Is The Iraq Dinar Too Good To Be True? and what about Ghana?

by **Ponee** Sun Dec 29, 2013 4:18 pm

Is The Iraq Dinar Too Good To Be True? and what about Ghana?

Posted on www.baghdadinvest.com

Is The Iraq Dinar Too Good To Be True? and what about Ghana? Too-good-to-be-true

Investing in the Iraqi Dinar for it to successfully complete a revaluation yielding an astronomical return, on the surface you would categorically say “come on are you serious”?

At this stage it is probably worthwhile looking at the Iraq Dinar rate and where Iraq is in terms of its economic growth. We all know about the resources and growth potential and it is fair to say that the current exchange rate of 1,165 to every 1 US Dollar is not exactly where you would expect the country that is in the top 5 OPEC proven reserves. Leaving the conspiracy theories to one side you would expect if Iraq continues the GDP growth year in year out that the exchange rate will follow suit.
Back in 2005 the exchange rate for every 1 US Dollar worked out as 1,462 meaning we have seen the Iraqi Dinar move by 20.31%

Let’s break that down:
$100 worth of Iraqi Dinars in 2005 would have got you 146,200 IQD
$100 worth of Iraqi Dinars in 2013 will get you 116,500 IQD

*your actual rate received will have been dependant on the broker you used as they will have added a mark up to cover their costs and show a profit. It is the nature of purchasing an exotic currency.
In layman’s terms you would have been better off buying your Iraqi Dinar in 2005 as you would have been able to get more IQD for every USD spent today.

Remember that until 1980 the Iraqi dinar exchange rate was 1 dinar/$3.3 compared to $1/1,168 dinars but really they are two separate currencies.

Although the two separate currencies are from the same country, the New Iraqi Dinar was issued to replace the old “Swiss Dinar” so in fairness it is not an argument to say “But Iraq was at 1 dinar/$3.3” because they are two very different currencies.

Could it be that 1,168 sounds high? But is in fact fair value? Truly at the end of the day it is just a number and there are many countries which have exchange rates in the thousands.

Given that many governments of developing countries experience high levels of inflation and a deterioration in their currency‘s value against other currencies, why do some elect to redenominate, while others do not? And why do some governments wait many years after a bout of hyperinflation or after their currency is priced at 1000 or 5000 units to the dollar, to redenominate, while others do so relatively quickly?

When you look at Ghana and the cedi redenomination it was absolutely necessary due to a result of years of decline in the currency’s value. In 1982, for example, the US dollar exchanged for 2.78 cedis. In 2007 the dollar was exchanging for about 9100 cedis. The redenomination was carried out as part of the government’s efforts to convince citizens and markets that hyper-inflation is a thing of the past. Inflation was as high as 116% in 1977, 117% in 1981 and 123% in 1983. The redenomination is also being carried now in order to re-align the cedi with other currencies in the West African region as ECOWAS member countries move to a common currency, the Eco.

Isn’t this exactly how the Guru’s do that thing!! Yes, Iraq is going to keep increasing its GDP and yes something will eventually have to happen to combat inflation, but not how the guru’s are telling you.
If Iraq drops 3 zeroes, you do NOT go from having less or more purchasing power, you simply have to exchange the old notes for the new ones.

So, what is redenomination? Well, it is simple. What the Bank of Ghana did for it’s people is really quite simple; instead of using say, 500 000 cedi to buy something, you would now use fifty Ghana cedis to buy that same thing. This is the portability effect of redenomination. The portability of the new currency makes it more convenient to carry large sums of money on a person rather than in suit cases or bags. The time wasted in the counting of large sums of money and the risk involved in carrying large sums of money in bulging pockets or suit cases was reduced drastically with the redenomination. It also helps facilitate other things like the introduction of vendor machines and car parking meters as well as the re-introduction of the use of coins for smaller units of money.
The new Ghana cedi was introduced on 1 July 2007 at a rate equal to 10,000 old cedis.
Folks, this is what Iraq is likely to do. No winners and no losers.

http://www.baghdadinvest.com/is-the-iraq-dinar-too-good-to-be-true-and-what-about-ghana/

by **catman** Sun Dec 29, 2013 8:05 pm

If you were living in Iraq and buying things there with dinar, you wouldn't lose. But most of us are not going to Iraq and if Iraq does that, we will lose because after you pay to convert to dollars you will have less than you started with. If they did it and then RVed to the 3-4 range, you would make a small amount after conversion. If you just bought it, and it goes to the 3-4 range, you will make a decent profit, if you have had your dinar for 5 or 10 years, not such a great profit.

by dinarstocker Fri Jan 03, 2014 11:29 am

http://www.ksl.com/?sid=28221507&nid=960&title=long-running-scam-involves-foreign-currency&fm=home_page&s_cid=queue-4

interesting story from local media. pressure must be mounting on the banks or they have seen a big increase in people thinking "the elite are cashing out!" for them to make a point to try to discourage all of our Dinar dreams LOL Tony would be so disappointed BUT I bet any money he would find a way to turn this around and make it part of "see its happening they just don't want you to know!"

by **Kevind53** Fri Jan 03, 2014 11:56 am

What about Ghana? They LOPed their currency after bringing 20+ years of hyperinflation under control. In that time their currency went from 2.74/USD to 9072/USD. There was no true hyperinflation in Iraq, their value was artificially driven down by external influences, and after the war deliberately set at a low value (under valued?) by an outside agency. Apples and oranges, one was driven by market conditions, one was driven by political expediency.

by Guest Fri Jan 03, 2014 2:22 pm

Kevind53 wrote:What about Ghana? They LOPed their currency after bringing 20+ years of hyperinflation under control. In that time their currency went from 2.74/USD to 9072/USD. There was no true hyperinflation in Iraq, their value was artificially driven down by external influences, and after the war deliberately set at a low value (under valued?) by an outside agency. Apples and oranges, one was driven by market conditions, one was driven by political expediency.

I think you are buying a little to heavy into the hyperinflation=LOP status. That's the argument that Jokie always would tell the sheepie.
All the links for LOP's are here on DD and not all those countries had hyperinflation , inflation yes.

Regardless, one important note of importance is that IN HISTORY , ANY NATION who had lot's of zeros ALWAYS LOP'd .

So why should Iraq be a first not to ??

It was interesting to read Marisol Luna's take on all this (BI) because the only thing she would confirm is that the IQD will not devalue. I'm in agreement with that.

by **HezekiaH** Fri Jan 03, 2014 2:32 pm

Well I am glad IQD is not going to devalue.That way it will always show as an asset on my networth statements.

by **Kevind53** Fri Jan 03, 2014 2:48 pm

florida guy wrote:
Kevind53 wrote:What about Ghana? They LOPed their currency after bringing 20+ years of hyperinflation under control. In that time their currency went from 2.74/USD to 9072/USD. There was no true hyperinflation in Iraq, their value was artificially driven down by external influences, and after the war deliberately set at a low value (under valued?) by an outside agency. Apples and oranges, one was driven by market conditions, one was driven by political expediency.

I think you are buying a little to heavy into the hyperinflation=LOP status. That's the argument that Jokie always would tell the sheepie.
All the links for LOP's are here on DD and not all those countries had hyperinflation , inflation yes.

Regardless, one important note of importance is that IN HISTORY , ANY NATION who had lot's of zeros ALWAYS LOP'd .

So why should Iraq be a first not to ??

It was interesting to read Marisol Luna's take on all this (BI) because the only thing she would confirm is that the IQD will not devalue. I'm in agreement with that.

Not really, I have always acknowledged that a LOP was a possibility. I am disagreeing with their comparison to Ghana. I place more of my judgement upon my analysis of the events and financial realities in Iraq. I am certainly no financial whizkid, but my studies have lead me to conclude that the IQD SHOULD realistically be in the $3.50 range. I have based this upon resources, and a comparison with the economies of the surrounding countries.

The history of the IQD is unlike that of any other country, so what has happened in the past is not necessarily any guarantee of what will happen in the future. IMO worse case, we see a LOP with an eventual RV to the $3.50 range. If so, we walk away with a 350% return eventually I would be satisfied with that. IF, as Shabibi seemed to indicate in some of his speeches, we see a straight RV, I will be ecstatic and will retire early. Realistically, I expect to walk away with a profit to reinvest toward my retirement.

Is The Iraq Dinar Too Good To Be True? and what about Ghana?

Is The Iraq Dinar Too Good To Be True? and what about Ghana?

Re: Is The Iraq Dinar Too Good To Be True? and what about Ghana?

Re: Is The Iraq Dinar Too Good To Be True? and what about Ghana?

Re: Is The Iraq Dinar Too Good To Be True? and what about Ghana?

Re: Is The Iraq Dinar Too Good To Be True? and what about Ghana?

Re: Is The Iraq Dinar Too Good To Be True? and what about Ghana?

Re: Is The Iraq Dinar Too Good To Be True? and what about Ghana?