Tag Archive | "IQD"

Why Two Exchange Rates?


By Mark DeWeaver.

Since the Central Bank of Iraq (CBI) began changing the rules for its USD auctions in 2012, Iraq has been operating a de facto dual exchange rate system. (There’s a summary of some of the CBI’s recent rule changes on pages 12-14 of this report from Sansar Capital.) For those with access to the CBI auction—mainly banks and (as of March, 2013) importers using letters of credit—the rate has been fixed at IQD 1,166: USD 1.00. For the rest of us, the dinar has ranged from 1,194 to 1,292, with two major episodes of depreciation in mid-2012 and mid-2013 (see chart).

The ostensible purpose for this arrangement is to limit illicit outflows of foreign exchange to Iran and Syria. In practice, it serves mainly as a subsidy to banks, large importers, and anyone in a position to generate phony trade documents. The losers include everyone from foreign investors in Iraqi stocks to the government itself, which gets the CBI rate on its oil-export revenues.

Iraq is unusual in this regard. Dual (or even multiple) exchange rates are usually only found in countries suffering from chronic trade deficits and foreign exchange shortages. Typically the objective is to make foreign exchange available for “essential” imports or to control inflation by lowering import prices. Examples include Hitler’s Germany, China in the 1980’s and early ‘90’s, Burma prior to 2012, and Venezuela today. (See this note from the Asian Development Bank for an excellent introduction to this topic.)

It’s hard to see why Iraq belongs on this list. The country has a trade surplus, inflation is low, and the central bank has ample foreign exchange reserves. Even USD outflows to Iran are presumably no longer a major issue.

One exchange rate should be enough.

Posted in Investment, Mark DeWeaver on Investments and FinanceComments (9)

APRIL FOOL: IBN Reporter Wins Award


By Nora Lenderby.

Iraq Business News is pleased to announce that our intrepid reporter John Lee has been honoured with an award from the Goldman-Rothschild Institute for Monetary Efficiency.

Although no formal announcement has been made, we understand that the award relates to the maintenance of monetary stability in Iraq.

At first Mr Lee was reluctant to discuss the award, which was conferred at a private ceremony at the organisation’s underground headquarters deep in the Swiss Alps, but when pressed he said it was given in recognition of his efforts in helping to limit the number of beneficiaries of the recent thousand-fold revaluation of the Iraqi Dinar (IQD).

What people don’t yet know,” he said, “is that the ‘Big RV’, the Global Currency Reset (GCR), has already happened, and the big players have all cashed out. That door is now closed – job done. We’ve turned our billions of dollars into trillions of dollars.

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The Truth Behind #WeAreThePeople


#wearethepeople has been tweeted more than four million times in the past three weeks.

It looks like an anti-government protest, but who’s really behind it?

The Trending team investigates how financial ‘gurus’ are using the hashtag to encourage people to buy Iraqi dinar.

Click here to listen to the report from BBC.

(Source: BBC)

(Iraqi Dinar image via Shutterstock)

Posted in Banking & FinanceComments (100)

Three Indicted for $23m Dinar Fraud


A federal grand indicted three men from the Toledo area for their roles in the operation of a $23 million fraud scheme involving the sale of Iraqi dinar currency and two non-existent hedge funds, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, and Kathy Enstrom, Special Agent in Charge, IRS-Criminal Investigation, Cincinnati field office.

Those indicted are: Bradford L. Huebner, 66, of Ottawa Hills, Ohio; Charles N. Emmenecker, 66, of Sylvania, Ohio, and Michael L. Teadt, 67, of Maumee, Ohio.

Rudolph M. Coenen, age 47, of Jacksonville, Florida, has already pleaded guilty to crimes related to his role in the conspiracy.

The men are charged with conspiracy to commit wire fraud and wire fraud. Huebner is also charged with multiple counts of money laundering, structuring and willful failure to file currency and transaction reports.

As a result of the defendants’ conduct, investors lost about $23.8 million from dinar sales and more than $700,000 from the sale of non-existent hedge fund “seats” and “placements,” according to the indictment.

“These defendants made false statements time and again to convince people to part with their savings and hard-earned cash,” Dettelbach said. “The fact that they falsely claimed one member of the conspiracy was wounded while fighting in Iraq is particularly egregious.”

“Illegal activity involving the investment industry has brought financial ruin to many Americans,” Enstrom said. “IRS Criminal Investigation is committed to unraveling complex investment schemes to ensure that the promoters of these schemes do not use the financial-services industry for personal gain.”

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New 50,000 IQD Notes and Coins


The Central Bank of Iraq has reportedly announced the production of new 50,000 IQD bills and coins from the beginning of the New Year.

The new dinar bill and coins will be printed in Arabic and Kurdish.

The Bank’s Deputy Governor said that they want to produce bills of higher value than the current largest denominationi, the 25000 bill.

He explained that the coins will be produced to “make commodity marketing easier for people”.

(Source: Erbil Governorate)

(Dinar image via Shutterstock)

Posted in Banking & FinanceComments (25)

Economists Divided Over Deletion Of Zeros


By Amina al-Dahabi for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

The Central Bank of Iraq (CBI) has been attempting to delete three zeros from the Iraqi currency since 2003. This project has raised many concerns among the Iraqi public and within the business community, and Iraqi economists are divided. While some support the project and consider it a chance to decrease inflation and unemployment, others warn of economic shocks that may prevail over the Iraqi market as a result of the project’s implementation.

Following amendments made by the CBI, implementation of the project has been postponed several times. This is because of fears that are mostly related to the lack of security, the presence of a market open to foreign commodities without any restrictions, the prevalence of counterfeit money in the market and rampant corruption in the country.

The independent Iraqi News Agency (INA) quoted Abdul Hussein al-Yasiri, a member of the Iraqi parliamentary Finance Committee, as saying that 2014 will witness the deletion of zeros from the Iraqi currency. He noted that the deletion will occur in coordination with the CBI, and that as a result of the project, the number of banknotes in circulation will be reduced from 4 billion to 1 billion.

Haider al-Abadi, the head of the Iraqi parliamentary Finance Committee, told Al-Monitor that while deleting zeros from the current currency is possible, this has been postponed until after parliamentary elections. He noted that studies are being carried out to ensure that, following the currency change, counterfeiting is limited and that Iraqis don’t go back to trading in the old currency.

The step to delete zeros from the currency has been postponed several times, leading the parliamentary Economic Committee to demand that the CBI accelerate this project, as Al-Sharqiya reported. In a news conference held July 6, the Economic Committee confirmed that the deletion of zeros will lead to an increase in the value of the Iraqi dinar and will have positive repercussions, including a reduction in unemployment and poverty rates in the country.

Posted in Banking & FinanceComments (130)

Australian Bank had Talks with Iraq, Despite UN Sanctions


By John Lee.

ABC and Fairfax Media report that Note Printing Australia, which is owned by the Reserve Bank of Australia, tried to do business with the Saddam Hussein regime despite UN sanctions.

Company officials are said to have visited Iraq in 1998, during the UN sanctions, to discuss a contract to replace the country’s paper currency with polymer banknotes.

During the trip, codenamed Delta Project, they met a middleman, Hussein’s brother-in-law and bodyguard Arshad Yassin, who confirmed that Hussein had seen samples of the banknotes and was keen to adopt them. Iraq allocated $US65 million for the project.

Two RBA banknote firms, NPA and Securency, face criminal charges for allegedly paying kickbacks to win contracts overseas.

(Source: The Guardian)

Posted in Banking & Finance, Industry & Trade, SecurityComments (0)

Dinar Exchange Rate Linked to Oil Exports, Federal Reserves


By Omar al-Shaher for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

According to an Iraqi financial expert, the value of Iraq’s federal reserves currently amounts to about $80 billion, following the recent increase in the country’s oil exports. Nevertheless, no information was made available by the Central Bank of Iraq (CBI) to this effect.

Speaking to Al-Monitor, Iraqi financial expert Hussein al-Asadi said, “According to my information, the value of Iraq’s federal reserves currently amounts to about $80 billion. This includes funds, precious metals and other items.”

Nevertheless, the spokesman for the CBI, which is charged with managing the federal reserves of Iraq, has yet to issue a statement in this regard. Meanwhile, Al-Monitor’s correspondent in Baghdad failed to obtain comment from the bank’s governor, Abdul Basit Turki, to this effect, or determine the identity of those authorized to speak to the media. The bank has only issued statements to comment on the developments of its work.

The last comment made by the CBI regarding the country’s federal reserves dates back to Jan. 31, 2012, when the bank denied the “decline of gold reserves.” The CBI stated, “They have been stable throughout the past months and amount to 29,730 tons.”

Asadi added, “The US dollar is the main currency in the Iraqi reserves. There are also some reserves in other currencies, in addition to gold. … Due to the troubled military and political conditions of the country, Iraq’s reserves cannot be invested to a large extent, as is the case in China or the United Arab Emirates, for instance.”

“Iraq is distributing its reserves to a number of banks just to protect [these funds], although it does generate some interest on the deposits,” Asadi added.

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