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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Written by Darren Chabluk for http://DrDinar.com
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Darren, how about when the dinar is introduced onto the world market??
I`m just a bit confused here.
It is good to know that the Iraq Dinar is the excepted medium of exchange inside the borders of Iraq. It is not an international currency. That is what we are all waiting for, for the World Bank, the ICC and the IMF to place a value on the Dinar so that it will have an international value. When I bought my Dinar it was worth 1/10 of 1 US Cent. When there in a reval even to 10 Cents it will be a good day. Then that day will come when it is worth 1 US dollar and maybe I’ll live to see the day that the Dinar is back to the pre-Sadam value of $2.79. It will happen I just don’t know if I’ll still be alive when it happens, but my childern or Grandchildern will. We Just have to have Faith.
Monique, well, the inflation was to be expected. After the initial ousting of Saddam in 2003 market prices for goods were basic. People just made enouph and sold enouph to sustain basic life.
After the reval, prices for goods on the market such as cheese, shoes, Internet access, fuel, will sell for average market value; And according to the currency exchange rate.
Lets say the Iraqi Dinar becomes 1 to 1 with the US Dollar just to keep numbers simple. A 25000 Dinar note would be $25000US. The average market value for the cheese would drop dramatically overnight.
This happened in Ukraine back in the early 90’s when they broke off of Russian control for independence. It causes a very short term caos on the market place where people trade daily goods but its very short lived as the currency exchange rate wave of value sweeps across the country.
Cheese will go from say 1700 dinar for a chunk of swiss to about 7 dinar for the same peice of swiss cheese. It may take a few days to a few weeks for consumable good prices on the market to reflect average market value once again.
During this time, merchants will constantly compete with eachother to see who will be the last to charge the old prices. Eventually, all merchants will need to adjust prices or nobody will buy cheese for $170 worth of Dinar when 99% of other stores sell the same cheese for $5 or 5 Dinar.
The government of Iraq don’t want US Dollar to be used so the government will distribute goods and services accordingly to enforce the exchange rate.
Thanks Darren!
When the Dinar starts trading on the `world stage` – has an international value as Jay puts it – THAT will be the day to celebrate.
Hope and pray it won`t be too too long so Jay can still be around to enjoy all that cash along with the rest of us.
1st round oil permissions will boost production to 6m bpd – minister
November 3, 2009 – 04:07:39
BAGHDAD / Aswat al-Iraq: The Iraqi Oil Minister Hussein al-Shahrestani said on Tuesday that the first round of permissions, granted for foreign companies according to oil services contracts, will boost the Iraqi oil production level to more than six million barrels per day (bpd) during the coming six years.
“Iraq will pay $2 per each barrel increase in production,” al-Shahrestani said.
He said this amount will be taxed by the Iraqi Finance Ministry by 35 percent, and 25 percent will go to the Iraqi partner.
“What each of those companies would actually get is around 97 cents per each additional barrel,” he said.
MH(P)/SR
CORRECTED-UPDATE 1-Iraq to sign deals with BP, Eni
By: AFX | 29 Oct 2009 | 10:24 AM ET
By Ahmed Rasheed BAGHDAD, Oct 29 (Reuters) – Iraq’s Oil Ministry said on Thursday that it will sign a final deal on Nov. 3 with BP and China’s CNPC to develop its biggest oilfield, Rumaila, the nation’s first major oil pact since the U.S. invasion in 2003.
The ministry will also sign an initial deal on Nov. 2 with Italy’s Eni Spa over the Zubair oilfield, Oil Ministry spokesman Asim Jihad said. The agreement with Eni and its partners, Occidental Petroleum Corp and South Korea’s KOGAS, must be approved by Iraq’s cabinet before a final contract can be signed, Jihad said. Both deals involve super-giant oilfields and a promise of increased production that could catapult Iraq up to the top ranks of the league of oil producing nations.
Iraq’s oil infrastructure is dilapidated after years of war, sanctions and underinvestment, and while it has the world’s third largest reserves, it is only the 11th largest producer. The country hopes foreign investment will help it move up to third place with oil output of around 7 million barrels per day (bpd) — triple current production of around 2.5 million bpd — within six or seven years.
Rumaila, with estimated reserves of 17 billion barrels, is the workhorse of Iraq’s oil sector, producing almost half of the country’s total daily output. The deal with BP and CNPC was the only one that emerged from Iraq’s first post-invasion auction of oil contracts in June after international firms balked at Iraq’s stiff terms. Subsequent negotiations behind closed doors have, however, led to other deals being worked out on some of the fields that were not successfully auctioned off.
One of those is the agreement with Eni and its partners over Zubair. Eni has said it expects to invest $10 billion in Zubair, which has estimated reserves of 4 billion barrels, and will boost production to 1.125 million bpd from 200,000 bpd within seven years. Iraq will hold a second round of oilfield tenders on Dec. 11-12 in which largely undeveloped fields will be on offer.
(Reporting by Ahmed Rasheed; Writing by Michael Christie; Editing by David Brough) Keywords: OIL/IRAQ DEALS (michael.christie@thomsonreuters.com; +964 7901 917 030; Reuters Messaging: michael.christie.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009.