PM Maliki: The Iraqi Dinar has all the reasons to grow stronger

Hat tip to DS on this one, nice job gents!

IRAQ. Iraqi Prime Minister Nouri al-Maliki said earlier this week that the process to re-evaluate the Iraqi dinar has to do with economic conditions which have to be strengthened, reported news agency Aswat al-Iraq.

“The Iraqi dinar has all the reasons to grow stronger thanks to an increase in revenues and development of the economy,” Maliki said in response to some questions through the National Information Center.

“The government would not rush matters but would rather work on finding all the guarantees to render this measure a success. The Central Bank of Iraq (CBI) is currently entrusted with drawing up a study on the whole issue and would give its decision soon,” said the Iraqi premier.

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.

The exchange rate fell even more after 2003 to reach 1170 dinars per dollar due to the CBICBI’s policy of daily auction, in effect for more than five years now.

The policy was lambasted by several economists on the grounds that these auctions do not give the real value of the country’s local currency.

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18 Responses to “PM Maliki: The Iraqi Dinar has all the reasons to grow stronger”

  1. Mike Rose says:

    Link to XE:

    Also if you go to the CBI website you can now see the lower denominations down to the coin!

    STATEMENT: The Central Bank of Iraq has announced their plans to redenominate the Iraqi Dinar to ease cash transactions. By the end of 2010, they intend to drop three zeros from the nominal value of bank notes. It should be noted that the actual value of the dinar will remain unchanged. That means that 1,000 IQD (pre-redenomination) and 1 dinar (post-redenomination) will both be worth the same amount in US Dollars. As stated by the Central Bank of Iraq, their mandate is to “ensure domestic price stability and foster a stable competitive market based financial system.” For more information about the redenomination, read “Iraq plans to slice three zeros off currency notes.”

  2. Alberto says:

    Does anyone has an idea of how much will be IRS tax on the iraqi dinar conversion to US dollars??

  3. Humberto says:

    Thank you Adam for this information, go dinar.

  4. rasec says:

    Absolutely absolutely prime minister.
    tomorrow big day for them.

  5. Andrew says:

    The way I see it, you have to open a Warka account to be completely shielded from the rebase. Holding cash is not the way to go. Youll just end up breaking even and no dealer will exchange that many notes anyway.

  6. sexymomof2 says:

    When will it happen?

  7. Emily Jones says:

    Alberto, It is 38% Federal and 6% State in most places and then you need a minium of 2% for the Exchange. So I am putting 50% of my amount in as savings for future taxes. If I do not have to pay that much then I was smart to save some… for future use.

  8. Steve Stone says:

    Could you put the dates on your label of your posts? Currently, it only shows the dates on the comments to your posts.

    Thanks you.

  9. jenny says:

    missed the chat other night, wanted to know how that went. What banks are we going to be able to go to once there is a rv?

  10. dwhite says:

    Since the CBI is dropping 3 zeros by the end of the year, does this mean my $1,550,000 will be $1,550 or what?

  11. Fortune & Glory says:

    The tax will either be short term or long term capital gains, if you convert some time this year.

    Short term capital gains is essentially the rate for your tax bracket. Long term capital gains is 15%.

    Now, Maliki at some point in the next six months should say we want the American military to stay on a bit more and Iraq will underwrite the cost and pay x billion a month for reparations.

    Should be no problem. Iraq stands to have as much oil as Saudi Arabia…so long as it is stable. Paying for stability ought to be worth it and it would come at a good time for this administration.

  12. Jessica says:

    Re-denominating the dinar thankfully has nothing to do with us losing value. On an up side however, it only justifies re-evaluating the dinar even more because of the necessity alone. Meaning, like many people have said before, who wants to carry a million one dinar notes to buy milk? This is great hope for us that our investment will pay off sooner than later! Go dinar!

  13. nhan says:

    this has been posted before

  14. Milehigh says:

    You guys are wrong about the capital gains tax by the way. Its not going to be taxed that way, it will be taxed as ordinary income (which subsequently will be the same as Short Term) The IRS will be incredibly agressive on this treatment

    I’m a CPA, trust me, we’ve looked into it

  15. Jessica says:

    Ok, Milehigh,
    You may be a CPA but obviously, if you have to look stuff up, you may not know as much as you think b/c you can claim the money based on capital gain OR interest income. It is only ordinary income if your profession is based on buying and selling investments on an everyday basis from my research. Besides, I don’t think Uncle Sam will care too much as long as he gets his cut.

  16. Milehigh says:

    wrong. Read code section 988

  17. dbk says:

    Milehigh – 2 questions – 1. Does Section 988 only apply to currency transactions related to a trade or business? 2. What about the exclusion for personal transactions in 988(e)?

  18. Milehigh says:

    1. I dont think so. It seems that you would have to designate that it was a capital transaction on the date it was entered into. There is some gray area there for sure. But I just have a feeling that IRS would want to view it as ordinary income… and i guess my main point is you should plan that way. If it can be passed off as a capital transaction then fantastic, but i would certain plan at this point for it to be treated as ordinary income

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