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.