DrDinar Blog

Kuwait and Iraq are two of the richest countries in the world, each country holding 10% of the worlds oil. Kuwait and Iraq are neighbours also, some people don’t know this fact.

There is one additional distinct similarity between the two counties regarding a revaluation. Both countries have international support to revalue their respective currency. Kuwait experienced its revaluation virtually under the radar after the Gulf war, probably because the Internet as we know it was not around for online trading of restricted (pre-reval) currency.

Violence in Iraq has dropped dramatically over the past 5 years and this violence was one of the largest reasons that the Iraq Dinar as we know it could fail to make it to the world bank. Were over that hurdle now, waiting for sanctions to be lifted along with more progress in the Iraqi Government.

Although very real and realistic risks are involved in the Dinar, there are a couple myths that are just impossible. Having a reliable source of information is important.

If it was a criminal offence to make or believe false accusations about Iraq Dinar currency, I think I could think of a suitable ‘Charge’ such as:

“Gross Negligence In Iraqi Dinar Knowledge Causing Broke Mentality.”

Whenever rumours, even ‘reliable source’ rumours relating the Iraq Dinar to Germany’s currency downfall after World War II, there could very well be charges laid of Gross Negligence In Iraqi Dinar Knowledge Causing Broke Mentality. Assuming such type of mentality were illegal, which it is not.

The world did not support Germany after World War II and Germany does not have 10% of the worlds oil for good measure. Yes, Germany had to devalue their currency after that war. The US Government is fully backing Iraq along with the World Bank and countless other countries with oil deals in the works. Iraq is all about revalue, not devalue.  The enemy wants the devalue, and the broke critics like to place the term ‘devalue’ into false ‘reliable source’ scenarios. 

My question for you now is, if such broke mentality were in fact a criminal offence what would be the sentence?

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This article may be reprinted online and offline as
long as this box remains and is hyperlinked online.
Written by Darren Chabluk for http://DrDinar.com/blog
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25000 dinar note is the highest currency denomination available in Iraq today. Hence, you may be of the opinion that you can buy a lot of stuff when you step out into the market in Baghdad or any other urban or rural market in the country. However, the drastic fall in the prices of crude oil and the ’still improving’ internal security situation has led to inflation and a huge rise in prices of basic goods in Iraq.

While prices of wheat and rice (imported rice) stood at less than 500 Iraqi Dinar per kg in January 2004, the cost of these goods have risen from 2500 Iraqi Dinar to 3300 Iraqi Dinar per kg by January 2009. As far as locally grown rice is concerned, the starting price stood at 700-800 Dinar per kg, which has now risen to more than 4500 Dinar per kg today.

The rise in prices of basic foodstuff is making life miserable for most ordinary men on the street. That is when you realize that the 25000 Iraqi Dinar note in your pocket is not going to fetch you a lot. You would need numerous 25000 Dinar notes for your shopping bag to get filled.

The fluctuations in the prices of beef and vegetable oil have been particularly vicious in Iraq. While prices stood at 1250-1750 Iraqi Dinar in 2004, prices now stand at more than 7500 Iraqi Dinar today. Despite the inflation and high prices, there is no denying that shopping in Iraq has a charm of its own.

Iraq is one of the oldest civilizations and no race can ever survive for such a long time without having healthy trade in and out of the country. The markets are flooded with numerous stalls and shops with each and every shop keeper hawking his or her wares in loud voices.

The smells, sights, colors and shapes is enough to dazzle even the most bored person. The market may not have the glitz and glamour of an American mall. It may also not have the sophistication of a Japanese or French market. Yet, it grows on you and you realize that shopping is a lot more than just a commercial transaction here.

Old shops jostle for space with new shops here with rickety old stalls overloaded with fruits and vegetable stands next to neat shops proudly displaying the latest electronic goods. The markets are crowded and the sheer surge of humanity on the market days is enough to disorient the most experienced shoppers.

Prices of bread, white meat, sugar and beans and lentils too have increased over the years. All this means that 25000 dinar will not help you purchase a lot of foodstuffs in an Iraqi market. As far as personal use items like shoes, garments and other such products are concerned, a 25000 Dinar note will help you buy a few of these products without any difficulty.

As per the current dinar exchange rates, a 25000 Iraqi dinar will fetch around $17. Now, what can one buy with $17 in a shopping mall or store in USA? A trip to Walmart will help you realize the fantastic goodies that $17 or 25000 Iraqi Dinar can buy in America.

You can easily buy a brand new digital camera from Walmart or Walmart.com for $17 amount. If you want something for personal use, then how about a few purses or one or two pairs of jeans? A 25000 Iraqi Dinar can be used to buy enough rations and foodstuffs to provide sufficient nutrients for an individual for 4-5 days. Or you could feed a family of four individuals for a day with $17 shopping in Walmart.

25000 Iraqi Dinar can easily help you buy flash drives, books, Cd’s, DVDs, PC games, video game consoles and other such electronic gadgets at Walmart. Inflation and teething trouble for the government has led to prices rising in Iraq.

The romance and charm of shopping in any market in Iraq has not diminished one bit. The improvement in the global economic condition will, hopefully, cool prices in the markets of Iraq as well. That will soon make the experience of shopping in the markets of Iraq with 25000 Iraqi Dinar notes a lot more enjoyable.

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This article may be reproduced online and offline as long
as this box remains the same and hyperlinked online. 
Written by Darren Chabluk for http://DrDinar.com
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Has this ever happened to you?  You purchased several million Dinar and it was all sold before your initial order even arrived in your own hands?  This was something that kept happening to me when I sold Dinar as one of Canadas largest Iraq Dinar dealers.  It grabs attention and its fun to tell veteran Dinar investors about that experience.  Dinar dealers selling Dinar before a revaluation sell at or near a price called Average Market Value. 

Average Market Value is the average price that consumers are willing to pay for a certain good or service such that the good or services price has not been set and backed by a Government law or in this case, Dinar has not yet been backed by World Bank at a fixed Exchange Rate.

What is the average market value of the Iraq Dinar?

There is an easy way to quickly find out what the average market value of Iraqi Dinar is.   The average price that a consumer is willing to pay for 1 Dinar can be found by executing the following simple steps:

Go to eBay, search for Iraq Dinar, then take the average of the top 10 sellers of Dinar.  Keep in mind you must compare apples to apples.  1 seller might have a million dinar for sale, another seller may have single notes.  You can’t count the same seller twice either.  So find out what each of the top 10 sellers are selling 1 dinar for and take an average. 

Central Bank of Iraq exchange rate is a totally different story.  Because Iraq Dinar is a restricted currency according to banks outside of Iraq we cannot buy Dinars at the current exchange rate unless we open an account at Warka Bank in Iraq, or go to Iraq to buy Dinar!

Anyone wanting to purchase Dinar outside of Iraq must pay a markup.  This markup is the difference between the exchange rate and the average market value that investors are willing to pay.  This margin is what gives dinar dealers incentive to distribute the currency and produce a profit. 

One of the 25,000 Dinar notes in excellent condition can fetch up to $100US or more at a coin shop in America.  Meanwhile, the exchange rate values the note at less than $20 and dealers sell such note for $22 and up. 

Revaluation of the Iraq Dinar currency will see the Dinar put onto the world market and accepted at currency exchange houses around the world.  What does this entail?  Well, Dinar dealers as we know it will have to compete with major banks and much smaller margins for one thing.  This will put most Dinar dealers as we know it out of business.  The great thing about the reval of the Dinar when it occurs is that the Dinar will be accepted around the world for exchange at the same rate as it is in Iraq. 

What some experts are predicting is that the initial revaluation of the Iraq Dinar will create a huge sell off for most people holding the Dinar.  The Central Bank of Iraq will be in a frenzy to buy back as much Dinar as humanly possible.  Then the second cycle of the reval will take place as the exchange rate will increase, allowing Iraq to sell much of the dinar it just bought back at a profit.  This is similar to what happened with the Kuwaiti Dinar reval.  Folks that sold off after the reval, saw a huge jump in the value just after they sold upon the initial reval spiked rate.   How long are You willing to hold on?

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This article may be reproduced online and offline as long as
this box remains and hyperlinked online.  Written by Darren
Chabluk for http://DrDinar.com/blog
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First quarter of 2008 Iraq signed contracts with three small companies from the Czech Republic to help modernize the Basra refinery, an important plant in the South.

Deals range between $50 and $70 million and one of them includes the setting up of a new refinery to help increase production capacity with 70,000 barrels per day.

In June 2008, several major companies were short listed for oil contracts, including BP, Exxon Mobil, Shell, Chevron, Sinopec and Total, but the announcement of the winners has been delayed several times.

The plans were ultimately cancelled in September 2008 because the projects could no longer be completed within the settled timeframe. In January this year 2009, Technip, an Italian-based company, won a contract to build a refinery in Kerbala, and Stone & Webster, part of Shaw Group Inc, won two projects for the redesigning of two plants in Maysan and Kirku.

In May, Foster Wheeler was awarded a $128 million contract for the final design of an oil refinery in the south with a production capacity of 300 thousand barrels per day.

Iraq also signed a controversial deal with South Korea where the former will provide infrastructure such as refineries and generators worth $3.55 billion, gaining some rights to the fields of Basra in exchange. This region concentrates most of Iraq’s crude oil.

The deals signed with major oil companies are service contracts. It is rather unusual for these companies to embark on such projects, which are generally carried out by smaller specialist firms. Large companies generally prefer investments that offer them a stake in the ownership of the oil and thus the possibility for high profits.

According to specialists in oil industry research, the reason behind such actions is that they see these deals as stepping stones towards more profitable projects. All in all, these deals are speeding up the previously sluggish development of Iraq’s oil industry.

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Article may be reprinted online or offline as long
as this box remains and hyperlinked online. Written
by Darren Chabluk for http://DrDinar.com/blog
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Iraq has a total oil refining capacity of approximately 600,000-bbl/d.  There are eight refineries across the country and they were not damaged during the 2003 war. The largest refineries are Baiji, with a capacity of 310,000-bbl/d, Basra with 150,000-bbl/d and Daura with 110,000-bbl/d.

Back in 2005, all the refineries were operating at a capacity of 50 to 75 percent and were unable to cover the country’s oil needs. This is why Iraq was forced to import about 200,000-bbl/d of refined oil, costing the country an estimated $200-250 million a month.

Subsidies imposed by governments on consumer prices cost Iraq another $800 billion a year. They also acted as an incentive for illegal trading of Iraq’s oil, which further accentuates shortages inside the country. Reducing dependency on oil imports is an important issue for the Iraqi economy.   In order to do so there are significant investments to be made in refinery upgrades and the building of new plants.

Two small firms from U.S. and the Czech Republic, Hydrocarbon Supply Ltd and Prokop, were awarded a $110 million contract in 2005 to upgrade the Daura plant. Capacity was to be increased by 60,000-bbl/d. Also in 2005, Iraq announced that a new refinery would be built in Basra and received bids from eight companies for the completion of this project.

By the end of 2005, construction had begun on two plants, one in Karbala with a capacity of 140,000-bbl/d and another in Diwaniya with 30,000-bbl/d. The two refineries cost about $1.5 billion and $300 million respectively and were two be completed by the end of 2008.

Despite having the third largest oil reserve in the world, it was only in 2009 that Iraq reached a stage where its refineries produced enough gasoline to cover the country’s domestic needs. The government has a $50 billion plan to overhaul the industry and boost oil production. As part of this strategy, Iraq signed contracts with several international companies.

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Article may be reprinted online and offline as long as
this box remains and hyperlinked online. Written by
Darren Chabluk for http://DrDinar.com/blog
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