Time Running Out for the Dinar Peg/ I thought mr koolaid said revalue

A foreign-exchange crunch cause by the drop in oil prices could force a devaluation of the Iraqi dinar, according to a report from Bloomberg.


Data compiled by Bloomberg show that dollar reserves fell by approximately 20 percent to $59 billion as of July 23, while in the first 25 days of August the Central Bank of Iraq (CBI) sold $4.6 billion of currency to keep the dinar at its pegged rate of 1166 to the US dollar.


Frank Gunter, author of “The Political Economy of Iraq,” said the currency could weaken as much as 20 percent over the next year, adding “Iraq’s perfect storm means the country will continue to lose reserves until the government of Iraq decides to devalue the dinar.”

Research from Dubai-based bank Emirates NBD suggests that Iraqi dinar is one of the Middle East currencies most at risk of devaluation, but that the current exchange-rate regime is likely to remain.

London-based investment firm Exotix Partners LLP said that maintaining the peg could cause Iraq’s foreign-currency reserves to drop to about $45 billion by the end of next year. “The authorities will try to hold on to the peg as long as possible, but may be forced to devalue if pressures continue,” said Jakob Christensen, a director at Exotix.


But Waleed Eedi, a director general at the CBI, told Bloomberg that the policy now is to meet the demand for dollars, the reserves won’t be depleted because of oil sales, and the dinar won’t devalue.


August 26, 2015 in Banking & Finance


By John Lee.


(Source: Bloomberg Business)                                                                             http://www.iraq-businessnews.com/2015/08/26/time-running-out-for-the-dinar-peg/

Thanks ClayF for sharing this post !

Yes, ClayF- Thankyou for the info that you afforded us-It is greatly appreciated!

Right now it looks like if anything it will RV downward ... sorry, not what I wanted to see or say, but economic reality is economic reality. If oil continues to free-fall, I do not see how they can avoid it.

My prediction is we will see the current trend continue until the frackers are completely priced out of business, then we will see our "friends" the Saudis quietly work to bring the price up to about $60 or $70 dollars a barrel. Low enough to keep the fracking operations from restarting but high enough for them to make a profit.

Just a guess, and I can't prove a thing, but I am pretty sure the Saudi's are working behind the scenes to drive prices down.

Just a guess, and I can't prove a thing, but I am pretty sure the Saudi's are working behind the scenes to drive prices down........., Your most likely RIGHT (as usual) Yep ME! posting holy carp its been a bit but Im just a working fool and had sometime this morning. We're old timers here and no so called guru can shine a light on us but I will try to do more when I can.Appreciate the koodoos guys 

The Sudi's are absolutely working to drive the prices down, and when Iran comes on full time it will make the oil prices even lower. The only saving grace for Iraq is that oil prices were at $32 per barrel when their currency had a value of $3.22 against the USD, but that was also under a different government regime as well. So will that value history make a difference today probably not as I see it.

Slotexe wrote:The Sudi's are absolutely working to drive the prices down, and when Iran comes on full time it will make the oil prices even lower. The only saving grace for Iraq is that oil prices were at $32 per barrel when their currency had a value of $3.22 against the USD, but that was also under a different government regime as well. So will that value history make a difference today probably not as I see it.

The price of oil at that time had nothing to do with it, it was the fact they had less than 24 BILLION Dinar in circulation vs the 91 TRILLION they have today! What is so hard to understand about the rate back then vs the rate now? At the time it was $3.22 Iraq had over three dollars in their reserves to cover each Dinar in circulation but today due to past hyperinflation they have over 1000 Dinar to cover with each Dollar in their reserves thus the 1166/1170 exchange rate.

This is NOT just opinion, it's fact and it's easy to back it up with documentation!