Wednesday, January 14, 2004

Has anybody been following what is happening to the Iraqi dinar the last couple of weeks?

It seems someone stuck the dinar on a Helium filled balloon and let it loose, the dinar keeps getting stronger and stronger; the foreign exchange market in Harthiya is in total shock. If things keep going the way they are the dinar will be worth twice as much as it was a month ago.
At new year’s the exchange rate was around 1750 dinars for a dollar, today it is 1150 for a dollar. No other subject is being discussed at the barber’s (yes Raed and I finally got a haircut). Last night during the late night news it said the dollar was selling for 1300, and today at 1150, tsk tsk tsk. The rise and rise of the Iraqi dinar. [Insert phallic or silly Viagra joke here].

Government employees being paid in dinar feel now that their money is worth much more. My Barber while snip-snapping at the little hair I have on my head; decided to stop the grumblers in his shop by announcing that there is nothing better than having a strong currency you are proud of “by Allah all those Iraqis working abroad should come back, now that working so hard abroad doesn’t pay off as much as it used to let them come work here in their country”….yep, I have a wise barber.

One thing is still bothering most people, traders who have imported their merchandise a month ago feel they have been given the [Khazooq*] and are refusing to re-price their goods according to the new price of the dinar, and more and more people ask to be paid in Iraqi dinar, more trust in the local currency. Very well done Iraqi National Bank.

The strange side effects this has had is the smuggling of huge amounts of Iraqi currency and heavier trading with the new dinar in the Arab world. Al-Sabah reported of two Kuwaitis trying to leave Iraq with a couple of hundred million new Iraqi dinars. Asharq Al-Awsat [the link is to the international edition, not the baghdad edition] published a picture of a car loaded with another couple of hundred million being taken out by a Pakistani. The Egyptian currency market has problems because of the volume of trade in the new Iraqi dinar.
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.
my grandmother would have one thing to say; “wallah ishna u shufna” – by Allah we lived to see that happen.

*That's a pole stuck up the bum.