly on imports for most goods, including food and building materials.

“If prices continue to increase and the inflation rate approaches two digits, monetary policy tools will be strongly activated to fight inflation,” he said.

Kasim said a plan to take off three zeroes from Iraq’s currency to simplify financial transactions was awaiting parliamentary approval and said the government should approve the project sooner rather than later.

(Sources: Reuters, AlsumariaTV)

Share

25 Responses to “Iraq: $58bn in Currency Reserves, Should Redenominate Soon”

  1. Stew says:

    How many redenomination articles does it take for dinar investors to realize they have been scammed?
    Apparently an infinite number, because there have literally been hundreds now.
    It is stunning people still believe in this fantasy big RV.
    The most valuable thing in dinar world might be the mailing list of all the hangers on. Every scammer in the world would pay dearly for that list of the most gullible of gullible.

  2. Stew says:

    Seriously… most people laugh when they receive those scam e-mails in their inbox. You wonder why people would go to the effort of trying something so ridiculous. But seeing the mentality on dinar web-sites you fully understand just who it is out there that believes some random Nigerian peasant whose long lost uncle was the Prince of a neighboring country and he just needs your help to transfer the multi millions of dollars and he’s willing to share it all with you.

  3. para~investigator says:

    Stew, I think you need to brush up on your history. Why don’t you research the Kuwait revaluation and the China Revaluation and compare those to the Iraqi Dinar. Both those contries denied they were going to revalue and with in 2 days they both released their currency values. Many people became instant millionaires over night from the Kuwait and Chine RV. If you don’t want to believe, that is fine. We will enjoy it without you.

  4. para~investigator says:

    You are so missinformed. It is actually rather funny and entertaining. Thanks for the smile. :)

  5. Stew says:

    I am fully aware of EXACTLY what happened in Kuwait. It isn’t even remotely close to the Iraq situation. Kuwait never devalued their currency so there was never a revalue. A few ignorant people sold the Kuwaiti dinar out of their pockets for cheap and that was it. Very few people made a little bit of money and that’s it.
    The Kuwait central bank never issued one single dinar at a discounted rate.
    Iraq’s central bank has issued 28 Trillion dinar at a rate of .00085 or worse. The stunning ignorance displayed in thinking those two circumstances are comparable is staggering.

    The later Kuwait and China RVs you talk about that were denied were for 1% increases. Yes… Central Banks lie about revaluing their currency even 1% because they so detest speculators making money off the RV. Yet dinar ****** [Edited: please keep it non-personal] are under the impression the Central Bank of Iraq is being so kind as to announce to the world they are about to have a 100,000% RV any day now.

  6. chris says:

    Don’t scammers try to take as much money from their victims as they possibly can? Any person that has bought dinars can sell them back at any time for about a five percent loss, if even that. Millions of people go to Las Veges every year and spend hudreds and thousands of dollars each. And most of them end up losing. Are all of them gullible too?

  7. nick says:

    why has the US Goverment also Buy almost 4 Trillion dinars and Why did President Bush always say that this war would cost us nothing and also ???

  8. Brian says:

    Don’t get sucked into the hype para-investigator. As Stew said, there’s an enormous amount of lies being told by pumper salesmen. To start with take the Chinese Yuan you quoted : In 1995 the value was 1.00 CNY = $0.1203 and today the value is 1.00 CNY = $0.1566 USD. $1,000 of Chinese notes turned into $1,296 notes over 16 years = barely 1.5% annual rate of return (worse than most basic savings accounts). It’s a total myth that the average person with $1k of notes suddenly became a millionaire. Same with Kuwait, here’s a 25 year chart of the Kuwait Dinar vs USD:-
    http://upload.wikimedia.org/wikipedia/commons/2/2d/KWD_against_USD.PNG

    The short term “glitch” where it fell to below $0.10 involved the smuggled black-market rate due to Kuwait Dinar’s being made illegal under Iraqi occupation. The Iraq NID isn’t even remotely like that. It’s so devalued because it’s so overprinted – there are approx 29 trillion Iraqi Dinars in circulation vs 32.9bn Kuwait Dinars in circulation – that’s an almost 1,000x “overprint” factor difference, which is why the Dinar is 1,000x weaker. Iraq has printed more money for its 31m population than USA + Europe + China + India combined have for 3.4bn people which is why it’s so weak and devalued. The only way of curing that is a redenomination (lop). It’s a complete myth that the Iraq Dinar will magically give you 99,000% more wealth from thin air.

    The Iraq Central Bank have openly and repeatedly stated they will redenominate – NOT “RV”. Only pumpers invented a “Dinar RV” rumor-mill. There’s really no arguing with their intention anymore after the clear April & June announcements to specifically “redenominate” and “based on Turkey”:-

    April 13th 2011 – “Iraq’s Central Bank announced on Tuesday that the project of Iraqi Dinar re-denomination consisting of removing three zeroes is close to completion. The re-denomination project is believed to be a strategic plan that will be passed to the ministerial council and Parliament once complete. Iraqi economists believe the re-denomination of Iraqi Dinar will not have a major influence on the purchasing power of the Iraqi Dinar which the government has hopes high on it.”

    April 16, 2011 – “An advisor of the Iraqi Central Bank, Dr. Mohammed Saleh appearance that the bank adheres to its policy regarding the removal of three zeros from Iraqi dinar traded at present… To that, the adviser to the Central Bank of the appearance of Mohammed Saleh, said that such fears are unwarranted, and that the economic situation in Iraq is good and able to withstand the application of this project, and that this experience had previously been applied in countries such as Turkey, which has by deleting six zeros from the currency before the period is not too distant future.”

    June 24th 2011 – “Iraq’s Central Bank announced on Thursday that it is planning to delete the zeros from the Iraqi currency. The new currency will be printed after deleting the zeros and will include the Kurdish language in addition to the Arabic language. It will bear as well photos of Iraq’s civilizations and patrimony in addition to symbols of Iraqi intellectuals and figures”, Saleh noted. On June 19, Iraq’s Central Bank Governor Sanan Al Shebeibi affirmed during the meeting of independent commissions with Prime Minister Nuri Al Maliki that the bank is preparing all requirements needed to replace the Iraqi Currency.”

    The word “redenomination” (lop) was used no less than 3 times in just the April 13th announcement alone.

    The “Dinar debate” is no longer economic or even due to lack of information or “ambiguous” CBI statements. The real issue is one of psychology : people attach themselves like a limpet to disinfo pumpers pretending to have “secret intel” who promise $1m from changing $1k dollars into $1k worth of Dinars and back again to the extent of ignoring – even openly attacking – what the Iraq Central Bank says when it doesn’t fit in with the fake intel pumpers are pulling out of their behinds on a daily basis. I witnessed the whole “pump and dump with secret intel” thing before with the CMKX penny stock fraud.

    No matter how you “cut the cake”, you simply cannot magic yourself 999x more wealth with a bank-note swap unless you print it (then the currency gets weaker again). Take a look at Zimbabwe for a nation of self-declared paper “millionaires”. The only people who have been sucked into believing an RD = “a millionaire for $1,000″ are confused amateur first-time Forex gamblers who do not understand the process, have never held any other currency through a similar RD before, and are being “bounced” around from one confused Internet “pumper” to another, desperately seeking new “intel” that promises free ridiculous sums of money rather than face the truth that the Iraq Dinar will cure it’s inflated currency via the same lop (redenomination) that literally all dozens of other countries with same inflation have in the past (including occupied Afghanistan from 4300:1 to 4.3:1 in 2003, oil rich Venezuela from 2,150:1 to 2.15:1 in 2008 and next door neighbour Turkey from 1200000:1 to 1.2:1 in 2005)…

  9. Stew says:

    Good post Brian.
    Just for the record though. The 32.9 billion you quote as Kuwait’s currency. That must be their M2 number… currency and electronic money.
    The last I checked Kuwait only has about 1 Billion dinar in circulation. Yes… 1 billion. That’s 29,000 times less currency than Iraq. Or better stated… for every 1 single Kuwaiti dinar, there are 29,000 Iraqi dinar.
    You never hear a pumper talk about that when he claims Iraq will do as Kuwait did.
    Guess how many dinar Kuwait had at the time of the Iraqi invasion. A little less than 400 Million. Notice… that’s’ million, not billion and certainly not trillions as Iraq has.
    The whole Iraq to Kuwait comparison is a joke.

  10. Quad says:

    that’s really funny guys. instead of having a relaxed attitude about it you have just as much to lose betting against it than people who are betting on it and its just because you know of it. It becomes a sore source of pride doesn’t it? Losers…i mean what do you care if you dont believe it will happen? Also, we dont know how much of that M2 was caused by pumpers judging by some of your bitter attitudes I think it would be a considerable amount right? What does that mean? Well regardless of how the investor got there bad info or what not, they still bought it which demonstrates CONFIDENCE and that….is a powerful thing when you consider that this investor is just one of many many many people over and over. My point is, is that this redenom hasn’t happened for all of this time because they dont want to be obligated to cash everyone out if a majority of foreign investors collectively decided to cash out in a period of time. Oh it would be brutal for iraq if that happened. Now Iraq is not innocent, its their currency they manage it and they know where it goes. They have allowed this to happen keeping everything shrouded for so long. So if there no purpose to this and they will just LOP then why would they keep allowing those outlets that feed the dealers running? AND if they are going to walk out completely on the foreign currency investor how will that help Iraq in the future what kind of reputation would that give them with all foreign investors? You see all of that runs contrary to what they are trying to accomplish now and if they can feed the same song and dance over and over and over and over like they have been the last 5 years or so actually longer than that, but at the end of the day they do nothing. No LOP NO RV more studies to be done. So the answer is that they will allow it to appreciate naturally and use their means to build the currency back up again to give great confidence to the currency and to the nation and Iraq will become a financial powerhouse in the middle east. This is a long term investment but in the next 6 months we should see a bump in the exchange rate. This will also clear out the get rich quick people and maybe shut people like stewie up.

    With the dollar propping up the economy literally, there is no immediate reason to cut those zeros but at the same time they are still obligated to honor the money held outside of the country. Thats the truth.

  11. Brian says:

    Quad, I stand to lose nothing “betting” against a simple redenomination because the overall value will not change. By “relaxed / bitter attitude” you mean “be quiet and accept pumper disinfo”. I’ve heard that subtle-censorship before on other forums, complete with banning members who know too much than is comfortable for some salesmen…

    “Quad” : “we dont know how much of that M2 was caused by pumpers”

    This makes no sense. M2 figures (amount of money in circulation including banknotes, checking & savings accounts, travellers checks, and money market funds) is a statistical measurement of how much money has been created (like “there have been 298 million €10 Euro banknotes printed” is a statistic), not an investment. It measures how much money has been created, not exchanged or speculated.

    “Quad” : “My point is, is that this redenom hasn’t happened for all of this time because they dont want to be obligated to cash everyone out if a majority of foreign investors collectively decided to cash out in a period of time”

    An RD will not change the value of the Dinar for anyone – including speculators, so there’s nothing to “cash out” – a lop is just a neutral note-swap. Only pumpers use “cash out” to describe changing up currency during a redenomination and it’s false info. The only reason the RD hasn’t happened is (aside from inflation) because they simply haven’t wanted it to happen until there’s a large educational programme for Iraq’s explaining the same thing that Turkey explained to Turks – and Shabibi openly stated that in plain English in his Washington speech earlier this year. All those pumpers throwing out “it is done” and “next week, buy more now quick!” nonsense week after week since 2007 are absurd. Iraq has kept nothing “shrouded” at all (there have been TV broadcasts and interviews about it on Iraq’s Alsumuria TV channel including quotes by the Finance Committee of “the Iraqi currency will change the face value of the dinar and not the real value as measured against the dollar and gold”). They’ve openly said there will be a massive education programme. Anyone claiming it will be suddenly be done in secret is an all-out liar.

    All that’s *really* happened is that some pumpers have been forced to resort to cooking up wild conspiracy theory excuses and fantasies of why the non-existent “RV” hasn’t happened since the Central Bank of Iraq started openly and repeatedly contradicting their “no lop” position making them look like the foolish conmen they are. Some spent most of 2010 swearing blind there will be no new banknotes then Iraq announced on June 24th 2011 – “The new currency will be printed after deleting the zeros and will include the Kurdish language in addition to the Arabic language. It will bear as well photos of Iraq’s civilizations and patrimony in addition to symbols of Iraqi intellectuals and figures” which sent the pumpers into a panic and they cooked up new fantasies to explain their previous lies away or “why a lop isn’t a lop”.

    It’s harsh but absolutely true that pumpers are bald-faced LIARS:-

    “[OKIE_OIL_MAN] – Hearing no later than Wednesday or Thursday. signed off on RV yesterday Shabibi ordered to Parliment meeting today we are 48 hrs. oil production goes into affect on Feb 2.. has to happen before then This source is very very good…” – Jan 31st 2011

    “[doonie] I have great intel from the other side of the pond. It appears that the stage has been set for a stunning movement with the IQD. All major players has signed off on the re-valuation of iraq’s currency and is scheduled to be released to the citizens of Iraq by noon 4-17-2011.”

    “[johnnydinaro] The IMF met with the UN late into the night going into to the early hours of the morning. In the end the UN gave the BIS authority to release the RV. It will be announced today.” April 15 2011

    “[Rich Queen] Notification went out today. The $$$$ floodgates open TOMORROW. I wish I could be clearer than that but I can’t. This is 100% REAL.”, March 1 2011

    “[Topguner] just hearing it is going to happen tonight… so it seems is everyone else”, Feb 2 2011

    “[Buckeye] Hearing no later than Wednesday or Thursday”, Jan 31st 2011

    This is from last year 2010 : “[tk] I HAVE BEEN TOLD BY A HIGH SOURCE THIS IS GOING DOWN THIS WEEK. WELL REALLY THREE DIFFERENT SOURCES TODAY. EVERYTHING IS DONE” June 2010

    And the year before 2009 : “[Dinardaddy] Everyone I speak with, or read, or hear of that seems to be connected is saying it will happen this month.” Dec 15 2009

    “[DinarDaddy] I heard from one contact that said a source of his told him there is a 100% chance of RV by Monday the 21st [Dec 2009]. The expectation was in the $2+ range.” Dec 18 2009

    There is no special secret about the Dinar redenomination – These guys are just masters at tweaking people’s emotions with plausible sounding sales lies.

    “Quad” : “So if there no purpose to this and they will just LOP then why would they keep allowing those outlets that feed the dealers running?”

    Iraq has nothing to do with small-time Western “dealers”. Most Western small-time Dinar dealers, eg, Dinar Trade (before they went into hiding), often buy Dinar’s via contacts in Jordan, etc. They’re not in contact with the CBI at all. Secondly, the reason the dealers keep running is because that’s exactly where they make their money – not from HOLDING Dinar’s in anticipation of 99,000% profit, but from SELLING them (getting rid of them) at huge spreads to inexperienced first-timers who buy them up on the back of false pumper hype. They also have disclaimers stating they have zero obligation to buy them back from you.

    They sell you 1 million Dinars (market worth $854) for +$1,200 (an eye-watering ripoff), then buy back at well under $1,000 (as low as $700), then resell them at +$1,200. They make up to $500 profit per order just for posting banknotes out to amateurs on the back of pumper get-rich-quick scams who in turn get paid from a cut-back from advertising the dealers sites on their pumper sites. “Give me $1k for these notes now and someone else will give you $1m US Dollars for them in the future” is just a variation of the “Advance-fee fraud”. The notes themselves are legal but the misselling of expecting 99,000% profit overnight is fraud. That’s why pumpers use fake pseudonyms rather than their real names, and try and keep hype separate from the sales site as those who have combined the two have already been slapped with “cease and desist” court orders.

    Much of this “I’m part of some ultra-secret intelligence group with top-level ‘sources’ and here’s the latest ‘intel'” stuff in reality, is little more than a bunch of posers pretending to be something they aren’t, and inventing rumors to keep people who bought some Dinar’s both confused as to how the process (and Forex in general) works and hooked into an unhealthy mental state of permanent excited anticipation and almost cult-like devotion to “intel” (manufactured rumor) forums and chat rooms. The dealers and pumpers make money from selling Dinars, not holding them.

    “Quad” : “With the dollar propping up the economy literally, there is no immediate reason to cut those zeros but at the same time they are still obligated to honor the money held outside of the country. Thats the truth.”

    No it isn’t. First up, a redenomination is value-neutral and will make no difference whatsoever to the dollar, and secondly, Iraq can install currency controls during the changeover requiring people to travel to Iraq to change them over. This is exactly what happened back in 2003 when they moved from Saddam Dinar’s to current Dinar’s:-

    Q: “Can dollars also be exchanged for new Iraqi dinars? What will be the conversion rate for dollars?”

    A: “Dollars will not be converted directly into new dinars during the official exchange. Following the exchange, dollars will be convertible directly into new dinars at the market exchange rate. New dinars will also be convertible into dollars as well as other currencies at the market exchange rate.”

    Q: “Will it be possible to exchange currency outside of Iraq?”

    A: “No. The only official currency exchange locations will be located within Iraq.”
    http://www.exchangerate.com/iraq_currency_exchange.html

  12. Mark says:

    Does anyone not believe that Iraq will become one of the wealthiest country’s on Earth? Then why would they not believe that the currency will not also become more valuable? The KWD is worth what 3.27 to 1 dollar? Look at the rest of the Middle eastern countries currency, they are all much higher, so to believe that it willnot happen or cannot happen is not correct thinking. Hey even if it came in at .50 cents or at an averahge of the Baske of currencies, I would be very happy with my investment.Instead of telling people how stupid they are, maybe the risk reward is too good to not try.

  13. Stew says:

    Iran….
    1.00 Iran Rial = 0.000095 U.S. Dollar.

  14. dinarholder says:

    mark you are so right, the value of foreign countries has nothing to do with the amount of currency in circulation or gdp and everything to do with the neighboring countries currency value

    oh snap, stew, thanks for pointing out the Rial value, I’m going to go buy a couple million rial now to cause Iran is going to RV their currency too, who’s with me? My RialDaddy message forums will be up soon, don’t mis out on this great investment.

  15. Okie Oil Man says:

    Brian is right. :(

  16. ded70 says:

    remember .. buy at low sell at highest..

  17. […] is in a nation with the second highest oil reserves in the world and a budget surplus of more than fifty billion US dollars in 2011. According to Transparency International, Iraq has one of the most corrupt […]

  18. […] is in a nation with the second highest oil reserves in the world and a budget surplus of more than fifty billion US dollars in 2011. According to Transparency International, Iraq has one of the most corrupt […]

  19. […] is in a nation with the second highest oil reserves in the world and a budget surplus of more than fifty billion US dollars in 2011. According to Transparency International, Iraq has one of the most corrupt […]

  20. […] is in a nation with the second highest oil reserves in the world and a budget surplus of more than fifty billion US dollars in 2011. According to Transparency International, Iraq has one of the most corrupt […]

  21. rich says:

    i never have understood why its so hard for these loppers to believe that iraq needs to add value to their currency if iraq was gonna lop there would be no need whatsoever to bring in the notes with 3 zeros who cares if their out there and thats exactly what their doing and have been for awhile their people need more purchasing power in their dinar to get them to use it period! if they lop wheres the incentive to use dinar?You cant even compare iraq’s situation with that of turkeys completely different deals alltogetherand there have been too many articles from the cbi to their people saying they will add value to their dinar that doesnt sound like a lop to me loppers!!

  22. Carrie says:

    I think its funny all the arguing going on back and forth. It’s just like any other currency investment. A lot of people invest in different currencies. Most of the time its long term investments and regardless whether Iraq RV’s in a day or in five yrs they do have to RV. They weren’t this poor before the war and they do have the oil. And do you really think its an accident that our countries leaders are involved? LOL not just what Bush said but go back and watch a few of Obama’s speeches. Read between the lines. This is not some scam from Iraq this is a very planned out way for America to make money too.. So its actually a waste of time to argue back and forth whether this Dinar is a good or bad investment.. How many people lose in the stock market everyday?? So do you tell them your stupid for investing? LOL Both sides have great arguments and if someone wants to invest and have faith in something just leave them alone. If others don’t want to invest so be it who cares?? eventually something is going to happen or not happen and either way some of the top ranking investors have invested in the Dinar saying if you have the money to invest then do it but don’t think your going to just get rich overnight. It is a risk.. Just like any and all other investments stock market or otherwise.

  23. jim sigmon says:

    I think revalue would not only help Iraq, but the whole world econ: such as USA. veitiam, china, all the European markets, So what is wrong with our government holding it back, Maybe our President Obama and his clan in Washington , D.C WHat can we do to help the process along, Iraq can afford to help their people as well as ours and others, Like Ron White said” you can’t fix STUPID, in WASHINGTON, pLUS IRAQM

  24. Afgan101 says:

    The afghan money revalued to .02 cents for a nice profit for me of about 20000 dollars per 700 dollar investment. No you really don’t become a millionaire over night currency is just like every other market. Serbian money may not be bad. Croatia was pretty good. Iraq seems like it’s going to only be about a 300 dollar return on a 400 dollar investment. It’s not usually the type of market that you can sit on something a long time and actually make money. It’s easier to go back and forth to silver and gold and make money then it is to speculate on currency right now. One of the reasons I like investing in currency is that is is currency and it has a recognized value.

  25. Stew says:

    That’s an interesting claim.
    In 2002 the afghani was trading for about 50,000 per dollar. They redenominated and deleted 3 zeros. For every 1000 old afghani you had, you got 1 new afghani. The new currency was valued at 50 per dollar, or .02 cents as you say. The old current did not change in value at all.
    Please explain how you made 20,000 on a neutral event where no-one else made any profit.

    http://edition.cnn.com/2002/WORLD/asiapcf/central/10/06/afghan.currency/


IBN Newsletter 'FREE Weekly Subscription'