The monthly statistical report of the International Monetary Fund stated that over the three months between August and October of last year, Iraq’s gold holdings quadrupled to 31 tons, the first time something like this has happened in years. The value of gold as a strategic reserve has grown over the past few years due to the continued instability of the U.S. dollar exchange rate.

International banks perceive gold as having long-lasting value that is not affected by rapid economic development. Gold can be used to compensate for insufficient cash reserves in the wake of political or economic crisis. In that context, Iraq is probably the country that is most in need of a great deal of gold reserves given its succession of political and economic crises.

“Gold is the first shelter for countries in times of crisis,” said the Iraqi economic analyst Majid al-Suwari.

According to Parliamentary Economic and Investment Committee member Abdul Abass Shiyah, “it is normal for the public not to read between the lines of sharp increases in gold reserves.”

“The Iraqi dinar exchange rate is based on the amount of cash reserves, which include not only money but gold as well,” said Shiyah, a member of the Dawlat al-Kanoun parliamentary bloc led by Prime Minister Nouri al-Maliki.

Gold is the most stable component of official reserves. It will result “in the stability and possibly the improvement of dinar exchange rates,” he added.

Shiyah reiterated that the public will sense indirectly the impact of the increase in gold reserves.

“When the value of imported goods decreases following the increase in the value of the dinar, which directly correlates to the increase of cash reserves, the public will remember the steps the state took to boost gold reserves,” Shiyah added.

The Central Bank of Iraq announced in August of last year that cash reserves had reached $67 billion, which is a first in the country that relies entirely on oil exports to finance its budget.

“The Iraqi reserve is figuratively described as ‘cash,’ but in fact it has multiple components. Iraq owns U.S. dollars, euros, pounds, gold and different types of securities,” said Shiyah.

He added, “The central bank uses a part of its huge reserve to fund major governmental projects. Even though a part of this reserve is disseminated between international banks and benefits Iraq financially, the central bank ought to fund some weighty governmental activities.”

Since 2003, Iraq has had an insignificant cash reserve. Some sources state that those who were in charge of the Iraqi economy during the first months following Saddam Hussein’s toppling converted a ton of gold, which was the only reserve held by the central bank, into cash.

Economic Analyst Majid Suwari said that Iraq’s reserves amounted to $39 billion in 1979; however, Saddam’s policies squandered that fortune. In 2003, Iraq’s debts reached $125 billion.

“The central bank policy is currently based on the diversification of reserves. However, if the policy of purchasing gold had been adopted two years ago when the value of one ounce was about $500 to $600, Iraq would have quadrupled its investment gains,” he added.

He concluded that “this initiative started late, but not too late.” Suwari expects the central bank to pursue the policy of increasing gold reserves amid the government’s spending tendencies.

He clarified that the Iraqi government needs the dinar to cover its huge expenses. The central bank provides it with the necessary Iraqi dinars in exchange for U.S. dollars obtained through the oil trade. Afterwards, the central bank converts dollars to gold.

Omar al-Shaher is a contributor to Al-Monitor’s Iraq Pulse. His writing has appeared in a wide range of publications including France’s Le Monde, the Iraqi Alesbuyia magazine, Egypt’s Al-Ahaly and the Elaph website. He previously worked for Al-Mada covering political and security affairs and as a correspondent for the Kuwaiti Awan newspaper in Baghdad from 2008-2010. 

This article was translated by Steffi Chakti.

Read more: http://www.al-monitor.com/pulse/originals/2013/01/iraq-central-bank-gold.html#ixzz2HzKubfJm

Posted on 04 October 2012.

The Central Bank of Iraq (CBI) has ruled out deleting the three zeros from the Iraqi currency in 2013 because it needs time and a new fiscal year.The Deputy Chairman of the CBI, Mudhir Mohamed Salih, told AIN on Wednesday:

“The project of crossing out zeros from the Iraqi currency takes time … The Council of Ministers has instructed to take extra time to consider this project.”

According to AIN, Salih denied “The reports over a malfunction that took place while implementing this project in the exchange rate of the Iraqi Dinar against the foreign currencies.”

The report also said that the Council of Ministers decided during its session on 10th April to postpone the deletion of zeros from the Iraqi currency until further notice.

(Source: AIN)

Iraqidinars.com – www.iraqidinars.com is pleased to announce , new reduced pricing on our notes giving more value to our clients – Visit our site today to see our attractive prices for purchases via on line money transfer , credit cards and wire transfers – established in 2003 , Iraqidinars.com remains one of the world´s oldest and reliable online Iraqi Dinar Dealers shipping Worldwide – No Order is too small or to big for us to execute . Read the rest of this entry »

http://iraqidinars.com/site/page/buyingdinarsvialaybyplan

July 06, 2012

“The government prefers to be patient before cutting zeros off Iraqi dinar and its redenomination because it is not a priority at the current stage,” Cabinet Secretary Ali Al Allak told Alsumarianews assuring that cabinet is currently studying possibilities and available circumstances for such a procedure.

“We are not sure we can control major money sums’ withdrawal under current circumstances,” Al Allak added calling to be patient because the simple thought of withdrawing, storing and destroying between 30 and 40 trillion dinars requires a serious study.

“There are no defects in our currency especially that many countries deal the same way,” he advanced. Finance committee received, on June 26, the deputy governor of Central Bank of Iraq Mazhar Mohamed Saleh to discuss about procedures related to the zeros cutting off, required time and expected changes following the dinar redenomination.

“During the meeting with Saleh, Iraqi cabinet approved cutting zeros off Iraqi dinar and its redenomination after it had resolved upon taking time before launching the procedure due to Dollar’s increase in comparison with Iraqi dinar in local markets during past months,” finance committee member Najiya Najib told Alsumarianews on July 3.

“Zeros will be cut off Iraqi dinar and the currency will be denominated in January 2013,” Finance Committee member Haitham Al Jabouri advanced on May 15 noting that printing the new currency bills will start in September 2012.(Source)Alsumaria news

June 18, 2012 – 9:31 PM

New pipelines stretching into the Persian Gulf near the city of Basra promise to shower Iraq with wealth and turn the nation into one of the world’s biggest oil exporters.

Leighton Offshore, an Australian firm, is installing additional oil-loading buoys to fill tankers with Iraq’s abundant crude.

The country claims to have reserves of 143 billion barrels, the third-largest in the world. In April Iraq exported more than 2.5 million barrels a day, more than at any time since the 1980s, earning its treasury almost $9 billion. Total production is now almost 3 million barrels per day, according to OPEC, the oil producers’ cartel.

More loading buoys are in the works and, as oil firms invest billions of dollars in Iraq, the industry is booming. By the end of the year, reckons Peter Hitchens, an analyst at the bank HSBC, Iraq’s output will reach 3.5 million barrels a day, a torrent of new oil to quench global markets.

Iraq’s production targets are even bolder. Hussein al-Shahristani, deputy prime minister for energy, says that contracts with foreign oil firms should lift output to an outlandish 12 million barrels per day by 2017, a level that would put Iraq on a par with Saudi Arabia, both as an exporter of oil and, if crude prices maintain their recent heights in coming years, as a global spending power.

It is unlikely to get anywhere close to that level. Saudi Arabia spent 80 years building its oil industry amid relative peace and stability. Iraq enjoys neither.

Sectarian violence persists. A series of bombings on June 13 killed more than 80 people. The government of Prime Minister Nuri al-Maliki depends on a feeble coalition. Despite years of negotiations, Iraq still has no petroleum law, leaving thorny disputes between the federal government and the regions over the control of oil revenue.

“All of this recent progress has happened against a backdrop of dysfunction,” said Keith Myers, a Revenue Watch Institute consultant working with the Iraqi parliament on the oil law.

Although the country’s crude is cheap to pump, Iraq hardly provides the bonanza that foreign companies such as BP, Lukoil and Royal Dutch Shell hoped for when they signed deals to develop its big fields. Unrest and crime can impede operations. Trucks being used by one company to conduct seismic surveillance recently disappeared overnight.

Graft taints much of the dealmaking. Transparency International, a Berlin-based activist group, ranked Iraq 175th out of 182 countries in its corruption-perceptions index last year.

Apart from the tiny coastline near Basra, Iraq is landlocked. So, aside from the new loading buoys, any increase in export capacity depends on pipelines through neighboring countries. One from Kirkuk to Ceyhan, a Turkish port, could be expanded — but with difficulty.

Other options are even harder. In recent years the governments in Baghdad and Damascus have talked of a new pipeline to Banias, on the Syrian coast, but civil strife in Syria makes that unlikely for the time being. A pipeline to a port in Saudi Arabia was shut down when Iraq invaded Kuwait in 1990. Saudi Arabia now uses it for natural gas and will not free it for a rival’s oil.

Export bottlenecks will keep Iraq’s ambitious production targets a ways off. Hitchens predicts Iraqi output of 7 million barrels per day by the end of the decade — a significant rise, but less than America produces today. At some point Iraq also plans to rejoin OPEC’s quota system, which might further limit exports.

Two other issues have the potential to undermine Iraqi production. Some analysts believe Iran, a rival producer increasingly hit by sanctions, could yet use its sway over Iraq’s Shias to spark more unrest. But would Iraqi Arabs really undermine their own prosperity in order to benefit Persian co-religionists?

Meanwhile Iraq’s autonomous northern province of Kurdistan has signed dozens of oil contracts with foreign companies, outside central government control. The region holds less oil than Iraq’s south, but the production-sharing agreements being offered to investors are far more enticing.

Kurdish leaders believe that, with such big firms involved, they can build their own oil industry. Kurdistan’s regional government has proposed a new pipeline to Turkey, allowing it to bypass the one belonging to the federal government.

This could be seen as a step toward Kurdish secession, however, unraveling federal Iraq and creating yet more sectarian fighting. Turkey may be unwilling to support such a move, not least given its own restive Kurdish population.

© 2011 Star Tribune

* Cabinet says stops plans to redenominate dinar “until further notice”

* Iraq has over 30 trillion Iraqi dinars in circulation

* Plan to trim zeros not seen as a priority

By Aseel Kami – Reuters

BAGHDAD, April 12 (Reuters) – Iraq has decided to hold off on a plan to knock three zeros off the nominal value of bank notes of its currency because it does not believe the economic climate is suitable, the cabinet secretary said on Thursday.

The central bank said last August it planned to redenominate the Iraqi dinar to simplify financial transactions in an economy that is still heavily centralised and dominated by oil, and where deals are often carried out in cash.

The proposal to restructure the dinar to bring more liquidity into the market has been awaiting parliamentary approval since last year.

On Thursday, a statement on the website of the cabinet secretary said the cabinet had decided to halt all procedures relating to the redenomination of the dinar “until further notice”.

“The economic committee discussed this issue and so did cabinet … There is a possibility that it could cause some problems in the economic situation. Besides that, this operation is so big that cabinet sees circumstances are not right to control this,” cabinet secretary Ali al-Alaq told Reuters.

Iraq is slowly getting back on its feet after years of war and sanctions. Oil accounts for 95 percent of government revenues and the country’s banking system is still highly underdeveloped.

HUGE PROCESS

The central bank has kept the dinar fixed at 1,170 dinars to the dollar in its daily auction but it recently moved to revalue the dinar slightly to 1,166 dinars after demand for the U.S. currency soared.

The central bank said it also had to tighten regulations over who can participate in the auctions as Iraqi traders sought to snap up dollars for resale in neighbouring Syria and Iran, both under Western economic sanctions.

Sales of dollars in currency auctions held by Iraq’s central bank rose as high as $400 million on some days in December from a previous average of $150 million, according to central bank data.

“We have more than 30 trillion dinars in circulation. To withdraw this amount from the market and then to examine them and to dispose of them is a huge process. Even the technical and the monetary capabilities to control a process like this, we consider as insufficient and it is not seen as a priority currently,” Alaq said.

The central bank says Iraq’s large foreign reserves, which have risen to a record $60 billion on the back of high oil prices, will shield it from any damage to its financial system on the national level.

via REUTERS

Iraq set to take its place on the world stage

Posted 3/8/2012 6:30 PM by Emerging Money

Iraq has started loading oil from a long-awaited new floating Single Point Mooring (SPM) platform, with the average loading rate into the tanker Maersk Hirado coming in at 22,000 barrels per hour.

Iraq’s oil exports have been held back by a lack of loading capacity in the Gulf after decades of neglect of infrastructure caused by war and economic sanctions. The opening of its new platform — built by Australian construction firm Leighton — had been held up for weeks, with officials blaming poor weather.

The new terminal is the first of four planned, each of which will ultimately have a capacity of 850,000 barrels per day, adding 3.4 million barrels of export capacity to make way for a doubling of Iraq’s oil production in the next few years.

For now, the South Oil Company says the first platform will increase its exports by 300,000 barrels per day.
Iraq said this week it had increased total output to above 3 million barrels per day for the first time since 1979. Iraq’s output last month was just 2.65 million bpd, with production held back by a lack of export capacity. Its exports have been slightly more than 2 million bpd.

The Iraqi government aims to more than double its oil output in the next few years and has set a long-term goal of 12 million bpd, which would rank it alongside Saudi Arabia and Russia as one of the world’s oil superpowers .
By that point, Iraq will probably be added to the world’s mutual funds and ETFs as well, making it a factor in portfolios likeMES ( quote ), which tracks stocks in the Persian Gulf region.

by Simon Watkins for Emerging Money

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.