Last 2011, Iraq was surrounded with several speculations about its booming currency and its new set of government officials but, the said year was a good start for the country’s economy. Now, let us take a closer look about some possibilities in the year 2012 and understand some facts behind the real increase of Iraqi Dinar price against the US dollar which is believed as a decision announced by the central bank of Iraq. Will there be more opportunities this 2012 than in the previous years?
The Economy of Iraq
Will the Central Bank of Iraq be strong enough to increase the Iraqi Dinar price against the USD? Is the economic growth reliable to raise the price? If we are going to check the current status of the country, we could just look at its oil reserves. As a matter of fact, Parliamentary Finance Committee recently stated that the country does not need to borrow from the International Monetary Fund although the budget deficit for this year is estimated to be around 13 trillion dinars. Why? The Finance Committee of the country knows that the deficit can be paid from the price of oil without obstructions.
For most people, they take this as budget deficit but, Dinar investors treat this as a part of the nation’s necessities given the fact that the country exports more than 2 million barrels of oil in a day. With an oil price of not less than $100, it seems that the economy will keep on pointing upward. Najiba Najib, a member of the Finance Committee, was even straight forward when she told the Kurdish news agency about the recent economic study about getting calculations to support the nation for the year 2012.
An estimated amount of 100 billion USD budget would make a great impact on how we could visualize the current economy of the country. If we try to convert the prospected budget, it would make up to more than 100 trillion Iraqi Dinars – a good sign of foreign exchange for modern Dinar investors. The only problem the country might expect is the US withdrawal because of the charges against the country’s Deputy President al-Hashemi’s involvement in terrorism. Although, the charges were denied by Tareq al-Hashemi, these allegations might affect the country’s current economic status.
An Increase of more than 3%
2011 was filled with speculations about the negative effects of redenomination to the increasing numbers of Dinar investors. Last year, news about the ‘deleting of zeroes’ was hitting the consciousness of Dinar holders. It raised hot questions that were even fueled when the Governor of CBI released prospected years if ever there would be a plan of replacing the currency.
As of this year, the tide tends to turn from ‘redenomination’ to the raising of Iraqi Dinar price as the economy of the country tries to compete with the world market. 2012 seems to be unpredictable for both foreign and local investors. Recently, Central Bank of Iraq increased the Iraqi Dinar price against the US dollar by approximately 3.4%. It was even noted that the decision was greatly influenced by the auction participated by more than 20 banks of the country. We can assess, based on the increase of price, that one US dollar will make up to 1166 dinars.
The unprecedented decision by the Central Bank of Iraq might affect the exchange rate of Dinar against the USD. In short, this might be a great start for the Iraqi market. But, will it also be pleasurable for some Dinar investors? Did the CBI make the right decision? Or is this another miscalculation that might lengthen the anticipated revaluation?
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