Friday, September 09, 2005

Dinar boosted by growing confidence in Iraq recovery

Good day again!

This is a good one to read!

Dinar boosted by growing confidence in Iraq recovery
Reuters, 01.12.04, 6:36 AM ET

By Suleiman al-Khalidi

BAGHDAD, Jan 12 (Reuters) - Iraq's dinar currency climbed back to 1,500 to the dollar last week, the postwar high reached a month after the fall of Baghdad, helped by growing confidence that the country is on the path to recovery, traders said.

The dinar has risen steadily in recent months after falling back to 2,200 last year on concerns about security. It was at 2,000 during the final year of Saddam Hussein's rule.

Currency traders say that for the first time since the end of major combat last April more Iraqis are holding on to the dinar as a savings vehicle after years of hoarding dollars.

"Before, at the end of a working day, I wouldn't keep my Iraqi dinars and would change them to dollars. Now I am increasingly keeping my holdings in the dinar," said hotel owner Alaa Jabari.

Demand for the dinar has been boosted by a surge in currency smuggling which has seen hundreds of millions of dinars taken to Kuwait, Jordan, Egypt and the other Arab states, traders said.

"There is strong demand from neighbouring countries. They think the dinar is undervalued compared to the dollar and they expect the dinar to rise in the medium and long term," said Mohammad Hassan al-Jashmae, who runs a currency exchange firm.

Bankers say that by pushing the dinar to around 1,500 to the dollar, Iraq's central bank has attained its initial target to bolster the local currency, a step towards beefing up the incomes of state employees whose salaries are now paid in dinars.

Read more here.


Marcel Heersema
Iraqi Dinar Opportunity