Dinar Exchange Rate Linked to Oil Exports and 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.

Jim Cramer on the Iraq Dinar

Iraq GDP

GDP Country Iraq

Definition of GDP (purchasing power parity): This entry gives the gross domestic product (GDP) or value of all final goods and services produced within a nation in a given year. A nation's GDP at purchasing power parity (PPP) exchange rates is the sum value of all goods and services produced in the country valued at prices prevailing in the United States. This is the measure most economists prefer when looking at per-capita welfare and when comparing living conditions or use of resources across countries. The measure is difficult to compute, as a US dollar value has to be assigned to all goods and services in the country regardless of whether these goods and services have a direct equivalent in the United States (for example, the value of an ox-cart or non-US military equipment); as a result, PPP estimates for some countries are based on a small and sometimes different set of goods and services. In addition, many countries do not formally participate in the World Bank's PPP project that calculates these measures, so the resulting GDP estimates for these countries may lack precision. For many developing countries, PPP-based GDP measures are multiples of the official exchange rate (OER) measure. The difference between the OER- and PPP-denominated GDP values for most of the weathly industrialized countries are generally much smaller. Source: CIA World Factbook - Unless otherwise noted, information in this page is accurate as of January 1, 2011

Al-Qaeda Claims Iraq Kurd Attack

October 07, 2013

An Al-Qaeda affiliate has claimed responsibility for an attack in Iraq’s northern semiautonomous Kurdish region. At least six people were killed in September when fighters tried to storm the headquarters of the security services in the regional capital, Irbil.

In a statement posted on the Internet on October 7, the Islamic State of Iraq and the Levant said it had carried out the September attack in response to threats by regional President Masud Barzani, whom the group described as a "criminal apostate."

The authenticity of the Internet statement could not be independently confirmed.

In August, Barzani expressed readiness to support fellow Kurds fighting Islamists in neighboring Syria.

Iraq’s Kurdish region has been relatively peaceful since the 2003 U.S.-led invasion of Iraq, compared to the rest of the country.

Iraqi Dinar History

The dinar was introduced into circulation in 1932, by replacing the Indian rupee, which had been the official currency since the British occupation of the country in World War I, at a rate of 1 dinar = 13⅓ rupees. The dinar was pegged at par with the British pound until 1959 when, without changing its value, the peg was switched to the United States dollar at the rate of 1 dinar = 2.8 dollars. By not following the devaluations of the U.S. currency in 1971 and 1973, the dinar rose to a value of US$3.3778, before a 5 percent devaluation reduced the value of the dinar to US$3.2169, a rate which remained until the Gulf War, although in late 1989, the black market rate was reported at five to six times higher (3 dinars for US$1) than the official rate.[2] After the Gulf War in 1991, due to UN sanctions, the previously used Swiss printing was no longer available. A new, inferior quality notes issue was produced. The previous issue became known as the Swiss dinar and continued to circulate in the Kurdish region of Iraq. Due to sanctions placed on Iraq by the United States and the international community and excessive government printing of the new notes issue, the dinar devalued quickly, and in late 1995, US$1 was valued at 3,000 dinars.

UN Security Council eases some sanctions on Iraq over 1990 invasion of Kuwait

[Security Council unanimously adopts resolution, removing Iraq from its obligations under Chapter VII of the UN Charter. UN Photo/Rick Bajornas] Security Council unanimously adopts resolution, removing Iraq from its obligations under Chapter VII of the UN Charter. UN Photo/Rick Bajornas 16 Print 27 June 2013 – Welcoming progress on resolving pending issues from Iraq’s 1990 invasion of its smaller neighbour Kuwait, including finding Kuwaiti or third-country nationals, the United Nations Security Council today eased some of its sanctions against Iraq. Unanimously adopting a new resolution, the Council called on the Iraqi Government to continue searching for Kuwaiti nationals and property missing since Saddam Hussein’s 1990 invasion, but terminated provisions in earlier texts that allowed the military enforcement of the measures under Charter VII of the UN Charter. Recognizing that the situation that now exists in Iraq is significantly different from that which existed at the time of the invasion, the Council decided that the issues of missing people and property will now be handled under Chapter VI of the Charter, which calls for a peaceful resolution of disputes. Another key provision of the new resolution is the Council’s decision to transfer the mandate formerly assigned to the High-Level Coordinator for Iraq-Kuwait Missing Persons and Property to the UN Assistance Mission in Iraq (UNAMI). Paragraph 14 of resolution 1284 (1999) requested the appointment of a High-Level Coordinator to report to the Security Council regularly on “compliance by Iraq with its obligations regarding the repatriation or return of all Kuwaiti and third country nationals or their remains” and “the return of all Kuwaiti property, including archives, seized by Iraq.” The new resolution terminates that measure and in turn calls on the head of UNAMI to “promote, support and facilitate efforts regarding the repatriation or return of all Kuwaiti and third country nationals or their remains, and the return of Kuwaiti property, including the national archives, seized by Iraq.” Further, the resolution also requests that Secretary-General Ban Ki-moon consider designating the deputy chief of UNAMI covering political affairs “with the responsibility for overseeing these issues and ensuring appropriate resources for this purpose.” Immediately following the action in the Council chamber, Hoshyar Zebari, the Foreign Minister of Iraq, who had attended the meeting, hailed the decision as an “historic landmark” in relations between his country and Kuwait. He told reporters that the resolution was making “Chapter VII a thing of the past and… concentrating on the present and the future.” Both countries were cooperating in good faith and managed to close all the files on Chapter VII issues. He added that such cooperation, culminating in the Council’s decision today, could serve not only as “a new beginning for relations between our two brotherly countries,” but also as an example to other nations seeking to settle disputes peacefully. In the aftermath of Iraq’s invasion of Kuwait, the Council established the UN Compensation Commission (UNCC), which settles the damage claims of those who suffered losses in the invasion. As of January of this year, the Commission has disbursed some $40.1 billion for more than 1.5 million successful claims of individuals, corporations, Governments and international organizations, leaving some $12.3 billion remaining to be paid. News Tracker: past stories on this issue UN panel pays out $1.3 billion in reparations for Iraq’s invasion of Kuwait

China Is Reaping Biggest Benefits of Iraq Oil Boom

Nabil Al-Jourani/Associated Press An oil refinery in Basra, southeast of Baghdad, in which China has a stake. China has poured money and workers into Iraq. BAGHDAD — Since the American-led invasion of 2003, Iraq has become one of the world’s top oil producers, and China is now its biggest customer. China already buys nearly half the oil that Iraq produces, nearly 1.5 million barrels a day, and is angling for an even bigger share, bidding for a stake now owned by Exxon Mobil in one of Iraq’s largest oil fields. “The Chinese are the biggest beneficiary of this post-Saddam oil boom in Iraq,” said Denise Natali, a Middle East expert at the National Defense University in Washington. “They need energy, and they want to get into the market.” Before the invasion, Iraq’s oil industry was sputtering, largely walled off from world markets by international sanctions against the government of Saddam Hussein, so his overthrow always carried the promise of renewed access to the country’s immense reserves. Chinese state-owned companies seized the opportunity, pouring more than $2 billion a year and hundreds of workers into Iraq, and just as important, showing a willingness to play by the new Iraqi government’s rules and to accept lower profits to win contracts. “We lost out,” said Michael Makovsky, a former Defense Department official in the Bush administration who worked on Iraq oil policy. “The Chinese had nothing to do with the war, but from an economic standpoint they are benefiting from it, and our Fifth Fleet and air forces are helping to assure their supply.” The depth of China’s commitment here is evident in details large and small. In the desert near the Iranian border, China recently built its own airport to ferry workers to Iraq’s southern oil fields, and there are plans to begin direct flights from Beijing and Shanghai to Baghdad soon. In fancy hotels in the port city of Basra, Chinese executives impress their hosts not just by speaking Arabic, but Iraqi-accented Arabic. Notably, what the Chinese are not doing is complaining. Unlike the executives of Western oil giants like Exxon Mobil, the Chinese happily accept the strict terms of Iraq’s oil contracts, which yield only minimal profits. China is more interested in energy to fuel its economy than profits to enrich its oil giants. Chinese companies do not have to answer to shareholders, pay dividends or even generate profits. They are tools of Beijing’s foreign policy of securing a supply of energy for its increasingly prosperous and energy hungry population. “We don’t have any problems with them,” said Abdul Mahdi al-Meedi, an Iraqi Oil Ministry official who handles contracts with foreign oil companies. “They are very cooperative. There’s a big difference, the Chinese companies are state companies, while Exxon or BP or Shell are different.” China is now making aggressive moves to expand its role, as Iraq is increasingly at odds with oil companies that have cut separate deals with Iraq’s semiautonomous Kurdish region. The Kurds offer more generous terms than the central government, but Iraq and the United States consider such deals illegal. Late last year, the China National Petroleum Corporation bid for a 60 percent stake in the lucrative West Qurna I oil field, a stake that Exxon Mobil may be forced to divest because of its oil interests in Iraqi Kurdistan. Exxon Mobil, however, has so far resisted pressure to sell, and in March the Chinese company said it would be interested in forming a partnership with the American company for the oil field. If the United States invasion and occupation of Iraq ended up benefiting China, American energy experts say the unforeseen turn of events is not necessarily bad for United States interests. The increased Iraqi production, much of it pumped by Chinese workers, has also shielded the world economy from a spike in oil prices resulting from Western sanctions on Iranian oil exports. And with the boom in American domestic oil production in new shale fields surpassing all expectations over the last four years, dependence on Middle Eastern oil has declined, making access to the Iraqi fields less vital for the United States. At the same time, China’s interest in Iraq could also help stabilize the country as it faces a growing sectarian conflict. “Our interest is the oil gets produced and Iraq makes money, so this is a big plus,” said David Goldwyn, who was the State Department coordinator for international energy affairs in the first Obama administration. “Geopolitically it develops close links between China and Iraq, although China did not get into it for the politics. Now that they are there, they have a great stake in assuring the continuity of the regime that facilitates their investment.” For China, Iraq is one of several countries it increasingly relies on to keep its growing economy running. China recently became the world’s biggest oil importer, and with its consumption growing, it is investing heavily in oil and gas fields around the world — $12 billion worth in 2011, according to the United States Energy Department. Over 50 percent of its oil imports come from the Middle East, even as imports from Iran have been reduced in recent years. “It’s pretty simple,” said Kevin Jianjun Tu, an expert on Chinese energy policies at the Carnegie Endowment for International Peace. “China needs more energy and needs to diversify its sources.” The Iraqi government needs the investment, and oil remains at the heart of its political and economic future. Currently OPEC’s second largest oil producer after Saudi Arabia, the Iraqi government depends on oil revenues to finance its military and social programs. Iraq estimates that its oil fields, pipelines and refineries need $30 billion in annual investments to reach production targets that will make it one of the world’s premier energy powers for decades to come. The revenue that investment would produce could either help pave over tensions between Kurds, Shiites and Sunnis, or worsen those tensions as competing camps fight over the spoils. But the kind of investment that is necessary has required contracting the services of foreign oil companies that are not always enthusiastic about Iraq’s nationalistic, tightfisted terms or the unstable security situation that can put employees in danger. Some like Statoil of Norway have left or curtailed their operations. But the Chinese, frequently as partners with other European companies like BP and Turkish Petroleum, have filled the vacuum. And they have been happy to focus on oil without interfering in other local issues. “The Chinese are very simple people,” said an Iraqi Oil Ministry official who spoke on the condition of anonymity because he did not have permission to speak to the news media. “They are practical people. They don’t have anything to do with politics or religion. They just work and eat and sleep.” International energy experts said the Chinese had a competitive advantage over Western oil companies working in Iraq. They noted that the Chinese, unlike many Western oil companies, are willing to accept service contracts at a very low per barrel oil fee without the promise of rights to future reserves. While private oil companies need to list oil reserves on their books to satisfy investors demanding growth, the Chinese do not have to answer to shareholders. The Chinese companies and their workers also win high marks for their technical expertise, as long as they are not working in complicated oil fields, like those in deep waters. “They offer a lot of capital and a willingness to get in quickly and with a high appetite for risk,” said Badhr Jafar, president of Crescent Petroleum, an independent oil and gas company based in the United Arab Emirates and a big gas producer in Iraq. He said the Chinese were vital to Iraq’s efforts to expand oil production, adding, “They don’t have to go through hoops to get people on the ground and working.”

Iraq agreed with a British company to build a new oil terminal

Iraq agreed with a British company to build a new oil terminal in May 1, 2013 · Posted in Central Bank or Iraq, Economic News Iraq agreed with a British company to build a new oil terminal in Basra Twilight News / signed oil company BP, the British signed an agreement with Iraq to build a new oil terminal in the port of Khor Al-Zubair in southern Iraq. Iraq straining to open new export outlets to keep up with the plans and promising to increase its oil production of about 3 million barrels, to between 6 and 8 million barrels by 2017. A spokesman for the General Company for Ports of Iraq Tigers net, in an interview seen by “Twilight News”, “The company signed a five-year contract with BP to build the port of New replace the port run-down, and that the BBC has received an official site.” The net that “BP will help Iraq build a marina developed to receive shipments of refined petroleum products, and also the export of products in the future,” noting that “the British company will pay about $ 7 for each cubic meter of refined products to be imported and exported through this port” . Iraq relies on imports to meet the demand for petroleum products such as gasoline, with the face of مصافيه oil problems, and in 2009 signed ABB Inc. CNBC Chinese service contract with Iraq to develop the Rumaila field, which is estimated reserves of about 17 billion barrels and currently produces 1.35 million barrels per day. shafaaq.com

Huge Oil reserve discovered in Kurdistan

Added by Ibrahim Khalil on April 10, 2013. Saved under Business Tags: Kurdistan (IraqiNews.com) The Turkish Company (Kennel Energy) announced discovering a huge Oil reserve in Kurdistan Region. The Turkish Company mentioned in statement “The Turkish companies (Kennel Energy) and (Petuwel), which are investing in Kurdistan Region, announced discovering a huge Oil reserve in (Cheaa Sorkh) Oil field located in northern Iraq.””The company conducted a study on the Oil field, which considered one of the most important Oil field in Iraq, and decided to drill five wells to extract Oil,” the statement added.The statement quoted the executive director of the company as saying “The Oil quality in Cheaa Sorkh Oil field is one of the finest kind of Oil and the production capacity estimated for the Oil wells reach (11,950) Oil barrel per day in addition to the natural gas.”

Iraq occupies 3rd position in world oil reserves

Added by Ibrahim Khalil on April 10, 2013. Saved under Business Tags: Baghdad, Iran, Saudi Arabia Baghdad (IraqiNews.com) Iraq announced rising oil reserves to reach (150) billion barrels. The Minister of Oil, Abdul Karim Laibi, reported a in press statement received by IraqiNews.com that “The Iraq oil reserves increased from (143,1) billion barrels to reach (150) billion barrels after a new study for productive oil wells in Dema oil field.” According to the BB statistic report for the global energy sector Iraq occupies the third position on OPEC in terms of oil reserves after the Kingdom of Saudi Arabia and Iran. Read more: http://www.iraqinews.com/business-iraqi-dinar/iraq-occupies-rd-position-in-world-oil-reserves/#ixzz2Qdr49GaT

Betting on Iraq

General Petraeus on investing in Iraq

IMF expects Iraq’s economic growth to increase 9%

Added by Ibrahim Khalil on March 23, 2013. Saved under Business Baghdad (IraqiNews.com) -The International Monetary Fund expected that the Iraq’s economic growth will increase 9%. In a press statement received by Iraqi News (IraqiNews.com), the IMF stated “Despite a difficult security and political environment, Iraq managed to maintain macroeconomic stability over the past two years. On the back of rising oil production and robust non-oil activity, economic growth has remained strong at about 8 percent in 2012.” “We expect activity to accelerate further to 9 percent in 2013, as oil production increases from just under 3 million barrels per day (mbpd) in 2012 to 3.3 mbpd in 2013,” the statement added. “In 2012, inflation was contained at 6 percent, and we project it to decline slightly next year. On account of strong oil proceeds, CBI reserves reached US$70 billion at the end of 2012, while the Development Fund for Iraq (DFI) rose to US$18 billion,” the statement concluded Read more: http://www.iraqinews.com/business-iraqi-dinar/imf-expects-iraq-s-economic-growth-to-increase/#ixzz2OvU49jPF Follow us: @IraqiNews_com on Twitter | IraqNews on Facebook

Exxon Mobil Oil Corporation allocates 1,650$ billion to develop Qurna field

Added by Ibrahim Khalil on March 25, 2013. Saved under Business (IraqiNews.com) -The US Exxon Mobil Oil Corporation allocated more than USD (1,650) billion to develop Qurna Oil field in Maysan province of southern Iraq during 2013.The Head of the Joint Committee tasked with running the Oil field, Mahdi Abdul Razaq, mentioned in press statement “The US Oil Corporation has allocated more than USD (1,650) billion to increase the production of Qurna Oil field from (480,000) barrel per day into (5 40,000) Oil barrel daily during 2013.”The Iraqi official expected that the daily production of the Oil field to “reach (600,000) barrels at the end of 2013 and to hit (900,000) barrels daily at 2015.”The US Exxon Mobil Oil Corporation is one of the oil companies that works in Kurdistan Region, but the Iraqi Federal Government enlisted the US company within the black list for contracting with KRG without obtaining the consent of the Central Government. \END\ Read more: http://www.iraqinews.com/business-iraqi-dinar/exxon-mobil-oil-corporation-allocates-1-0-billion-to-develop-qurna-field/#ixzz2OpfWv9QD Follow us: @IraqiNews_com on Twitter | IraqNews on Facebook

Jim Cramer on the Iraq Dinar

Secretary Of State Kerry In Baghdad, With Concern Over Syria

by Dana Farrington

March 24, 2013 6:59 AM

Enlarge image

Secretary of State John Kerry is in Baghdad Sunday on an unannounced visit following President Obama's Mideast tour.

Alex Brandon/AP

Secretary of State John Kerry is on an unannounced trip to Baghdad Sunday, and according to an official, the buzzword of the trip is "engagement."
NPR's Michele Kelemen, who's traveling with Kerry, tells our Newscast Desk that Syria is on his agenda:

"He's ... pressing [Iraqi Prime Minister Nouri al-Maliki] to crack down on, as one official put it, 'the nearly daily Iranian flights over Iraqi territory to Syria.' The U.S. accuses Iran of shipping weapons to Bashar al-Assad's regime and is warning Iraq that these shipments are fueling the conflict and are dangerous to the region."

The Associated Press reports the overflights "have long been a source of contention between the U.S. and Iraq." Iraq promised to inspect the flights last year, the AP says, but an official says only two have been checked since then.

IMF Mission Concludes Article IV Discussions with Iraq

Press Release No. 13/87
March 21, 2013
 
An International Monetary Fund (IMF) mission, led by Mr. Carlo Sdralevich, met with an official Iraqi delegation headed by the Acting Minister of Finance, Dr. Ali Al Shukri, in Amman, Jordan, during March 2-12, 2013 to conduct the Article IV Consultation discussion. The IMF mission met with the Acting Minister of Finance, the Acting Governor of the Central Bank of Iraq (CBI), head of the Board of Supreme Audit, AbdulBasit Al Turki Said, and other Iraqi officials from the ministries of finance, planning, and oil, and representatives from the Central Bank and the Board of Supreme Audit. The team also met with representatives from the Iraqi banking and business community.

At the conclusion of the mission, Mr. Sdralevich made the following statement:
“Following the recent expiration of the Stand-By Arrangement with Iraq approved in 2010, the IMF is committed to continue close collaboration with Iraq to support its development and help the government improve the social conditions and employment opportunities of Iraqi citizens.

“Despite a difficult security and political environment, Iraq managed to maintain macroeconomic stability over the past two years. On the back of rising oil production and robust non-oil activity, economic growth has remained strong at about 8 percent in 2012. We expect activity to accelerate further to 9 percent in 2013, as oil production increases from just under 3 million barrels per day (mbpd) in 2012 to 3.3 mbpd in 2013. In 2012, inflation was contained at 6 percent, and we project it to decline slightly next year. On account of strong oil proceeds, CBI reserves reached US$70 billion at the end of 2012, while the Development Fund for Iraq (DFI) rose to US$18 billion.

“While we welcome the achievement of a budget surplus of about 4 percent of GDP in 2012, largely due higher-than expected oil revenues, the execution of the 2013 budget should be aligned with available financing and provide for the accumulation of adequate fiscal buffers in the DFI, which suggests to target a budget surplus in 2013. Public financial management should be strengthened, notably by phasing out off-budgetary spending practices and reliance on state-owned bank financing to support public enterprises. Approval of additional spending commitments during the fiscal year should also be avoided.

“Financial sector policies are improving, but more remains to be done. The CBI’s ongoing efforts to refine monetary policy instruments, strengthen banking supervision, and accelerate the restructuring of the banking system are crucial. In this respect, the recent steps to clean up the balance sheets of Rasheed and Rafidain in preparation for their restructuring and recapitalization are key. The CBI should also take measures to gradually liberalize the provision of foreign exchange through its auctions, with the objective of avoiding in future the turbulence experienced by the market in the past year.

“Iraq will need to address serious medium-term challenges in order to be able to create the conditions for high and sustainable growth that is necessary to improve the living standards of its people. The economy continues to suffer from severe structural weaknesses such as a small nonoil sector, high unemployment, public sector dominance, and a weak business environment. In this context, we discussed the role of economic policies in leveraging Iraq’s potential and creating an enabling environment.

“With regard to the fiscal sector, the budget must be managed carefully to maintain macroeconomic stability, meet Iraq’s large social and investment needs while continuing to accumulate buffers to address oil market volatility, and ensure medium-term fiscal sustainability. At the same time, Iraq needs to strengthen fiscal institutions and public financial management to make sure that the large oil revenues are used effectively and transparently.

“Developing a stronger financial sector development will require moving away from the current model in which weak state-owned banks dominate the financial sector and enjoy favorable treatment vis-a-vis private banks. A solid banking system that can support growth and employment will require the full financial and operational restructuring of state-owned banks and creating a level playing field for both private and public banks.

“Finally, while oil-growth is projected to remain high over the coming years, boosting non-oil private sector growth will need a long-term government strategy centered on improving the business environment and opening up opportunities for the private sector.”

UN envoy in Iraq condemns attacks on government offices

UN envoy in Iraq condemns attacks on government offices Special Representative Martin Kobler. UN Photo/Rick Bajornas 14 March 2013 – The top United Nations official in Iraq today strongly condemned the attacks targeting the Ministry of Justice and other locations in the capital, Baghdad, which killed and injured dozens of people. “Today’s terrorist attacks targeted the heart of Iraq’s democratic institutions. I condemn them in the strongest possible terms,” the Special Representative of the Secretary-General for Iraq, Martin Kobler, said in a statement. According to media reports, at least 18 people were killed and 30 others injured in what appear to have been coordinated attacks targeting government buildings. “The Ministry of Justice is vital for efforts to build a stable, prosperous and democratic country where the rights of the people of Iraq are protected and the rule of law is upheld,” added Mr. Kobler, who is also the head of the UN Assistance Mission for Iraq (UNAMI). Mr. Kobler extended his condolences to the families of the victims and wishes for a speedy recovery to those wounded.

Sales of dollar by CBI rise on Wednesday auction.

06/03/2013 16:35:00 Baghdad/ NINA /--Sales of dollar by the Central Bank of Iraq CBI rose on today's auction to 125 million and 831 thousand dollars after hitting yesterday only 113 million and 103 thousand dollars, with a stable exchange rate of 1166 dinars per dollar, as well as sales and purchase of other foreign currency showed rising on Wednesday auction. The daily bulletin published by the Central Bank said : "The demand for dollar was ranging today around 25 million and 950 thousand dollars./End Central Bank of Iraq

Iraqi Dinar Could Rise as Much as 15%

The General Secretariat of Iraq’s Council of Ministers has ruled out the replacement of the currency or cancellation of three zeros “at this stage”, and it is seeking to raise the value of the dinar against the dollar. The Secretary General of the Council of Ministers said that the project to replace the currency, dropping the three zeros, was discussed but is not a priority for the government at this time being, and “there is no real problem in this field”. He noted that replacing currency requires “large adjustments”, and the process of withdrawing the existing money is an enormous and difficult task. He stressed that some have the mistaken impression that deleting the zeros will “reduce the size of the money in circulation as a block”, but in fact it does not reduce it even by 1 percent, and while the government believes that the change of currency is a good thing under appropriate conditions, it is not a priority. The Secretary-General said the dinar should be stronger than it is now, and implied that an exchange rate of 1,000 dinars to the dollar — a rise of about 15 percent — might be sustainable. By John Lee (Source: Iraqi Cabinet)

Standby Agreement Ends, sequestration, fiscal cliff, budget cuts… smoke and glass

copy right Dr. Israel Molina Coincidence or fact? The United States employs numerous strategies in dealing with countries. Grand Strategies are Diplomatic, Economic and Military. Diplomatic strategies involve negotiation, reasoning resolving issues to the equal benefits of all nations. Economic Strategies involve sanctions devaluing a country’s currency to affect the county’s ability to wage war against the U.S. Military Strategies involve the use of military power against a nation. In 2003 the U.S. used the Economic Strategies against Iraq and through the U.N. and the IMF devalued the Iraq Dinar. Cutting the purse strings of a nation is critical in waging war; a country has no financial means to wage war against the U.S. As the U.S. destroyed Iraq’s military it also destroyed its economic infrastructure. In order to make the country whole again the U.S. agreed to a currency exchange securing 4 Trillion Iraqi Dinar. The U.S. and the E.U. currently make up almost 90% of Iraq’s Foreign Currency Reserves which for all practical purposes should put the Iraq Dinar at almost 1.5 to the U.S. dollar. To insure that Iraq rebuilds their economic structure both macro and micro the IMF impose a Stand By Agreement which will provide capital to the nation. In 2010 the Stand By Agreement (SBA) included a “Exchange Rate Program” which allowed the Central Bank of Iraq to revalue the Iraq Dinar to 1170 to one U.S. dollar although better than the 2000 to one U.S. Dollar but well under its real value. In July 2012 the IMF extended the Stand By Agreement to 23 Feb. 2013. 23 Feb. 2013 the Stand By Agreement ended, the U.S. faces Sequestration and major budget cuts that will bring down the debt. Will the budget be reduced because of cuts or is it that the U.S. is on the verge of profiting on its 4 trillion Dinar which will be worth $12 trillion U.S. Dollars? It’s all about the money, follow the money…

Statement by IMF Managing Director Christine Lagarde on G-20 Ministerial Meeting in Moscow

Ms. Christine Lagarde, Managing Director of the International Monetary Fund (IMF), issued the following statement today after the conclusion of the Group of 20 Finance Ministers and Central Bank Governors meeting in Moscow: “I would like to thank the Russian authorities for hosting us, including President Vladimir Putin, Finance Minister Anton Siluanov, and Bank of Russia Governor Sergey Ignatiev. They were instrumental in facilitating discussions among G-20 ministers and governors on the significant challenges facing the world economy, and helped everyone to continue deliberations over policy actions needed to strengthen the global economic recovery. “As emphasized by the G-20, global growth is still weak, with unemployment remaining unacceptably high in many countries. The weak global performance derives from policy uncertainty, private deleveraging, continued fiscal drag, as well as insufficient progress on rebalancing global demand. Implementation of the financial reform agenda to build a more resilient financial system remains a priority. Credible medium-term fiscal plans also need to be in place to provide flexibility while growth is more fully restored. “I welcome G-20 resolve to achieve a lasting reduction in global imbalances through joint actions to avoid persistent exchange rate misalignments, and the group’s commitment to refrain from competitive devaluation, to resist protectionism in all forms, and to keep markets open. It was heartening to see the G-20 reaffirmed its commitment to move more rapidly toward more market-determined exchange rate systems and exchange rate flexibility to reflect underlying fundamentals. “We think that talk of currency wars is overblown. People did talk about their currency worries. The good news is that the G-20 responded with cooperation rather than conflict today. “Lastly, I welcome G-20 support for completing the 2010 quota reform agreement, and I urge countries to quickly ratify the measures necessary to implement this important agreement. The G-20 continues to demonstrate its interest in global economic cooperation through the IMF. I know that the 188 member countries of the Fund are committed to reaching agreement on the 15th General Review of Quotas, including a new quota formula, by January 2014. “Many of the key issues discussed today will be reviewed at the Fund’s International Monetary and Financial Committee´s spring meeting in April, and at the next G-20 ministerial meeting, which will take place at roughly the same time in Washington. Until then, it is crucial that all countries continue efforts to strengthen global recovery

The SBA ends!!! Along with the "Rate Exchange Program"

IMF Approves Seven-Month Extension of Stand-By Arrangement for Iraq Press Release No. 12/286 August 3, 2012 The Executive Board of the International Monetary Fund (IMF) approved on July 20, 2012—on a lapse-of-time basis1—a seven-month extension of Iraq’s Stand-By Arrangement (SBA),to February 23, 2013. The SBA had been scheduled to expire on July 23, 2012. The extension, which had been requested by the Iraqi authorities, will provide them with time to implement the policy measures needed to complete the combined third and fourth reviews under the SBA. The extension will, in particular, provide time for discussions on fiscal policies for the remainder of 2012 and on measures to improve the functioning of the exchange regime. The two-year Stand-By Arrangement (SBA) in the amount of SDR 2.38 billion (about US$3.58 billion), was approved by the IMF's Executive Board on February 24, 2010 (see press release 10/60). The IMF's Executive Board completed the first program review on October 1, 2010 (see press release 10/373), and the second review on March 18, 2011 (see press release 11/90). At the time of the second review, the program duration was extended by five months to July 2012, along with a rephasing of program disbursements based on a shift in financing needs. Total resources currently available to Iraq under the arrangement amount to the equivalent of SDR 1307.24 million (about $1.96 billion). --------------------------------------------------------------------------------

Jim Cramer (Mad Money) on the Iraq Dinar