_Here is a little something to think about. I had a long talk with an old friend of mine that is an international expert in many fields.
This is a basic observation regarding Iraqi contracts with other countries. He said that those contracts are derived in USD for a reason, and OPEC has something to do with that.
If other companies (larger ones) from other countries wish to engage in business or investments, then Iraq will have to stand on it own two feet at some point with their currency. As you are all aware, that will change prior to entering into the WTO as a full fledged member.
Read More Link on Right
_IMF Country Report No. 10/316 <-- See Page 12
"Fiscal policy is on track, but the authorities will need to ensure that the 2011 budget will be consistent with a return to a sustainable fiscal position over the medium term. In this regard, the 2011 budget should be based on conservative assumptions for oil prices and volumes. The large uncertainty about the global economic outlook and the large scope for delays in the increase in oil production in Iraq warrant a cautious approach. The authorities should also continue to make every effort to contain current spending."
"Staff supports the CBI’s intention to continue to manage the exchange rate with a view to keeping inflation low. A strong and stable currency provides a solid anchor for the public’s expectations in an otherwise highly uncertain environment."
(I think this message is loud and clear that the budget must contain a STRONG RATE or the entire country and economy is a destiny for failure.)
Lets talk about the Ministry of Planning (MOF). MOF Amended Exchange Rate Document
1. It is necessary to put central controls to amend the official exchange rate * to reflect the shadow price of the foreign currency, and that is considered one of the necessary requirements to implement the net discounted present value standard and the internal return rate on investment in the economic calculation stated in the instructions, paragraph nine.
3. Estimate the amended exchange rate of the Iraqi dinar to be used in technical and economical feasibility studies and for (1.134) dollar per dinar. This price should be approved for 3 years until re-appreciation by the competent authorities. (Recommended by the UN regarding Chapter 7 guidelines)
Baker Jaber AL Zubaidi: Iraqi Dinar Value should be Raised<-- Article to support this.Reserve is sufficient to raise the value of the Iraqi dinar
Secondly would be regarding need for re-evaluation of the Iraq currency. Back in February of last year, Maliki's quote was "The Iraqi dinar has all the reasons to grow stronger thanks to an increase in revenues and development of the economy,"
Recap of that article:
The Iraqi dinar's exchange rate is suffering from low value against foreign currencies as a result of decades of wars and economic embargo that brought the local currency's exchange rate to the rock bottom from three dinars per dollar in the late 1970s and 1980s to 3,000 dinars per dollar after the 1990 invasion of Kuwait, followed by a 13-year crippling sanctions regime.
We have Dr. Sinan al-Shibibi in news interviews and articles, on more than one occasion throughout the year telling us they are going to raise the value of their currency this year.
The primary objectives of the Central Bank of Iraq (CBI) is to ensure domestic price stability and foster a stable competitive market based financial system. The CBI shall also promote sustainable growth, employment and prosperity in Iraq. The functions of the CBI in addition to achieving its primary objectives are:
* Implement the monetary policy and the exchange rate policy of Iraq.
* Hold gold and manage the state reserves of gold.
* Issue and manage the Iraqi currency.
* Establish, oversee, promote a sound and efficient payment system.
* Issue licenses or permits in addition to regulating and supervising the banking sector as specified by the Banking Law.
* Carry out any ancillary tasks or transactions within the framework of Iraqi law.
Asked whether the removal of three digits from the Iraqi currency is a step aimed at curbing inflation, Al-Shibibi says this issue has nothing to do with inflation, but the concerned parties are taking this issue into great consideration and giving it precedence over other issues, such as the implementation of certain monetary policies and reserve investments.
Rahim notes that the Central Bank has fixed the exchange rate for the US dollar and that it is the only party that controls any increase or decrease in this rate, and he asks Al-Shibibi to confirm this.
Al-Shibibi confirms that this is true, "because managing the exchange rate mainly helps in curbing inflation. The system by which we determine the exchange rate is called 'managed float system,' which means that the price of the dinar is kept floating but is closely monitored so that it can be managed whenever a tangible change occurs.
" He adds that this floating system is linked to the supply and demand for the US dollar, explaining that the Central Bank is obliged to guarantee 100 per cent of the demands by Iraqi banks for the US dollar; otherwise, they might buy it from other local sources at a cheaper price, resulting in the presence of more than one price, which is against the bank's current policy.
Asked whether the Central Bank has sufficient amounts of foreign currency to meet the market's demand, Al-Shibibi says that the bank is obliged to meet the demand in full, adding: "We believe that our reserves are sufficient to meet such demand."
He explains that any request for foreign currencies that takes place in the currency auction is reviewed carefully before it is approved, requiring the Central Bank to always make foreign currencies available. He notes that the Central Bank receives requests for foreign currency in amounts ranging from 150 to 200 millions daily, [currency not specified], which means that it should be able to meet this demand. He explains that exchange rate fluctuation is more dangerous than any drop in the exchange rate.
CBI Consultant: We seek to restructure the currency
December 1, 2010
Baghdad (news) .. An advisor of the Central Bank Mzarsaleh that the bank is seeking to restructure the currency to suit the economic development., “Said Saleh (of the Agency news) today:
We will resort to the restructuring of the currency to suit the new situation and economic progress, noting that the currency is growing day by increasing Alatnag and economic progress, not because of inflation and release as before.
He added: that the value of the Iraqi dinar escalate, and this rise has achieved a major goal in addition to the purchasing power of the dinar rose to the value of imports.
Saleh explained: Ann’s central bank plans to maintain the value of the Iraqi dinar and the essence of monetary policy, which we have adopted the stability of the overall level of prices.
Salih noted that the exchange rate the Iraqi dinar and foreign currencies is the external value of currency, where the value of internal and external value, explaining: the external value is important for the economy of oil-exporting countries and importing of goods of the many, as we believe that monetary policy is part of the targeting of inflation and raise the purchasing power of the Iraqi dinar .
Now you can all relax and let Iraq get their act together. It sometimes looks like an impossible task, but rest assured, they can and they will within a reasonable amount of time.
Ray and I will keep you posted on anything we can as soon as we can.
Blessings until then.