Iraq Dinar Speculation

An interesting article on the Gulf Daily News – Sinan Al Shabibi made some comments regarding Iraq’s reserves in the forex during a meeting with Arab central bank governors in Dubai. Of note, he said:

“… There are discussions. The reserves cannot be touched except for foreign exchange stability.”

Other than that, no big news today on the Iraq Dinar Speculating front, at least – none that has been confirmed. As some of you know, Dinar Speculation (DS) has an inside source at the CBI with some interesting information. I would like to make a public apology for withholding the exact details, but we are only 90% confirmed at the moment. Stay tuned.

From aswat al Iraq:

BAGHDAD / Aswat al-Iraq: Negotiations will be carried out next week in Amman – Jordan between the Central Bank of Iraq (CBI) and the International Monetary Fund (IMF), an advisor from the IMF said Monday.

The two sides will meet as part of the preparations to sign an agreement that grants Iraq a loan of around 1% interest.
“The negotiations will start on Monday Sept. 29, 2009,” Modhihir Mohammed Salih told Aswat al-Iraq news agency.
He said that the low-interest loan aims at activating the Iraqi economy.
“The loan has a condition that the Iraqi economy should be reformed,” Salih said.

I love Iraqi economy reform! Post comments if you have them, thanks for your contributions.

From Army Times author Kris Osborne (no link provided):

U.S. slows cash flow into Iraq, Afghanistan
By Kris Osborn

The U.S. government is slowing the flow of dollars into Iraq and Afghanistan as part of a push to build up the local currencies, banking systems and economies.
In the effort by the State and Treasury departments and the Army, all U.S. payments to local vendors in Iraq and Afghanistan will be made by electronic transfer starting Oct. 1, said Brig. Gen. Phillip McGhee, director of resource management, Third Army.
In recent years, billions of U.S. dollars has flowed into the coun­tries.
“There was no banking struc­ture, there were no financial insti­tutions. They either didn’t exist to begin with or they col­lapsed after the start of Opera­tion Iraqi Free­dom,” McGhee said. “We went for years revert­ing back to what we know and can do very well, and that is put a lot of cash out there.” But that approach invited corruption and theft, tied up U.S. troops as security guards and gave insur­gents a key financial tool.
“Insurgents and al-Qaida prefer to use U.S. currency,” McGhee said. “They can use that anywhere in the world, so the sooner you get that out of there, they will have to find another currency.” But the primary reason for the switch, the general said, was to give Iraqis and Afghans more con­trol of their recovering economies. Using local currency boosts con­fidence in local governments, one analyst said.
“For the long term, this is good for the country to the extent that people see the Afghan and Iraqi governments as providing stable institutions. It does build some confidence,” said Keith Crane, who directs environment, energy and economic development pro­grams at Rand Corp., a California­ based think tank.
The flow of U.S. cash is already drying up. U.S. payments will move through a web-based Defense Department service called “Wide Area Work Flow.” That allows the government to “write contracts to the vendors in U.S. currency that are paid in local currency,” McGhee said. “If you are a contractor and your con­tract was written through [elec­tronic funds transfers] — you can see where your payment is in the system.” The funds will be sent to local banks that have been certified ready to handle e-transfers, where they will be available for the ven­dors to withdraw in local currency. Reducing cash payments saves the Army money. Each transac­tion costs about $32 a payment, according to an Army news release.

(Hat tip to one of the readers of DS, please claim your credit in the comments if you wish it.)

It’s amazing to me to hear all the naysayers out there when it comes to the ISX. If you haven’t noticed, Iraq IS moving forward in leaps and bounds on a regular basis. Security is consistently stronger, peace is more prevalent, technology is moving forward, and business is growing. Take a look, for example, at the Warka Bank news page. Here are a couple excerpts:

… Baghdad Motor Cars Servicing is issuing 200% paid up shares at the value IQD (1) per share for those shares owned prior to holding their general assembly meeting. You are kindly requested to submit your signed buy requests to purchase the paid up shares…

You know what that is, right? Free shares. Free shares = free money! More:

… Ready Made Clothes has announced that it will be issuing 41.718% paid up shares at the price of IQD (1) per share for those shares owned prior to holding its general assembly meeting. Investors are kindly requested to …

Yep, more free money! More:

Dear Warka Investors,

Please note that Palestine Hotel has announced that it will be issuing 47% free shares to its fine shareholders.

Getting the picture yet? Well, here’s one more:

… Mamoura Real Estate has announced that it will be issuing 15% free capital shares…

Pretty amazing, huh? All of those announcements were made within the last three weeks. I was personally the recipient of 2 of them, and I am in the process of buying into a few more stocks.

This is, of course, my personal opinion and I am not a financial advisor.

I’m just a wealthy guy who knows the value of free money. Best regards to you and yours.

Now for the poll question – are you invested in the ISX?

Hat tip to Seaview over at IIF.

Someone please tell me how the article was translated by google to include a famous Disney character, though! Article:

Sign adviser CBI Mzarmohamd for Iraq to become of the oil-producing countries developed during the next two years if entering Iraq through the gate of the oil investment.

وأكد صالح أن الاستثمار سينعكس على تطور الواقع الاقتصادي في البلاد نتيجة تنوع موارده، وهو ما سيؤدي إلى ارتفاع قيمة الدينار العراقي: The benefit of that investment will be reflected on the evolution of the economic reality in the country by the diversity of its resources, which would lead to a rise in the value of the Iraqi Dinar:

وأشار صالح في حديث لـ”راديو سوا” إلى أن العراق يحتفظ بمعدلات عالية من العملة الأجنبية تغطي السيولة المحلية ما يدفع إلى استقرار الدينار العراقي في تداولات سوق العملات وبالتالي يحفظ الاستقرار الاقتصادي: Salih noted in an interview with “Radio Sawa” that Iraq retains high rates of foreign currency cover domestic liquidity is paid to the stability of the Iraqi dinar in trading the currency market and thus preserve economic stability:

فيما أوضح الخبير الاقتصادي أسعد العاقولي أن سعي عدد من الدول الأوربية للاستثمار في العراق سيرفع من موارد البلاد وسيدعم قيمة الدينار في المستقبل، ما يؤهل العراق للدخول في الاستثمارات الخاصة في مجال الغاز: The economic expert explained that the happiest bugsbunny attempt by a number of European countries to invest in Iraq will raise the country’s resources and will support the value of the dinar in the future, as Iraq prepares to enter into private investments in gas:

وكان صندوق النقد الدولي قرر منح العراق 1.8 مليار دولار لدعم السيولة النقدية واحتياطيات البنك المركزي العراقي، فضلا عن إنعاش المشاريع التنموية. The International Monetary Fund decided to give Iraq $ 1.8 billion to boost liquidity and cash reserves of the Central Bank of Iraq, as well as for the recovery of development projects.

It sure would be handy to know how to read arabic… If someone could comment on this article with firsthand knowledge of the translation, it would be appreciated!

More oil = more revenue for Iraq, correct? More revenue equals… well, more revenue! I can’t imagine more money being a bad thing!

Test pumping is set to begin soon in the Nassiriya field, part of the al-Geteaa area that is about 380 km south of Baghdad. Expected output is 15,000 bpd – they will only be utilizing 3 of 5 wells in the field.

State run South Oil company director Dhiaa Jaafar states that production will begin in a few days.

See the following from Warka Bank:

Dear Warka Investors, United Bank will be issuing 300% paid up shares at the price of IQD (1) per share for those shares owned prior to holding its general assembly meeting. Investors are kindly requested to submit their signed authorization letters to purchase the paid up shares by May 26th 2009 and any request received after this date will be considered null and void by our bank.

Best regards,

ISX Department Warka Bank for Investment and Finance

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-Adam Montana

At the news conference yesterday, Al-Maliki stated that his government had set down laws to secure and develop investment, stabilize the currency and fight corruption.

“We need more than ever at this time an effective private sector to revive economic life,” he said.

Al-Maliki told the conference of some 520 British, Iraqi and international business leaders that his government was taking steps to both capitalize on the country’s massive oil wealth (proven reserves of some 115 billion barrels) and diversify Iraq’s sources of income.

“Security and economic development must have equal amounts of interest… Iraq is democratic, a place where freedoms and the rule of law is respected… We need more than ever at this time an effective private sector to revive economic life,” he said.

As you know, the Iraqi Stock Exchange went digital with 5 stocks on the 19th of April this year, 2009. Here are the results from the first day of trading: link. Now, that’s not a huge deal in terms of what was traded – at least, not in terms of profit or gains for any particular stock. Only 15 trades were made, and you can clearly see that closing prices were exactly the same as opening prices. Al-Mansour Bank was the heaviest traded stock, capturing 52.630% of the action with 500,000 shares valued at 1.55 IQD each.

However, let’s take a gander at the rest of the ISX – this could be interesting! The trading day previous to April 19 2009 was April 16 – you can see the action here. Total number of trades: 282. About a year ago. April 20 2008, that number was 129. The ISX has seen a slow growth from 129 to 282 over the past year, as is expected for a country in the situation Iraq is in.

We could spend hours analyzing the growth over the last year or 5, but let’s look at something more interesting – the change from April 16th to April 23rd, with the implementation of electronic trading. 

Simple numbers, folks.

Total ISX trades April 16, 2009 (pre electronic): 282.

Total ISX trades April 23, 2009 (after electronic): 359.

The Iraqi Stock Exchange just experienced 27.30% growth in a week. Discuss in the comments section or send your ideas in here. 

World Bank to help Iraqi Economy

Editors note: This Iraqi news contains one of the recurring themes, which is a central desire to make Iraq more suitable and attractive for investing.

Baghdad: General secretary of the Iraqi cabinet, Ali al-Allaq, received representatives of the World Bank, which included VP of the Middle East and North Africa Region and the executive director for Iraq.

Quoted:

“The bank’s strategy mainly aims to enable Iraq to manage its resources more effectively… The World Bank will help the Iraqi government create a favorable climate for construction and a potential ground for investment…”

Sources: Radio Nawa, Aswat al-Iraq