Dinar Boosted by Iranian Election

By Mark DeWeaver.

Since the beginning of 2012 the Iraqi dinar has been on something of a roller coaster ride. Changes in central bank policy combined with strong dollar demand from Iran and Syria have twice pushed the market rate above 1280. Both times, subsequent increases in dollar sales at the central bank’s currency auctions then steered the rate back toward 1200. (See chart. Data is from the Central Bank of Iraq website.)

In the most recent iteration of this cycle, the dinar appears to have gotten a boost from the Iranian election held on June 14. Hopes for an easing of US sanctions following the victory of moderate candidate Hassan Rouhani seem to have led to a significant drop in Iranian dollar demand both at home and abroad. The Iranian rial is reportedly up 20.7% post-election, rising from 36,200 to the dollar to 30,000. Iranians are now said to be selling down hoards of US dollar cash, the total value of which the Central Bank of Iran puts at USD 18 billion.

The effect on the dinar has been less dramatic but is still easy to see on the chart. The Iraqi currency rose 1.0% from June 13 to June 15 and was up 2.9% (to 1215) as of June 27.

How long this trend can continue remains to be seen, however. President Obama earlier this month signed an executive order that will take effect July 1 and is intended to increase the pressure on the rial.

16 Responses to Dinar Boosted by Iranian Election

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  2. Adrian 28th June 2013 at 13:14 #

    This is the beggining of the end for the Iraqui Dinars investors. However, there still some of you that belived that when Iraqui came out of chapter 7 it was going to be beneficial for them. The sad truth is that the only beneficiaries in all this were the brokers and dealers. CONGRATULations !!!!!

  3. kattan 29th June 2013 at 19:49 #

    Abdel Basit Turki has recently asked the commercial banks to sell the Dollar at a lower rate in the market. This is in order to appreciate the value of the Dinar which has substantially depreciated recently.

    What Abdel Basit Turki does not understand is that commerical banks are not ready to accept to sell the Dollar on the cheap for long as this means less profit.

    It is time for Abdel Basit Turki to either come up with a genuine monetary policy or resign.

  4. shaheed hussain 3rd July 2013 at 05:56 #

    No the coming time is Iraqi Dinar's....
    The country is the worlds largest oil producers and turn to open a large gate

  5. Kaseem 4th July 2013 at 11:46 #

    Looks like I got scammed on the Dinar. If they redenominate instead of revaluing then I am screwed. Fortunately I made only a modest investment so I will recover and move on.

  6. cooper 4th July 2013 at 15:58 #

    RV Tomorrow! Always tomorrow.

  7. Curtis Wilson 8th July 2013 at 18:16 #

    Hi, to whom i'm writing to are we ever going to see the RV on the Dinar's for the US Dollar's

  8. Stew 9th July 2013 at 00:54 #

    There is no big RV of the dinar coming. You have been scammed.
    There are two things being talked about in Iraq. One is that there are plans to redenominate the dinar. They will drop 3 zeros from the dinar Iraqis will have to turn in all their dinar for new dinar. Iraqi’s will receive 1 new dinar for every 1000 they turn in. People holding dinar in shoe box half way around the world will not be able to exchange for new dinar. New dinar will only be available in Iraq. Foreign holders of dinar will have to hope that someone will buy their currency back from them and try to get it back to Iraq to exchange for new currency. The same scam artist that sold you dinar may be willing to buy it back at a much lower price, but they may close up shop and leave you holding worthless paper. Read up a little about currency redenominations and you will understand people don’t make money off the process. Iraq has plans to do this, but they have announced that those plans are on hold for now. Which means they still have the plan and will probably do it sometime in the future.
    The other thing being talked about in Iraq is that some people think that because Iraq has such high currency reserves, they can raise the value of the currency. That’s probably not the case because at the same time that they have increased reserves they increased the amount of currency in the system proportionally to the growth in reserves. All of this talk by Iraqi officials to increase the exchange rate refers to raising the rate 1, 2, 3, maybe even being crazy and raising it slowly 10%. But that is a totally separate issue from the redenomination.
    So called gurus have used those two discussions in Iraq and mixed statements about 2 different things to confuse people into thinking a big RV is coming. That is not going to happen. The best that will happen is the dinar might increase in value to about 1000:1 and at some point will be redenominated removing 3 zeros and moving to 1:1 at that time.
    On the other hand, Iraq is a very volatile nation. The country could fracture and the value of the dinar could sink.
    The street value of the dinar is worse than the CBI official value. That means the people of Iraq have no confidence in their currency. They don’t want it, they would rather hold dollars. That’s hard cold proof that Iraqis are not falling for this RV scam. They know better. They know a big RV is not going to happen. If they did think a big RV was going to happen they would want to hold dinar and the value would be much higher than the CBI official rate of 1166. The street rate went all the way to 1300:1 recently, then all this good news brought the street rate back down to 1215. It has now gone back to 1225, so the dinar euphoria in Iraq seems to over and never really amounted to much. Street rate never made it to 1166.

  9. Redhand 9th July 2013 at 22:58 #

    The amazing thing of the idea of a grand RV is utterly preposterous as if over night the Iraqis will make the value of the dinar go up by 1000%??

    There would be madness in Iraqi society. Packs of men like wild dogs going house to house killing people indiscriminately for something given such a great value. No time in the history of mankind's use of currency has ever an event as described in the "RV Scenario" ever happened. NONE.

    I even read recently someone disputing Turkey's re-denomination not being a "lop" omg...i just shook my head. Iraq will be no different than Brazil or Turkey. Like stew said they will get the value closer to 1000 to 1 and then remove three zeros making 1,000 equal to 1. The Millions of dinars that everyone has will be worth thousands. END OF STORY. You have a better chance hitting a Lotto Jackpot than trying to be an overnight millionaire buying the Iraqi Dinar or any other currency for that matter....

    There are no shortcuts in life. There is only school, work, taxes, and death...

  10. wayne 15th July 2013 at 14:14 #

    No Removal of Three Zeros from Iraqi dinar in 2013:

    Members of Parliamentary committee have refused an idea about the Iraqi dinar that the government of Iraq is planning to remove the three zeros from its main denominations. When parliamentary members were asked about this figure then they said that it cannot be done because the ground is not prepared yet.

  11. wayne 15th July 2013 at 14:21 #

    If Iraq removes the zero's they will be cutting their own throats. The cut on their currency value will affect them as well. Why do you think they have created the smaller denominations as well as coin currency? Well, I believe so they can buy more easily and be able to go to the mall and buy something with a 100 dollar bill instead of a 10k or 25k bill and be able to get "Change" back..... come on people!!!
    I was in Iraq from 2003 to 2007 - I seen them exchange the old notes for the new money we now have. Do you honestly believe we have been scammed? I do not!!

  12. wayne 15th July 2013 at 14:23 #

    Oh ya, Iraq is use to having a 3 to 1 currency..... go crazy and kill each other,,,,,,, come on, get a grip!!

  13. Grant 24th July 2013 at 18:30 #

    The real value in dinar will be if the economy finally turns around. It will not be overnight due to a revaluation, but by progress. It has the potential to sky rocket with a few good years of stability. It could also go the opposite direction. It is a bit of a gamble, but I see no real value in a revaluation, dropping zero's, etc. There will not be an overnight millionaire just from a revaluation like it seems many dinar holders are hoping for. Hope for stability and economic growth, not the lotto.

  14. Wendy 22nd August 2013 at 02:19 #

    I hear all the time tomorrow. Well does anyone know. Like soeone for obce to tekl the truth and not sugar coat it. I have enough people doing that in my lufe.

  15. RB 23rd August 2013 at 15:44 #

    Officials cannot agree to drop the zeros??? here`s a thought> how about rv at 50% of the bills worth for say 6 months to see what happens??? if all goes well then another rv for the remainder, if all does not go well then drop the zeros" at lest try something to stimulate the economy!!

  16. javier 9th June 2014 at 11:19 #

    When the said to removed the zeros is to create another currency, Dont missedinformed the public if you dont know how to read arabic.The Dinar will rv , just hang tied.


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