[size=41]Why Iraqi’s Dinar Should be Around the Value of Kuwaiti’s Dinar
Sunday, 5 December 2021, 1:50 AM
458
[/size]
Why Iraqi’s Dinar (IQD) should be around the value of Kuwaiti’s Dinar (KWD) at USD 3.3
By Maijanfad (1 July 2018)
When one looks at the historical data available in public domain, it is clear that IQD has always been the same or around the value of KWD.
Why are they far apart?
Let’s us look at 2 of the major economic indicators of both countries. These are oil and gold.
Before we begin, let’s understand the assumptions behind this writing first. It is assumed that both countries’ major source of income are coming from oil production and both have sufficient gold reserve that makes their currencies valuable and at par. Of course there are other economic components that we are not going to touch.
Let’s begin by looking at the historical IQD and KWD relative to each other and United States Dollar (USD) from the chart below.
Source: http://fxtop.com/en/historical-exchange-rates.php (1 July 2018, processed).
From the chart, one can see that historically since 1960, IQD (purple line) has always been in the range between 1 – 0.97 to KWD (red line) until 2000 – 2001 when it dipped to 0.0002. Interestingly, it went back to 0.97 in 2002 – 2003 before it plunged to 0.00024 (average 1 KWD = IQD4,100) in 2004 until to date (2018).
Correspondingly, IQD value relevant to USD follows the same trends (average 1 USD = IQD1,198). Strangely, KWD (dashed green line) value remains relatively stable at USD3,30/KWD since 1960.
The chart does not show revaluation of KWD purportedly took place in 1991 when Iraq invaded Kuwait.
This article http://articles.latimes.com/1991-03-24/news/mn-1395_1_kuwaiti-banks (1 July 2018) suggests that the revaluation of KWD was against IQD to prevent bank’s clients exchanging IQD with KWD. “Clients will not be able to exchange Iraqi currency issued during the occupation, when Baghdad pegged the rates of the strong Kuwaiti dinar to the far less valuable Iraqi dinar.”
But then this happened in 1991 and was not captured in the historical data!
On different angle, it can be argued that given the history of both IQD and KWD that was always at par on 1 : 1, KWD was revalued against IQD twice. First, between 2000 – 2001 and second, 2003 – 2004.
In the next paragraphs, let’s assume that KWD is always stable against USD at USD3.30 and correspondingly, stable toward IQD at 1 : 1.
KWD was revalued against IQD and not USD
The chart below was plotted to show the value of IQD/KWD (red line) against both Iraq (blue line) and Kuwait (light-green line) Gross Domestic Product (GDP) in Billion USD.
It is clearly seen that both Iraq and Kuwait have enjoyed increased GDP having almost similar pattern and trends. Why IQD/KWD value dipped in 2000-2001 and 2004?
i) World Oil Prices
One of the reasons of looking at the world oil prices is to see whether USD as Petrodollar has influenced the revaluation of KWD against IQD.
The data shown in the graph above suggests that there is no correlation between the revaluation of IQD/KWD with the world oil prices as the prices sharply increased. This means, both countries enjoyed financial benefits from selling oil.
Both Iraq and Kuwait main sources of income are coming from oil production at 99% and 89% respectively (Source:http://www.worldsrichestcountries.com/top-iraq-exports.html). Thus, logically speaking both countries enjoy the rising oil prices. But, why KWD was revalued against IQD and subsequently IQD towards USD?
If the case is linked to USD, there is no plausible explanation as both Iraq and Kuwait during 2000 – 2005 were exporting their oil denominated in USD.
Iraq and Kuwait Oil Production
Let’s see the data on Iraq and Kuwait’s oil production.
Both countries’ oil productions appear to be stable for the period of 2000 – 2005 with upward trend within which Iraq production is more than Kuwait.
Traditionally, Iraq produced more oil than Kuwait. To date, Iraq production of oil of 4,380 Blue Barrel per day/1000 (BBL/D/1K) is almost double that of Kuwait.
Source: ieconomics.com
ii) Gold Reserve
Now, let’s see the relationship between IQD and KWD from both countries gold reserves.
It appears that this is where the root cause of the KWD revaluation against IQD as it is obvious from the graph that Iraq has no gold being reported as its reserve from 2000 – 2004. Another way of stating this is that KWD departing itself from its traditional 1 : 1 relationship from IQD relevant to the gold holding of Iraq.
Could this be the main cause of the revaluation?
Despite Kuwait’s gold reserve data for 1960 – 2000 is not present, it is apparently stable in the range of 80 metric tonne for the period of 2000 – 2018.
Correlating this with IQD/KWD relationship since 1960, IQD had been significantly at par on 1 to 1 with KWD and the graph below suggests that Iraq has always got more gold reserve than Kuwait which is on average above 100 metric tonne.
Source: www.gold.org (both Iraq and Kuwait from 2000 – 2018) andwww.24hgold.com (Iraq, 1962 – 1977) (1 July 2018)
From the graph, it can be seen that Iraqi’s gold of 127 metric tonne have disappeared in 1978 and started to be recorded by World Gold Council (gold.org) in 2005 from 5.9 metric tonne. Where did the 121 metric tonne of Iraqi’s gold go?
Where is Iraqi’s gold reported from 1960 – 1977 and why there was no record from 2000 – 2004? Will Iraq be able to get them back?
Interestingly, IQD/KWD revaluation happened within this time frame (2000 – 2004) and during which IQD has been at 4,100/KWD or 1,190/USD. These values linger till to date.
What is happening with IQD?
If macro-economic data of Iraq and Kuwait are correlated, there seem to be non-technical reasons that have been affecting IQD value. Could this be linked to Iraq’s gold reserve?
The data suggest that by 2015 IQD—when Iraq gold reserve is approaching 100 metric tonne—should be about the same as KWD at 1 : 1. Why to date this has not happened?
It appears the main reason is political and has got very little to no relationships with macro-economic and the wealth of Iraq.
Could this be changed by President Trump?
IQD future
Since 2015, using Iraq’s gold reserve as benchmark which has been steadily increased to beyond Kuwait’s, the future of IQD’s value looks similar to KWD that is USD3.0 – 3.3 using IQD 1 – 0.95 per 1 KWD.
______________________________________________________
Today at 5:11 pm by Rocky
» Sudanese advisor criticizes Kuwaiti analyzes regarding the development road project
Today at 2:21 pm by Rocky
» Al-Mandalawi stresses the need to strengthen economic and trade cooperation between Iraq and Poland
Today at 2:04 pm by Rocky
» Power maneuvers: America provides defensive weapons to Kurdistan in exchange for withholding from Ba
Today at 10:26 am by Rocky
» Kuwait is drilling an oil well near Umm Qasr, towards Iraqi territory
Today at 10:24 am by Rocky
» In the document... the first Iraqi ministry identifies the obstacles to changing the new official wo
Today at 10:22 am by Rocky
» Italian Institute: Iraq is stuck in its own crises, including Baghdad’s efforts to undermine the “au
Today at 10:21 am by Rocky
» The head of the Integrity Commission announces the holding of an international Interpol conference i
Today at 10:18 am by Rocky
» Planning: Iraqi companies are not efficient in conducting the population census
Today at 10:14 am by Rocky
» utube MM&C 4/24/24 Support - USA- Turkey - Timing- Currency Value - Tabled
Today at 8:08 am by Rocky
» MM&C 4/25/24 National Bank of Iraq goes live with Temenos core banking and payments
Today at 8:06 am by Rocky
» A banking official indicates a "danger" to Iraq by depriving more than half of its banks of dollars
Today at 7:55 am by Rocky
» With the participation of the Association of Private Banks, investment opportunities are on the tabl
Today at 7:45 am by Rocky
» Within a month... an Iranian border crossing recorded a noticeable increase in exports of goods to I
Today at 7:44 am by Rocky
» The Association of Private Banks appreciates the efforts of the government and the Central Bank to c
Today at 7:43 am by Rocky
» Al-Maliki's coalition presents a third candidate for the position of governor of Diyala
Today at 6:57 am by Rocky
» Arab gathering: The Kirkuk problem is getting complicated and the Sudanese must intervene
Today at 6:56 am by Rocky
» Next week.. a Kurdish delegation will visit Baghdad to meet with the Minister of Finance
Today at 6:54 am by Rocky
» Under the pretext of salaries... Al-Party refrains from handing over port revenues to Baghdad
Today at 6:53 am by Rocky
» Association of Banks: For the first time, we are witnessing a clear targeting of depriving half of t
Today at 6:51 am by Rocky
» Parliament does not know the reason for the delay in sending the 2024 budget schedules: Voting takes
Today at 6:49 am by Rocky
» Applicants for the 2024 Hajj are demanding that the Central Bank secure the dollar for them through
Today at 5:09 am by Rocky
» Governmental and private banks will showcase their services tomorrow during Financial Inclusion Week
Today at 5:08 am by Rocky
» Iraq's oil exports rise despite OPEC+ cuts
Today at 5:06 am by Rocky
» A study explodes a "surprise"... Iraq is among the countries that export oil to "Israel": How is the
Today at 5:04 am by Rocky
» Al-Araji emphasizes working to strengthen national identity
Today at 5:02 am by Rocky
» Al-Sudani visits Saudi Arabia to participate in the World Economic Forum in Riyadh
Today at 5:01 am by Rocky
» Iraq is talking about producing one million additional liters of gasoline
Today at 4:59 am by Rocky
» The Council of Ministers approves the implementation of the Baghdad Metro project
Today at 4:56 am by Rocky
» Minister of Commerce: We formed a joint economic committee with Türkiye
Today at 4:55 am by Rocky
» Resources: Government measures have contributed to improving the water situation in Iraq
Today at 4:53 am by Rocky
» Parliamentary Finance: Baghdad will continue to send salaries to the region’s employees until settle
Today at 4:51 am by Rocky
» A parliamentarian describes the corruption of Iraqi ports as “ghouls” and reveals the involvement of
Today at 4:49 am by Rocky
» Obelisk Hour: Basra is the subject of political conflict and ambiguity over the fate of the funds al
Today at 4:48 am by Rocky
» Turkmen leader: An agreement on the local government of Kirkuk is near
Today at 4:45 am by Rocky
» Anbar calls for the operation of its factories despite financial obstacles
Today at 4:44 am by Rocky
» Turki: The crisis of the Presidency of Parliament prompted the Sunnis to amend the Council’s interna
Today at 4:43 am by Rocky
» The Agriculture Committee confirms the existence of Iraqi-Turkish-Iranian discussions on water
Today at 4:42 am by Rocky
» Resources diagnose the challenges facing the water file in Iraq
Today at 4:38 am by Rocky
» Parliament pledges to the Interior Ministry: We will transfer money to buy weapons from citizens
Today at 4:33 am by Rocky
» Al-Issawi is the closest.. Parliament sets the date for deciding the choice of the new president
Today at 4:31 am by Rocky
» Deputy: Iraq's investments have risen and need a comprehensive review of previous years
Today at 4:30 am by Rocky
» Iraqis consume 7 billion eggs annually and import about $900 million
Today at 4:28 am by Rocky
» The Iranian role complicates attempts at open cooperation between Iraq and Turkey. Turkey is trying
Today at 4:26 am by Rocky
» Move in Iran to obtain $242 billion from Iraq in compensation for the eight-year war
Today at 4:25 am by Rocky
» 12 decisions from the Council of Ministers regarding the Baghdad Metro and Najaf-Karbala train proje
Today at 4:23 am by Rocky
» Sudanese Advisor: The path to development has begun... the Baka and the militias “we silence them wi
Today at 4:21 am by Rocky
» Not from Kurdistan.. How did Iraq become a source of oil for “Israeli tanks”?
Today at 4:19 am by Rocky
» Parliamentary Agriculture criticizes the Sudanese and Erdogan agreement: Türkiye will control water
Today at 4:16 am by Rocky
» The Iraqi government issues new decisions
Yesterday at 2:35 pm by Rocky
» The story of “reduced oil” to Jordan, from “compulsion” to mutual benefit.. Is there a loss?
Yesterday at 2:33 pm by Rocky
» The Council of Ministers takes 12 decisions for the Baghdad Metro and the Najaf-Karbala train
Yesterday at 2:32 pm by Rocky
» utube MM&C 4/23/24 Iraqi Dinar - IQD Update - Development Road Project - Saviour of Global Banking
Yesterday at 10:18 am by Rocky
» Kidney from pig transplanted into deathly ill New Jersey woman — and begins working almost immediat
Yesterday at 10:15 am by Bama Diva
» The most difficult option.. Warnings of the danger of floating the Iraqi dinar without achieving an
Yesterday at 9:48 am by Rocky
» Trade from the “Economic Committee” with Türkiye: It will overcome all obstacles facing the traders
Yesterday at 9:46 am by Rocky
» Washington's hope for stable relations with Baghdad clashes with Iraqi parties' rejection of the Ame
Yesterday at 9:41 am by Rocky
» Karim Badr: Development is America’s will to kill silk
Yesterday at 9:36 am by Rocky
» Oil: Opening of a new port for liquid gas for vehicles in Baghdad
Yesterday at 9:33 am by Rocky
» A media advisor warns of corruption in a draft law on the Parliament’s agenda
Yesterday at 9:21 am by Rocky
» Economist: There is serious work to lift US sanctions on Iraqi banks
Yesterday at 9:16 am by Rocky
» Will the agreements signed with the US Treasury reflect positively on the exchange rates?
Yesterday at 7:52 am by Rocky
» Iraq continues its quest to join the World Trade Organization
Yesterday at 7:51 am by Rocky
» Iraq completes the completion of the files for the initial offer of goods and services to join the W
Yesterday at 7:50 am by Rocky
» Economist: Travelers' dollars are leaking into the parallel market...and this is what the Central Ba
Yesterday at 7:32 am by Rocky
» President of the Federal Court: It is not permissible to force anyone to join any party, and the pol
Yesterday at 7:30 am by Rocky
» The Council of Ministers holds its session headed by Al-Sudani
Yesterday at 7:27 am by Rocky
» America weakens Baghdad...and increases Kurdistan's military capabilities
Yesterday at 7:26 am by Rocky
» The Iraqi government plans to build 10,000 schools throughout the country
Yesterday at 7:23 am by Rocky
» American threats close the Iraqi Stock Exchange at a loss
Yesterday at 7:21 am by Rocky
» Increase in external transfers at the Central Bank
Yesterday at 7:20 am by Rocky
» Al-Maliki calls on Britain to cancel restrictions on the entry of its companies into Iraq
Yesterday at 7:18 am by Rocky
» Planning and the European Union are discussing signing a number of agreements in the development, en
Yesterday at 7:16 am by Rocky
» Parliament talks about the mechanism for recovering smuggled funds and hints at the next stage
Yesterday at 7:13 am by Rocky
» Interior Ministry: The number of completed national cards reached 37 million cards
Yesterday at 7:06 am by Rocky
» Amnesty International: Violations of freedom and human rights continue in Iraq and the Kurdistan Reg
Yesterday at 7:04 am by Rocky
» Parliamentary Oil: The government is proceeding with the decision to raise the price of improved gas
Yesterday at 7:03 am by Rocky
» A parliamentary committee in Basra to investigate violations of the port company and the local gover
Yesterday at 7:00 am by Rocky
» Revealing the 10 most important American exports to Iraq
Yesterday at 5:31 am by Rocky
» A noticeable increase in the rate of Iraq's import of Chinese cooling devices
Yesterday at 5:30 am by Rocky
» Prime Minister: Working on projects without completing the infrastructure is a waste of money
Yesterday at 5:28 am by Rocky
» Iraq.. Extending the deadline for registration procedures on plots of land
Yesterday at 5:27 am by Rocky
» What is the main purpose of conducting the population census in Iraq?
Yesterday at 5:25 am by Rocky
» A plan to transform Iraq from a barren land to green with 5 million trees
Yesterday at 5:24 am by Rocky
» The Housing Fund announces the acceptance of more than 11 thousand loans through the Ur platform
Yesterday at 5:23 am by Rocky
» The Bank of Baghdad is moving to increase its capital to 400 billion dinars
Yesterday at 5:20 am by Rocky
» The electronic payment system will soon be adopted on Iraqi buses
Yesterday at 5:19 am by Rocky
» “It threatens our interests and destroys our economy.” An Iraqi project “irritates” the Kuwaiti stre
Yesterday at 5:18 am by Rocky
» Warning from the Central Bank about “misuse of electronic payment cards”
Yesterday at 5:17 am by Rocky
» Iraq and the Sultanate of Oman are discussing sending capacities through the Gulf countries
Yesterday at 5:16 am by Rocky
» The fact that a decision was issued to deport Syrian workers from Iraq
Yesterday at 5:14 am by Rocky
» Rice comes first... America exports 10 foodstuffs worth more than 350 million dollars to Iraq
Yesterday at 5:14 am by Rocky
» A sixth licensing round for gas exploration
Yesterday at 5:12 am by Rocky
» Baghdad is preparing to host the 50th session of the Arab Labor Conference
Yesterday at 5:11 am by Rocky
» Scientific symposium on the future vision of the tripartite budget
Yesterday at 5:09 am by Rocky
» Five conversion power stations enter service in Najaf
Yesterday at 5:08 am by Rocky
» Planning: Conduct a population census next November
Yesterday at 5:07 am by Rocky
» Experts: Spreading misleading information harms development and investment
Yesterday at 5:03 am by Rocky
» Economists call for tightening money laundering laws and port controls
Yesterday at 5:02 am by Rocky