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When to Sell Foreign Currency? 2 Dec 2019 5:22 AM (5 years ago)

When you sell foreign currency, it’s a sign that you believe the currency you are selling will weaken in value compared to other nations’ currency. How do you determine when it’s the best time to buy and sell foreign currency? While there are numerous factors that affect currency exchange rates, here are five key signs when it will be profitable to sell:

5 SIGNS IT’S TIME TO SELL FOREIGN CURRENCY 

1. Inflation Rate Falls
2. Interest Rates Rise
3. Currency Revaluates
4. Political Change
5. Economic Change

You can also decide to buy the currency of a nation because you will be able to make a profit when the currency revalues. For instance, if you were to invest in the Iraqi currency, it’s because it is inexpensive to buy with United States dollars and economic forecasts about Iraq suggest a foreign currency revaluation of the dinar in the near future. Consequently, you will be able to profit by buying low and selling high.

Investors typically use one or more of these five signals when they decide to sell foreign currency. Usually, however, it’s a good idea to sell when you have several factors working together since this suggests an overall trend.

1. Inflation Rate Falls

A country’s inflation rate impacts its currency and its foreign exchange rate. Ironically, both high and low inflation can have a negative economic impact. A high rate of inflation means that consumers have to pay more for goods and services that have not increased in demand or value while a low rate does not assure investors a favorable foreign exchange rate.

For instance, in 2015, between the months of November and December, Canada’s inflation rate dropped from 2% to 1.5%–and then even lower in subsequent months. During the previous year, one Canadian dollar was equivalent to $0.91 in United States dollars. After the inflation rate dropped, one Canadian dollar was equivalent to $0.80 in United States dollars. This may not seem much, but it represents a 12% fall in currency value. We can see a clear relationship between the fall in the inflation rate and the fall in its currency value against the United States dollar.

Incidentally, what is true of a change in currency value of one currency against another in a pair is not true for one national currency against all currencies. So, while the Canadian dollar did significantly depreciate against the United States dollar, the value of the Canadian dollar continued to favorably match the Australian dollar, the euro, and the British pound. This is an important distinction to keep in mind. When thinking of selling a foreign currency you should base your decision on the currency pair you are specifically evaluating and avoid the temptation to generalize.

While examining inflation rates is important when deciding whether to sell a currency, it should not be the only factor to consider. Interpreting the effects of inflation is too complex an issue for economic forecasting, and there are many other variables at play.

2. Interest Rates Rise

Interest rates are affected by inflationary trends. The two have a complex interrelationship that is difficult for a government to balance. Initially, low-interest rates can be seen as positive for two reasons: It spurs economic growth and increases how much consumers spend. When interest rates are low, entrepreneurs tend to borrow more to build companies that offer enticing goods and services to the marketplace. Also, consumers are more likely to buy goods and services rather than conserve their funds.

However, as the trend continues, there comes a point of saturation. This occurs when consumer spending becomes excessive and the demand for goods and services exceeds the number of businesses that can supply them. When this happens, high inflation occurs, and interest rates rise. When interest rates rise, this attracts more foreign investments. This, in turn, will increase the demand for a home nation’s currency. All this is positive enough, but inflation is also likely to increase as well, which will then depreciate the currency value.

3. Currency Revaluates

Revaluation is the opposite of devaluation: While revaluation is upward, devaluation is downward. Both are measured by a specified baseline and both affect a nation’s foreign exchange rate. A number of measures can be used as a baseline. For instance, it could be the living wage rate or the price of precious metals like gold, silver, or other bullion products.

In a fixed exchange rate system, revaluation is a decision to change the official value of a currency by its government or central bank, and in a floating exchange system, as a result of market forces affecting the value of a currency.

Revaluations may happen regularly, rather than just periodically, and they create fluctuations in the FOREX market and in foreign exchange rates. It not only affects a currency but also the asset value of a foreign company that holds the currency. This affects the book value of foreign assets.

Many possible events can spark a currency evaluation. For instance, it might be interest rate changes between countries or it might be new, emerging markets in an economy that affect competition or profits.

4. Political Change 

Political changes, especially if they are drastic, can create a huge economic impact, changing its economic outlook and the value of the national currency. For instance, this can occur following the election of a new leader who has a completely new vision for the direction of the country, or a coup d’état when the military overthrows a demagogue.

By monitoring the political changes around the world, a Forex investor can gauge in what direction a country is moving and how it will affect the economy. Besides selling when there are radical political changes, they might also decide to sell if there is an increase in government spending, a restriction on an industry, or other factors that could affect the foreign exchange rate.

A recent example of a political change that will have an economic impact is Brexit. The British pound (GBP) reached an all-time low since 1985 after the UK decided by popular vote to leave the European Union. This loss of confidence in the currency was due to the fact that the country’s economic future became uncertain and difficult to forecast.

Political changes affect fiscal trends and monetary policies. When these occur, a government and a central bank may make new economic decisions that affect interest rates, inflation, and foreign exchange rates.

5. Economic Change 

Forex traders also pay close attention to economic reports to understand the economic outlook of a country. Here are some key indicators that help a trader decide whether or not to sell foreign currency:

• Gross Domestic Product (GDP) is a broad look, a quantitative measure, of a country’s economic regression, stagnation, or growth. It is a baseline figure that measures the country’s monetary value. This value is calculated based on the goods and services created within its boundaries over a given period of time. However, it’s important to keep in mind that this is a lagging indicator–it measures economic trends and events that have already happened.
• Inflation measures the purchasing power of a currency. Inflation can be upward or downward. As a result of inflation, currency can appreciate or depreciate. Depending on the rate of inflation, foreign investments may increase or decrease. When inflation rises too high, the central bank may take steps to curb it. Since inflation is a dynamic movement, it can be hard to balance, and its effect on the value of a currency is not easy to estimate.
• Employment levels affect economic strength or weakness.
• Retail sales levels may rise or fall based on seasons and global economic trends.
• Manufacturing indexes can change depending on technological innovations.

Where to Sell Foreign Currency 

In the US, compared to many other countries, currency exchange firms are not widespread. However, you can sell foreign currency online. Still online currency exchange companies, even if they have earned a sterling reputation for honest transactions and have the official credentials of regulatory authorities to prove that they are legitimate, are not always your only option.

The best place to sell your foreign currency is the foreign exchange market, which is also known as FOREX or FX or currency trading. This is a decentralized global market, a place where all the major currencies in the world are traded.

It’s the best place to sell back foreign currency because it is bigger than the New York Stock Exchange, is the most liquid financial market in the world, and it’s open 24 hours a day. While the New York Stock Exchange had an average daily trading volume of $38.5 billion in 2017, the average daily trading volume in the FOREX market was in excess of $5 trillion.

If you’re asking, “Where can I sell my foreign currency?” then the FOREX market is the place. However, it is not the best place if you plan to sell foreign currency notes or to sell foreign currency coins because FOREX is about electronic trading rather than cash transactions. For buying and selling foreign notes and coins or cryptocurrency, a reputable online currency trader or exchange will be your best option. These are also good places to invest if you have long-term investment plans, like buying a currency like the Vietnamese dong while the prices are low then waiting for the currency to revalue before selling it.

Two Different Types of Foreign Currency Markets 

You should not confuse financial transactions to make a profit from selling foreign currency with another type of foreign exchange market related to international payments, credit card transactions to purchase foreign goods, travelers’ cheques when going overseas, airport exchange kiosks, or exchange rates at your credit union or bank.

While these, too, deal with foreign currency assets, a foreign currency purchase or a foreign currency payment, they function in a completely different way. They do share a few things in common, such as the use of money to decide the exchange rate between two currencies, but they are a different market.

The difference between these two foreign currency markets is that the foreign exchange market and foreign exchange rates focus on buying and selling currency as an investor. The other foreign exchange market is designed to serve a different sector of the economy, namely, merchants, consumers, and overseas travelers.

How to Make Money Buying and Selling Currency

You can make money buying and selling currency. However, just like buying and selling in any investment market—such as stocks, commodities, or real estate—you need three skills to do well in currency trading: education, experience, and practice.

Buying and Selling Currency

Currency trading is speculating on the currency exchange rate. This is the rate that traders exchange one currency for another. Since the FOREX market runs on the laws of supply and demand of one currency in relation to another currency, this currency exchange rate is a floating exchange rate. In contrast, when a government decides on the rate, is a fixed exchange rate.

Brokers quote currency exchange rates in pairs.

• When the forex market compares the euro and US dollar exchange rates, this is a EUR/USD pair.
• When the forex market compares the US dollar and Japanese yen exchange rates, this is a USD/JPY pair.
• When the FOREX market compares the British pound sterling and US dollar exchange rates, this a GBP/USD pair.

Most pairs involve the United States dollar because this is the world reserve currency. However, there are exceptions. One popular example is when the FOREX market compares the euro and British pound sterling exchange rates, which is a EUR/GBP pair.

Buying and selling foreign currency is not like buying and selling stocks. In the stock exchange, you either buy or sell a share, but in the currency exchange market, you’re buying and selling currency pairs. Since currency transactions strive to be as accurate as possible, the foreign exchange marketplace prices every currency to the fourth decimal. The smallest increment of a trade is a pip (percentage in point).

Currency Selling and Buying Superstars

What do billionaires like George Soros, Andy Krieger, Bill Lipschutz, Chris Larsen, Joseph Lubin, Ray Dalio, Steven A. Cohen, and Bruce Kovner have in common? They rank as some of the most successful investors in the world.

Each investor has an epic story about how they struck it big in the currency market. George Soros, for example, is known as “the man who broke the Bank of England.” In 1992, he shorted $10 billion (USD) worth of the British Pound sterling (GBP) and made a $1 billion profit.

How to Make Money Buying and Selling Foreign Currency

When it comes to buying and selling currency, you must tap into many available online resources. Here on Treasury Vault, for example, we help people who are interested in investing in the Iraqi dinar and multiple currencies from around the world. We also create educational blog articles. For instance, our post on the most valuable currencies identifies the top 10 most valuable currencies in the world and how various factors, such as a government’s monetary policy and a country’s rate of inflation, contributed to the purchasing power of the most valued currencies.

Besides a resource like ours for buying and selling currency for profit, you should also look for an online currency exchange calculator because the foreign exchange market is dynamic. Since today’s currency buying and selling rates will change tomorrow, you need quick and accurate currency conversion figures at your fingertips.

What Is Buying and Selling Digital Currency?

In addition to FOREX transactions that deal with tangible money, there is also an alternative money exchange that deals with cryptocurrency. While you will use checking and savings accounts provided by financial institutions for buying and selling currencies in FOREX trading, you will need “a digital wallet” to store your cryptocurrency.

Common Confusion About the Currency Exchange Market

By definition, the currency exchange market focuses on currency exchange buying and selling rates—but investors and travelers use it in different ways.

The different use of the currency exchange market can cause confusion. Many investors began to use the Wells Fargo currency exchange office to buy Iraqi dinars as a financial asset. They wanted this foreign currency because they planned to sell it for profit after a dinar revaluation in the future. In fact, the public demand for purchasing Iraqi dinar as a financial asset got so out of control that the bank now has the following disclaimer on their foreign exchange webpage: “Wells Fargo does not sell Iraqi dinar in any location – online, by phone, or in our branches.”

Financial institutions like banks buy foreign currency to sell to their customers as travel money. For instance, people going to Turkey would need Turkish lira. They can’t use their credit cards, debit cards, or United States dollars to buy goods, assets, or services in Turkey.

How to Buy and Sell Foreign Currency in FOREX 

There are three advantages to trading in the FOREX market: It’s open 24 hours a day, it has robust liquidity, and it offers substantial leverage.

All you need is a computer with reliable internet access and a trading account with a FOREX broker. Here one type of currency is exchanged for another currency based on the exchange rate between the two different currencies. For example, when trying to decide what to buy and sell you might look for quotes on following types of currency pairs:

● EU to USD

● JPY to USD

● CAD to USD

● GBP to USD

● USD to CAD

● BAHT to USD

●USD to PHP

Basically, these are symbols for different currency pairs. For example, a CAD to USD quote will tell you that 1 Canadian Dollar (CAD) is equal to 0.76 United States Dollar (USD).

When investors are buying and selling foreign currency in the FOREX market, they treat money as a commodity and trade in currency pairs. For instance, you might look at the spot rate of the US dollar (USD) compared to the Japanese Yen (JPY) and decide to sell.

Talking about currency in the FOREX market, should not be confused with thinking of money as a means of exchange for goods and services. Instead, currency in FOREX has to be thought of as a commodity, like, say, wheat or soybeans in the futures market. FOREX trading is rather similar to electronically purchasing a share in a publicly traded company. However, there is no central exchange, but instead an interbank market, a network of banks and financial institutions.

Selling Foreign Currency

When selling currencies as an investor, look at indicators like inflation rates, interest rates, currency revaluation, political events, and economic changes. Ideally, you will consider more than one indicator to improve your chances of profiting from selling at the right time.

Think, of selling currencies as similar to selling shares, except instead of relying on the performance of a company, you are evaluating the performance of a country in relation to another country. If you are selling foreign exchange electronically, then FOREX trading is a good option. However, if you are selling foreign currency notes and coins–in other words, dealing with cash–then look for a brick-and-mortar or online currency exchange company.

The post When to Sell Foreign Currency? appeared first on Treasury Vault.

Top 10 Most Valuable Currencies in the World 2 Dec 2019 5:20 AM (5 years ago)

What is the most valuable currency in the world? Is it the British Pound, once the most valuable currency in world history? Issued in 775 A.D., it’s now about 1,200 years old. Or is it the world’s reserve currency, the United States dollar? In this Treasury Vault article, we’ve compiled a list of the world’s top currencies.

TOP 10 MOST VALUABLE CURRENCIES IN THE WORLD 

1. The Kuwaiti Dinar
2. The Bahraini Dinar
3. The Oman Rial
4. The Jordan Dinar
5. The British Pound Sterling
6. The Cayman Islands Dollar
7. The European Euro
8. The Swiss Franc
9. The US Dollar
10. The Canadian Dollar

The world’s most valuable currency notes are not what you might expect. Out of 180 monetary classifications of banknotes used in 195 countries, the more historical, well-established currencies are not at the top. Let’s take a brief look at their various currency codes, its value compared to the USD, and some reasons for its significance as a global currency.

Curious about what country has the most valuable currency? Here is a list of the top ten most valuable currencies in the world in 2019.

1. The Kuwaiti Dinar 

Kuwait’s national currency is the Kuwaiti Dinar (KWD), and 1 KWD equals 3.29 USD. Issued in 1961, after Kuwait’s independence forced Britain to withdraw its political control of the Middle East, the Kuwaiti Dinar is the most valuable currency today.

In 1975, Kuwait pegged its national currency to a monetary system called “a weighted currency basket.” The Iraqi dinar replaced it after the 1990 Iraqi invasion, but after liberation in 1991, the Kuwaiti government put this currency in circulation again and restored the dinar exchange rate value. Pegged to the US dollar in 2003, Kuwait returned to the weighted currency basket in 2007, where it remains a strong currency.

2. The Bahraini Dinar  

Bahrain’s national currency is the Bahraini Dinar (KWD), and 1 BHD equals 2.65 USD. The government issued the Bahraini dinar in 1965 when it was still a British protectorate. In 1980, Bahrain pegged the currency to the International Monetary Fund’s Special Drawing Rights. Because it’s a desert state, it’s a net importer, paying for its essential needs — including water — through strong petroleum production exports.

3. The Oman Rial  

Oman’s national currency is the Oman Rial (OMR), and 1 OMR pegs to 2.6O USD. In 1970, when the Qaboos bin Said al-Said established the Sultanate of Oman, it used the Saudi Riyal. Then in 1973, the country issued the Oman Rial and pegged it to the USD.

Despite its short existence, the Oman Rial now ranks as number three on our list because of its economic stability. Initially, because of modest oil reserves discovered in 1967 compared to other oil-rich countries in the Arabian Peninsula, it relied on a diverse economy, earning income from tourism, livestock (camel and goat herding), agriculture, fishing, and handicrafts. However, in 2002, it ramped oil production to over 900,000 barrels a day.

4. The Jordan Dinar  

Jordan’s national currency is the Jordan Dinar (JOD), and 1 JOD pegs to 1.41 USD. In 1946, Jordan became an independent kingdom. Then, in 1949 and 1950, the country introduced a national currency.

In 1995, the government linked the Jordanian dinar to the Standard Drawing Rights (SDR). The SDR is an International Monetary Fund (IMF) reserve currency started in 1969, which operates like the USD. Today, Jordan ranks as a strong currency because of strong foreign investments and high public confidence.

5. The British Pound Sterling 

The United Kingdom’s national currency is the British Pound Sterling (GBP), and 1 GBP pegs to 1.26 USD. When it comes to the history of money, the British pound sterling may be the most resilient. It’s still a major player in the world of high finance, and it took three world-shaking events like World War I, World War II, and the Great Depression of the 1930s to force the mighty British pound sterling to give up its leadership role as the world’s reserve currency. Yet, despite its fall from grace, it remains a formidable currency — the fifth most valuable in the world.

6. The Cayman Islands Dollar  

The Cayman Islands’ national currency is the Cayman Islands Dollar (KYD), and 1 KYD equals 1.20 USD.

In 1972, the Cayman Islands announced its new currency to the money market, and today, it’s tightly pegged to the USD and rises and falls parallel to it.

7. The European Euro  

The European Union’s money is the European Euro (EUR), and 1 EUR converts to 1.14 USD. The euro to dollar rate keeps changing because the euro uses a flexible exchange rate.

Besides the 17 countries of the Eurozone that peg to the euro, other countries in the world also peg to the euro. Because of its widespread usage, it is among the most popular and expensive currencies in the world, with many nations relying on it for international cash settlements.

8. The Swiss Franc 

Switzerland’s national currency is the Swiss Franc (CHF), and 1 CHF pegs to 1.04 USD. The Swiss Franc is also Liechtenstein’s legal tender. When a multinational business is researching tax havens, it will often use this currency for its foreign offshore banks.

9. The US Dollar 

The United States’ national currency is the US Dollar (USD). Naturally, 1 USD is equal to 1 USD because it is both a national currency and a world reserve currency.

In July 1944, delegates from 44 nations gathered in Bretton Woods, New Hampshire to create an international monetary system, choosing the dollar as the world reserve currency. Because it’s the world’s reserve currency, almost every country in the world uses this currency. While some use the US dollar to measure the value of their money against other currencies, others use it as an acceptable alternative to their own denominations of equal value. Some countries have even adopted the money as their national currency, using United States paper money as their own legal tender—a monetary system that economists call “dollarization.”

Since we base the US dollar on a floating exchange rate, its value often fluctuates, which affects currencies closely pegged to it like the money of the Cayman Islands.

10. The Canadian Dollar 

Canada’s national currency is the Canadian dollar (CAD), and 1 CAD pegs to 0.75 USD. Valued for its stability and purchasing power, it’s used by many investors—intraday market speculators, investment bankers, forex brokers, individual investors, managers of hedge funds, etc. Investors frequently use it in the FOREX market through currency pairings and in the CME Globex futures market.

It has a market share value of about 119 USD, and the IMF ranks it as the world’s fifth most commonly held money. Since it’s a floating currency, an open market rate determines its value, not the Canadian government. Consequently, its value can fluctuate as much as ten percent in a single trading day.

What’s the Most Valuable Currency for Investing? 

After reviewing this list, keep in mind that you shouldn’t necessarily change how you invest based on a new understanding of what currency is the most valuable. The purpose of this list is to help you stay informed — but it’s not a guide on what currencies to buy or sell.

Understanding the world’s most valuable currency will help you understand the wealthiest places and monetary policies in the world, but knowing about the most valuable world currencies will not help you make smarter investment decisions. Instead, you will trade better if you understand how international trade affects currency rates, as well as what other factors affect currency exchange rates.

You will trade better in foreign currency markets when you know where to access the most reliable financial updates, understand Fibonacci retracements, and can evaluate the stability of a currency based on current events and political news.

The best currency for investors to spend their time and attention remains the Euro, the US Dollar, the Japanese Yen, the British Pound, the Swiss Franc, and the Canadian dollar. Be prepared to play the long game if you invest in the Kuwaiti Dinar, the Bahraini Dinar, the Oman Rial, or the Jordan Dinar. Instead, focus on understanding how the monetary system works. For instance, learn what online tools provide the most accurate euro to dollar conversion and study what geopolitical factors influence the dollar to euro exchange rate.

If you’re interested in foreign currency investments, you will get the best returns from trading pairs like EUR/USD (Euro/US Dollar), USD/JPY (US dollar/ Japanese Yen, GBP/USD (British Pound/US Dollar), AUD/USD (Australian Dollar/ US Dollar), USD/CHF (US Dollar/ Swiss Franc), and USD/CAD (US Dollar/ Canadian Dollar).

How Do Analysts Determine the Most Valuable Currency in the World?

How does a country make it to the list in the first place? A system called a dollar peg may decide its value, comparing its fixed exchange rate to the United States dollar.

A nation’s central bank often controls the value of its money based on the rise and fall of the American dollar. Since they peg the value of their currency to the dollar, the value of their money goes up when the dollar rises, and the value of their money goes down when the dollar falls. The dollar fluctuates because it’s based on a floating exchange rate monetary policy.

We use the dollar as a basis of comparison because many world governments formally recognized it as the world’s reserve currency by the Bretton Woods Agreement in 1944. Today, about 66 countries peg their currency to it, with some even using it as their country’s own legal tender. Still, this is not the only peg. Many countries peg to the Euro instead.

How Does a Country Rise to the Highest Currency Value in the World?

Although many economic factors influence the highest currency from other currencies, it is theoretically possible for any denomination to rise in value.

A country can change some factors, such as importing and exporting, by creating new economic policies. But it can’t change other things, such as stock market performance, because this is subject to geopolitical conditions or strong market forces. Other critical factors that can influence the monetary strength of a currency include employment rates, trade deficits, and foreign exchange reserves.

Despite numerous factors influencing a currency, a government only needs to focus on a small list of economic factors: interest rates, inflation, current account balance, and economic growth.

The value of a currency rises if the following occur:

• A country’s government increases the interest rate.
• A moderate bump of the rate of inflation (about 2% a year) will cause the currency to rise.
• Improved balance of trade, which is the total amount of income, currency transference, goods, and services in relation to other countries.
• Stimulated economic growth.

While we could classify these four economic factors as the primary drivers, governments can also raise the value of their currency by introducing policies that influence supply-side economics.

The benefits of such a move are enormous. It will increase competitiveness in the marketplace while reducing waste by forcing companies to streamline their costs of production. It also stimulates the growth of the export industry.

How Do Currency Markets Compare Money Between Countries?

Many currencies are pegged to the American dollar, which is the international reserve currency, to make it easier to compare the value of one currency to another.

We know, for instance, that the Kuwaiti dinar (KWD) is the highest currency value in the world because we can compare it to the United States Dollar (USD). If we use a currency converter, we will see that 1 Kuwaiti dinar (KWD) equals 3.29 United States dollars (USD). We also know that the Indian rupee is a much lower-value currency because 1 United States dollar equals 71.56 Indian rupees (INR).

Comparisons influence foreign exchange trading. For example, the Indian Rupee (INR) to Kuwaiti Dinar KWD exchange rate is a popular rate for traders in the currency markets because 1 Indian rupee equals 0.0042 Kuwaiti dinar.

Is a High-Value Currency a Good Thing for the Economy?

A government often has the power to create a strong currency. It can build its economy or adjust its monetary policy. A government can also use demonetization to limit the power of a black-market economy. For example, a government might withdraw a precious metal, note, or coin that serves as legal tender if it wants to curtail widespread monetary corruption.

If there are strategies to upgrade the value of money, why don’t the denominations of strong economies vie for the prestige of becoming the highest value currency?  

The answer is complex. While some countries benefit from having a highly valued currency value, other countries benefit from a weaker currency.

The oil-rich countries of the Middle East, for instance, have the highest currency value. This is because crude oil is a scarce resource all over the world, except in the Persian Gulf countries, which have an abundance of oil. Since the high revenues are generated by crude oil sales, the Bahrain dinar (BHD), Omani rial (OMR), and Jordanian dinar (JOD) have the highest denomination currencies in the world.

Many countries benefit from a mid-value currency because a weaker currency helps their export industry. They can gain significant market share because their goods are cheaper to buy.

Countries with powerful economies could compete for the position of highest denomination currency, but it’s not beneficial for their economy to be stronger than the American dollar. For instance, the Turkish lira, the Japanese yen, the South African rand, the Brazilian real, the British pound sterling, the Polish zloty, the Mexican peso, and the European euro are close in value to the United States Dollar (USD), falling only a little below it.

However, a weak currency is not always a strategy to improve export revenues. Some, like the Nigerian naira or the Tanzanian shilling, are weak currencies because they have serious economic challenges.

How did Kuwait raise the value of its currency?

Kuwait is a classic example of a country that successfully reorganized its money. It raised the value of its national currency due to an economic crisis. In fact, it was so successful at doing this that it is now the highest currency in the world.

THE MOST VALUABLE CURRENCIES IN THE WORLD

Some of the most valuable currencies in 2019 may surprise you. Keep in mind, this list of the top ten most valuable currencies in the world keeps changing every year because of economic fluctuations and changes in government leaders and monetary policies.

Many countries that made it to the top ten in previous years have long since lost their coveted position as a top-rated global currency. For instance, the Australian dollar, with 1 AUD once being equal to 0.73 USD, is no longer on the list. Also removed is the Libyan dinar, with 1 LYD once being equal to 0.72 USD, as well as the Azerbaijani manat, with 1 AZN once being equal to 0.59 USD.

Sometimes, the reason a country is on the list is not immediately obvious. For example, how did a little-known country like Azerbaijan ever make it to the top ten list? It is not a prosperous country, a significant military power, or a rapidly emerging industrial nation. The reason this Central Asian country previously made the list is because it had a stable, strong economy, less tax evasion by the wealthiest corporations, and a low unemployment rate.

So many historical, economic, and political, factors go into determining the value of a currency. All one can say about why a currency has a high value is that a country has inflation under control. Nordic states, for example, have well-developed social systems that offer its citizenry excellent free education, free hospitals, fair working conditions, and unemployment benefits for the elderly. But despite having a stable economy, they are not on the list of top ten currencies.

Another factor to consider is that no currency constantly increases in value, even if it makes consistent economic gains. Japan, for example, has one of the most robust economies in the world, with the third biggest Gross Domestic Product (GDP) and the fourth largest purchasing power parity (PPP) — but the value of the Japanese yen remains small, with 1 Japanese yen equal to 0.0093 USD.

Does a currency of high value suggest a strong economy? Perhaps—but that might be an oversimplification. Yes, the value of a currency falls when a country is in crisis, but then again, countries with well-organized societies are not always at the top.

The post Top 10 Most Valuable Currencies in the World appeared first on Treasury Vault.

Who is Anthony Renfrow AKA TNT Dinar? 25 Nov 2019 5:16 AM (5 years ago)

“TNT Tony,” “Tony Dinar, and “TNT Superfantastic Dinar Tony” are some of the nicknames of Tony Renfrow, whose full name is Anthony Wayne Renfrow. Although a year-long prison sentence for committing wire fraud for amounts over $10,000 tarnished his reputation, he may still be selling Iraqi dinars through intermediaries.

WHO IS TNT DINAR?

1. Who is Tony Renfrow, aka Iraqi Dinar TNT Tony?
2. Iraqi Dinar Predictions.
3.  Review of Tony’s TNT Dinar Platforms.
4.  Why You Can Trust Treasury Vault.

A DETAILED REVIEW OF TONY RENFROW’S BUSINESS SCAMS

Who is Tony Renfrow, aka Iraqi Dinar TNT Tony?

Tony Renfrow, like many other people who offered the “latest dinar intel” online, posed as a financial expert on the Iraqi economy, and his updates on the Iraqi dinar interested hundreds of people in currency investment.

Because of his background selling MLM scams, he was quick to see the opportunity to make money as a financial advisor selling dinar currency after the 2003 US-led coalition’s invasion of Iraq forced the foreign exchange rate of the Iraqi currency rates against the US dollar to plummet.

He made a small fortune by recognizing that many people in the United States will pay good money to buy Iraqi dinars at rock-bottom prices because they could get a thousand-fold return on their initial investment after the currency revalued. Naive investors assumed that US security forces in Iraq would rebuild the economy of the country and trigger an Iraq dinar revaluation. Shelling out American dollars (USD) in exchange for Iraqi dinar (IQD) seemed like a certain way to become an overnight millionaire.

It is not clear how Renfrow monetized his Iraqi dinar news and frequent dinar calls. Apart from his website properties, he may have earned the bulk of his fortune as an affiliate for Sterling Currency, an authorized Iraqi dinar seller. We base this speculation on advertising he had on his website for Sterling Currency and the fact that court documents showed that this company’s revenue jumped from $2 million each month in 2010 to $20 million a month in 2011 during the same time he was doing his dinar calls.  He also recommended Sterling Currency during his talks.

However, unlike other Iraqi dinar gurus, Tony was a consummate marketer, someone who had learned the art of persuasion after spending most of his working life pitching dubious MLM opportunities. Things changed for him after an investigation into wire fraud forced him to go to court. According to those in attendance, Tony adopted a disdainful, dismissive attitude toward the judge. So, it’s not surprising that on Monday, November 30, 2015, at 2:25:00 PM MST, the judge sentenced him to 366 days in prison.

After a year and a day in prison for financial fraud, he had three years of supervised probation. In addition, he had to give the Crime Victims Funds $100 and provide his scam victims a restitution amount of $1,692,803.26. Although the official TNT Dinar website was no longer active when he got out of prison, his brother Raymond Renfrow had kept the business open using other channels, such as a Twitter account. Incidentally, this account–rebranded as The TNT Team–is still active.

Iraqi Dinar Predictions

Because Tony Renfrow was considered by many to be a chronic liar, he made countless Iraqi dinar predictions over the years to excite people to part with their money. It’s not clear whether he originated many of his claims or merely passed on conspiracy theories, riding the wave of the most popular dinar rumors. In either case, his intriguing, apparently unique information delivered on his weekly conference call, People’s Talk Radio, Blogtalk radio, #wearethepeople twitter feeds, and other online channels, created a cult-like following.

Because of his amiable, informal way of sharing information, many of his listeners and readers trusted him as a straight shooter. Some even became convinced that he had insider sources about the fate of the Iraqi currency. Although his predictions of an RV never happened, he kept up the excitement for years.

Here are 10 conspiracy stories he propagated:

1) Iraq is no longer using the US dollar.

There has been no proof that this occurred. Historical facts about Iraq do not bear it out. Years later, the Iraqi dinar remains pegged to the US dollar.

2) A redenomination is the same as a revaluation.

He deliberately confused the economic terms “redenomination” to mean the same as “revaluation” after Reuters reported Iraq planned a redenomination.

In a redenomination, an old banknote replaces a new banknote. The purchasing power remains the same even if the new banknote drops a few zeros. In a revaluation, the value of the new banknote is greater.

3) Iraq is using lower denomination dinar notes.

There has been no proof that this occurred.

4) The US government will exert its influence to push for a revaluation.

As a sovereign nation, the US government can’t dictate Iraq’s monetary policies, including determining its foreign exchange regulations.

5)  An RV of Iraqi dinar will happen overnight, resulting in a big payoff for investors.

This, of course, has still not happened.

6)  President George W. Bush issued an executive order that gave the citizens of the United States unique legal rights to buy, hold, or invest in the Iraqi dinar.

The Bush administration issued Executive Order 13303 for the Development Fund for Iraq against liens by US citizens. This executive order had nothing to do with regulating Iraqi dinar investments.

7) The Kuwaiti “revaluation” suggested that this might happen in Iraq, too.

After Saddam Hussein invaded Iraq, his army looted large amounts of Kuwaiti dinar by breaking into the Kuwaiti Central Bank. After Kuwait regained its sovereignty, it reissued new banknotes to replace the stolen ones, making the old banknotes valueless. No revaluation happened, no surge of the Kuwait dinar value.  A revaluation increases the value of a currency, but Kuwait just reestablished the rate before the invasion.

8)  Since banks sell Iraqi dinar, buying the Iraqi dinar is not a scam.

US banks buy and sell currencies from all over the world for US travelers visiting these countries. They are not selling any currencies, including Iraqi dinar, for speculation. Wells Fargo even reduced their supply of Iraqi dinar after people thought they were promoting Iraqi dinar banknotes as a sound investment strategy.

9) The World Bank, the IMF, and other global monetary institutions were coordinating a Global Currency Reset to get rich and investors could get a slice of the pie.

There is no such thing as a global currency reset. No banking cartel can tell the Central Bank of Iraq how to determine their foreign exchange policies.

Since the idea of a global currency reset masterminded by a secret banking cabal gained a lot of traction, TNT Tony offered subscribers an elite package deal so they could get preferential rates for Iraqi dinar to increase their profits after a global currency reset.

10) The United States Treasury has a large position in Iraq’s currency.

The US Treasury has a nominal amount of Iraqi dinar for foreign exchange, but it is not investing in the Iraqi dinar.

 

Review of Tony’s TNT Dinar Platforms

A platform is a popular business model on the Internet. It’s a large, flexible, scalable model for businesses to communicate with their audience.

TNT Tony Dinar Guru used many platforms legally. It’s not illegal in the US to recommend the sale of Iraqi dinars for a commission. This is classified as affiliate marketing. He mastered the art of search engine optimization and made “TNT” into his branded keywords to get the latest dinar recap or dinar updates. As a result, Google’s algorithms directed people to his latest TNT Tony dinar call if they typed in phrases like “Iraqi dinar TNT,” “TNT dinar call,” “Tony TNT dinar update,” “TNT Tony dinar update,” “TNT Tony update dinar currency,” “TNT Tony Dinar RV updates,” or “TNT dinar detectives update today.” Besides setting up his own network, he leveraged other people’s networks via guest interviews on their blog talk shows.

Tony used numerous channels to share his insights about the status of the Iraqi dinar, including TNT Dinar Blast, TNT Chat Room, TNT dinar detectives, TNT dinar updates, TNT dinar forum, TNT dinar superfantastic conference calls, TNT dinar showtime. His TNT dinar detective’s updates and Iraq news briefings on Dinar Chronicles attracted hundreds of attendees.

His Tony TNT Dinar Twitter account with the hashtag #wearethepeople had more than four million tweets. Although a large number were fake accounts, this illusion of popularity attracted hundreds of real followers. Since his tweets echoed the themes of the Occupy movement, such as anti-banking and secret societies, many people considered TNT Tony dinar to be an anti-establishment icon.

The hashtag @THE_TNT_TEAM also became very popular. Although this, too, had many fake accounts, it worked in the same way as his other Twitter accounts to pull in real people. Conversations around “releasing the RV” and “releasing the Global Currency Reset” sparked high user engagement. His blog talks were his most popular platform because of his disarming personality and his apparent expertise in foreign affairs and foreign exchange regulations. His avuncular style in breaking down economic terms for his listeners made them feel that they were getting invaluable investment advice. They were not aware that he often repurposed economic terms to suit his own agenda. On his Iraqi Dinar conference calls, which he started around 2011, he shared the spotlight with Winston Pfiester, also known as the “DC guy.”

Since his forums were only for members, moderators helped manage the narrative to suit his Iraq dinar predictions. Since many members assumed that he was a devout Christian on a mission to free them from economic bondage perpetrated by secret societies and evil banking cartels, they threw blessings on him in the forums, thanking him for informing them about a secret currency reset that they could cash in on.

Why You Can Trust Treasury Vault

What makes Treasury Vault different from many websites that sell Iraqi dinars is that we find reliable sources for our news and avoid hyperbole to increase sales. Our aim is to inform people about many types of currency investments, not just the Iraqi currency. We also strive to educate our audience about fraudulent dinar gurus like Anthony Renfrow.

TNT DINAR

Tony TNT Dinar Guru pulled many people into his schemes. Prior to his regular conference calls about investing in the dinar with naïve investors, he had a long track record of other types of scams. Other dinar gurus could not compete with his shill and years of experience as a consummate MLM marketer.

He could outsell most, if not all, dinar gurus online because he used extremely persuasive selling tactics in his TNT dinar calls. He created a sense of urgency by predicting that the dinar was about to revalue and talked about the possibility of it happening “today.” Other dinar gurus who predicted a more reasonable and realistic time frame could not compete.

He made big, bold promises. While other dinar gurus were predicting an RV of $3.77, Tony TNT Dinar Guru boldly talked about an RV of $32. His friendly tone and attitude won people over. He behaved like an earnest truth-seeker, someone who researches little-known investments. He disarmed skepticism with his good-natured banter and did not come across as a high-pressure salesman. Tony reinterpreted official government announcements, news media reports, and statements by monetary organizations to his advantage. Sometimes, for instance, he would reinterpret economic terms, such as using “redenomination” and “revaluation” as synonyms.

He also flipped government agency warnings about dinar scams to fuel conspiracy theories that the US government, world monetary organizations like the IMF, and secret banking cartels were trying to hide these investment opportunities from the common people.

TNT Tony Dinar perpetrated falsehoods with the sincere conviction of a gospel preacher to increase dinar investments, and his popular dinar recaps and updates on breaking news added to profitable connections with dinar dealers, online advertisers, and exclusive online membership sites. He learned how to build business platforms online when he was in MLM and you can find many of his MLM videos online. Today, 14dailyplus.com, his original website, now under new ownership has become an archive of his various scams. You can also find a wide range of his pre-dinar scams on RIPOFF REPORT. They include writing bad checks, internet fraud, deceptive advertising, and Ponzi schemes.

The post Who is Anthony Renfrow AKA TNT Dinar? appeared first on Treasury Vault.

Should I Invest in the Philippine Peso? 24 Oct 2019 6:14 AM (5 years ago)

Over the past year, the US dollar to Philippine peso foreign currency exchange rate has become a very attractive investment. Should investors be optimistic or cautious? In this article, we examine how a high foreign exchange rate can have both advantages and disadvantages for investors.

Should you take full advantage of the Philippine peso rate? It’s not an easy question to answer. Let’s take a look at the pros and cons of investing in the Philippine peso.

PROS AND CONS OF INVESTING IN THE PHILIPPINE PESO  

Pros

• Filipinos Are Optimistic About President Duterte
• The Country Is Going Through an Infrastructure Drive
• The Philippines Has the 30th Largest Economy in the World
• Overseas Filipino Workers Can Send More Money Home

Cons  

• Wages Are Low in the Philippines
• The Philippines Has a “Credit Negative”
• Basic Commodities Cost More
• Unemployment Is High Because of Insufficient Employers

PROS OF INVESTING IN THE PHILIPPINE PESO

There are several reasons why you may want to invest in the Philippine peso.

Filipinos Are Optimistic About President Duterte 

Although Western politicians and the international press often portray president Rodrigo as a hardliner, about 79 percent of adult Filipino voters feel this populist leader has done a commendable job as president in the first quarter of this year.

Although the international media often point out how his statements are brash, harsh, and even buffoonish, the Filipino people appear to view his administration in a more tolerant way, focusing on his political will to take decisive action.

Older Filipinos often compare Duterte favorably to the “good old days” of the late President Ferdinand Marcos, who ruled the Philippines with an iron fist from 1965 to 1986. While the West believe Marcos was a corrupt leader who pocketed around $10 billion during his 21-year dictatorship, nostalgic Filipinos recall him as a strongman who enforced law and order in the country and prospered its economy.

It may puzzle outsiders why Filipinos hold Duterte in such high regard despite his flagrant and well-documented human rights violations—such as extrajudicial killings in his administration’s “drug war.” But like most populous leaders, Duterte has a well-oiled propaganda machine that reinterprets the meaning of his actions, spinning the narrative to credit him with all positive changes in the country. He skillfully blames other politicians or past administrations for anything that has gone wrong. And perhaps most importantly, the economy of the Philippines is doing well, performing better than it has done for several decades.

The Country Is Going Through an Infrastructure Drive

The promise of economic growth across the archipelago gained momentum last year and continues this year as the Philippine government rolls out an infrastructure program. The government expects this program to continue over the next few years and increase the number of people employed, raise household incomes, and benefit the most impoverished families in the country.

The Philippines Has the 30th Largest Economy in the World

According to an International Monetary Fund (IMF) Outlook for 2019 to 2023, which looks at global economic data, the Philippines ranks as the 30th largest economy in the world with a GDP around $354 billion.

Although this emerging market economy was the second largest in Eastern Asia shortly after World War II, the economy declined over the years because of bad governance, political volatility, financial crises, and poor planning.

The Philippines has progressively transitioned from an agricultural-based economy to a service and manufacturing one. Today, its extensive international trade includes the export of electrical parts, copper, petroleum products, clothes, and fruits. Much of this growth occurred after the 1997 Asian financial crisis. In 2018, the Philippines economy grew by 6.2 percent, with most of the revenue generated by manufacturing.

Overseas Filipino Workers Can Send More Money Home

The low exchange rate of the Filipino peso is excellent news for families who have a family member working abroad. Millions of Filipino workers have work contracts abroad, especially in the Middle East, which pays both overseas professionals and skilled laborers well.

CONS OF INVESTING IN THE PHILIPPINE PESO

There are also several reasons why you should use caution before investing in the Philippine peso.

Wages Are Low in the Philippines  

Although Filipinos prize literacy because of the abundance of free government elementary and high schools, wages in the country are low. This is due to a low supply of job creators and a high number of available workers. Filipino corporations and outsourcing firms around the world take advantage of this competitive job-seeker market so they can pay low wages.

The Philippines Has a “Credit Negative” 

Asia Pacific currencies are most susceptible to foreign exchange rate hikes. This can occur for various reasons. For instance, when the Federal Reserve changes the fed funds rate by increasing or decreasing it, this also affects the United States dollar exchange rate against other currencies.

However, the Philippine currency (the Philippine peso) and the Indonesian currency (the Indonesian rupiah), fared far worse than other Asian currencies during recent foreign exchange fluctuations. While the Philippines’ negative credit is because of a stronger dollar affecting the dollars to Philippine peso foreign exchange rate, many other factors also play a significant role. For instance, the continuously escalating US-China trade wars, the rise in oil prices, and a hawkish US Federal Reserve have all contributed to currencies in Asia feeling the heat of geopolitical maneuvering.

Basic Commodities Cost More

A lower currency often has a negative impact on the citizens of a country. In the Philippines, basic fuels, such as crude oil and coal, have become far pricier. A weakened currency also affects other commodities, especially trade goods.

Unemployment Is High Because of Insufficient Employers

Because of the shortage of jobs, there is a high unemployment rate. In 2018, this was about 4 percent. As a result, millions of Filipinos go overseas to find work in countries that need skillful contract workers.

Many Western corporations also outsource work to the Philippines because the workforce is well-educated and will accept weakened wages despite their high level of technical and computer skills. Consequently, many multinational telecom corporations have built large call centers for hundreds of well-educated Filipino employees fluent in English.

FAQS ABOUT THE PHILIPPINE PESO 

Before deciding on whether to invest in Philippine pesos, let’s review some frequently asked questions about the currency and the cost of living in the Philippines to help give you an economic overview.

How do you buy Philippine pesos?

You can get Philippine pesos through your local bank or credit union, a foreign bank branch, or a specialist exchange provider. There are many standard channels to buy any foreign currency with ease on business days. Money bureaus offer travelers, businesses, and investors services like money transfer payments, travel money, or long-term monetary investments.

Banks are useful if you want to use your credit cards abroad, so you have to carry fewer notes and coins of the foreign local currency. Usually, banks will give you a fair USD to Philippine Peso and charge a reasonable fee, but some monetary trade experts argue that they don’t always offer the most competitive exchange rates.

The best places for exchange rates may be online websites and physical storefronts registered as money service businesses. Tell them how many Philippine pesos you need, and they will give you a competitive dollar to Philippine peso foreign exchange rate price.

Why is the peso the currency of the Philippines?

Before the Philippines had a currency, they used pieces of gold called “piloncitos” and gold rings for trading. Then in 1521, the Spanish colonized the Philippines. They replaced gold bits and rings circulating in lieu of money with coins. However, since this money differed in weight, purity, and value because it came from different countries occupied by Spain, the Spanish government established the first mint to standardize the coinage in 1861.

The US acquired the Philippines on December 10, 1898, after the United States and Spain signed the Treaty of Paris. In 1903, the US pegged the currency to be worth half a United States dollar, implementing this monetary policy to control the inflation rate and keep prices stable.

In 1942, during the Second World War, the Japanese occupied all the Philippine Islands and introduced their own notes and coins as legal tender. However, on October 20, 1944, US troops made an amphibious landing on Lyte, an eastern Philippine island, and regained the country.

On July 4, 1946, the Philippines was granted independence by the United States. Two years later, the Central Bank of the Philippines reintroduced the peso as a formal currency.

What is the official currency of the Philippines?

The official currency is the colorful Philippine peso. It’s divided into 100 centavos and comes in the following denominations: 10, 20, 50, 200, 500, and 1,000.

What is the currency code and symbol for Philippine peso?

The currency code is PHP and its symbol is “₱”.

What is the average monthly income in the Philippines?

The average monthly income for someone working in the Philippines is 50,555 PHP per month. In dollars and cents, this comes to about $983.57 USD.

When is the best time to buy Philippine pesos?

The best time to sell United States dollars and buy Philippine pesos is from August to February. The worst time to buy Philippine pesos is during the hot summer months, between March and May.

How does the US dollar trade against the Philippine peso historically?

At the time of this writing, a currency converter will tell you that 1 United States Dollar equals 51.87 Philippine pesos. This is the lowest price in 12 years. Many factors contributed to the Philippine Peso falling to this record low, including the Bangko Sentral ng Pilipinas’ (BSP) cutting the reserve requirement.

What is the cost of living in the Philippines?

Living in the country costs around $300 a month while living in the city costs about $1,100 a month.

INVESTING IN THE PHILIPPINE PESO

Should you consider a long-term investment in the Philippine peso? There are pros and cons. On one hand, you can buy a large amount and wait to see whether the Philippines economic growth will continue rising. If it does, then you can sell this money at a higher price. On the other hand, while it looks like a promising investment, the best economic advice for every investor is to only buy a small amount for now and keep watching for more positive signs.

The leadership of President Rodrigo Duterte and his government’s infrastructure drive will hopefully build a stronger economy. Compared to the Vietnamese currency, which shows the potential to rise in value because of Vietnam’s impressive economic growth, the situation in the Philippines is not as clear. Despite the current performance of the Philippine peso, the good news to date is that it is one of the stronger currencies in Southeast Asia because of the positive economic growth of the Philippines.

The post Should I Invest in the Philippine Peso? appeared first on Treasury Vault.

The Dinar Chronicles: 5 Historical Facts Investors Need to Know About the Iraqi Dinar 15 Oct 2019 6:08 AM (5 years ago)

The Central Bank of Iraq issues the nation’s currency, Iraqi dinar. Many currency trading firms sell dinar to long-term investors who want to buy dinars because of the currency’s low foreign exchange rate to United States dollars. In this article, we will look at how investors stay informed about dinar news and also briefly outline the history of the currency and the country.

THE DINAR CHRONICLES: 5 HISTORICAL INTEL FACTS INVESTORS NEED TO KNOW ABOUT THE IRAQI DINAR

1. Investment in the Iraqi Dinar Currency
2. The Ottoman Empire Once Ruled Iraq
3. The British Seized Iraq in World War I
4. The British Dragged Iraq into World War II
5. The Rise and Fall of Saddam Hussein

Let us now look at both the history of the Iraqi dinar and Iraq in more detail. Here are two pieces of interesting historical research to give you the backstory of Iraq to put the unfolding dinar chronicles into perspective.

A BRIEF HISTORY OF THE DINAR

The word “dinar” is not unique to Iraq. Many Middle Eastern countries use this name for their currency, as it refers to the caliphate of Damascus who issued Arabic gold coins around the 1630s. A caliphate was an Islamic state under the leadership of a caliph. The Muslim population regarded this Islamic ruler as a political and religious successor to Mohammed, the Islamic Prophet.

Since the dinar is a popular name for many currencies used in the Middle East, people often assume it must have Arabic, Persian, or Turkish roots. However, the word itself originated from the Latin word for money, “denarius.” The Iraqi Dinar once ranked among the most valuable currencies in the world because Iraq once used to be a country with enormous wealth. In fact, the old dinar was worth as much as $3.20 before Hussein began his unprovoked wars against Iran and Kuwait.

The United Nations trade embargo came in response to the hegemony of the sovereign Arabic state of Kuwait and the Gulf war led by a US-led military coalition. This caused the Iraqi dinar to plummet in value. By August 2002, an Iraqi dinar was worth less than a penny. Today, according to a foreign exchange currency converter, 1 Iraqi Dinar (IQD) is only equal to 0.00084 of a United States Dollar (USD).

5 HISTORICAL INTEL FACTS INVESTORS NEED TO KNOW ABOUT THE IRAQI DINAR

1. Investment in the Iraqi Dinar Currency

Is it possible that the Iraqi dinar will rise to the rate it used to be in the 1980s?  While we can only speculate how much the rate will change, we have two good reasons to believe the dinar will revalue.

The first is that the Bank of Iraq is doing all it can to restructure Iraqi debt and restore international trust in the Iraqi currency and its market economy.

The second is that both the newly elected Prime Minister of Iraq and President of Iraq want to end corruption in Iraq—not only corruption within the Iraqi government but also corruption by international companies exploiting the Iraqi oil industry. The new government plans to reconstruct the oil industry because boosting oil sales will restore the country’s financial assets faster than developing any other Iraqi industry.

Since the Arab Gulf region has as much as 65% of the oil reserves of the world with Iraq contributing 12% to this total, the proven oil reserves in Iraq will be money in the bank. Iraq has the potential for turning oil into cash once it can get its oil fields back up to par. When this happens, Iraq will produce as much as 2 billion barrels a year. If each barrel sells for $100, then Iraq could earn $200 billion a year.

No doubt, many other economic benefits will also accrue once the people prosper and build businesses. For example, the personal income tax rate will rise from its present low level of 15%. By comparison, the personal income tax rate in the United States is 39.6%, which is the average for a developed country.

2. The Ottoman Empire Once Ruled Iraq

Iraq once commanded an illustrious position on the world stage. In ancient history, it was part of the lands historians dubbed the “cradle of civilization.” Great empires like the ancient Sumerians and Babylonians and Assyrians rose and fell between the lands straddling the Tigris and Euphrates River. After the dust of the war had settled, Persia ruled from Baghdad to the Euphrates valley, holding on to their conquered lands until the Middle Ages.

In 1638, the Ottoman Turks became an unstoppable military force and conquered lands stretching from the Tigris Valley to the Euphrates Valley. At its height, the Ottoman Empire circumscribed southeastern Europe up to the city gates of Vienna; the Middle Eastern lands of Iraq, Syria, Egypt, and Israel. It also ruled most of North Africa, spreading as far as Algeria in the West, as well as most of the Arabian Peninsula.

The Ottoman Empire ruled Iraq during two time periods, and they called the country “Ottoman Iraq.”

Suleiman the Magnificent of the Ottoman Empire captured Baghdad in 1534 and ruled Iraq until 1704. To make it easier to administer, he divided Iraq into four provinces, called “eyalets.” He segmented Iraq into the Baghdad Eyalet, the Shahrizor Eyalet, the Basra Eyalet, and the Mosul Eyalet. A remnant of this period of history still surfaces in Iraq today in the form of the deep division within Islam between the Shia and the Sunni. This rift emerged during the Safavid-Ottoman conflicts early in Iraqi history. From 1623 to 1639, the Ottoman Empire battled with Safavid Persia for control over Mesopotamia.

Although Iraq freed itself from the yolk of the Ottoman Empire briefly, the Ottoman Turks again seized control in 1831. The Ottoman Empire now organized Iraq into different regions, called “vilayets,” segmenting Iraq into the Mosul Vilayet, the Baghdad Vilayet, and the Basra Vilayet. Many of these regional names may sound familiar.  For instance, you may have heard about the “battle for Mosul” between Iraqi or coalition forces against the Islamic State of Iraq and Syria (ISIS) militants, which resulted in the death of about 10,000 people, mostly civilians, from October 2016 to July 2017.

3. The British Seized Iraq in World War I

From July 1914 to November 1918, World War I rearranged the hierarchy of the dominant geopolitical powers and changed the map of the world. Contemporaries called the First World War, “the war to end all wars,” because it mobilized over 70 million soldiers.

The Middle Eastern region of WW1 called the “Mesopotamian campaign,” was a series of battles between the British Empire and the Ottoman Empire. After forcing the Ottoman Turks to retreat, Britain seized Iraq from the Ottoman Empire, which had ruled Iraq for a long time period—from the middle of the 16th century to 1916.

In 1920, the League of Nations granted Britain a mandate over Iraq. The British government installed a Hashemite monarchy, and Iraq remained a British protectorate for 17 years. Iraq gained independence after the League of Nations admitted it as a member. On October 3, 1932, Iraq celebrated its independence.

4. The British Dragged Iraq into World War II

Although Iraq gained its independence from Britain, British influence continued because the Iraqi government continued to rely on Britain for economic and military aid. This dependency irked the population and led to many failed revolts against British-influence peddling.

From 1939 to 1945, World War II was underway. Iraqi revolutionaries once again tried to break away from Britain. This time, Iraq tried to align with the Axis forces. British military intervention crushed the revolutionary movement and coerced the Iraqi government to support the Allies. It was not until 1958 that the Iraqi people finally overthrew the British-controlled Iraqi monarchy. Military and civilian governments tried to rule until Saddam Hussein eventually usurped power.

5. The Rise and Fall of Saddam Hussein

In 1976, General Saddam Hussein was a strongman of the Iraqi government. Although not the formal head of government, he exercised far more power over the government than the Iraqi constitution allowed. As a de facto leader, he consolidated his influence over the Ba’ath party and the Iraqi government. In 1979, he formally ruled Iraq as a dictator.

For 30 years, he ruled with an iron fist. His statue stood outside every village and his portrait glowered over every government office. The country appeared to name almost everything after him to win his approval—mosques, cities, suburbs, and airports. Iraqi poets invoked his name during public gatherings, writing lyrical poems about how the invocation of his name alone was enough to stimulate Iraqis to aspire higher. Ethnic pogroms were common under his rule, and his tyrannical regime executed people reported to have made jokes about him.

Hussein appeared infallible to the Iraqi people, even after two military misadventures against Iran and Kuwait. It was not until a US-led coalition in 1991 that Hussein fell from power.

During the occupation of Iraq, he eluded American forces for eight months. After the occupying American soldiers brought him to trial, he denied that Iraq had lost the Gulf War and bragged about a crushing defeat over the United States. He even insisted that the Iraqi judge grant him immediate immunity because he was still the President of Iraq. Throughout the trial, he remained unapologetic for all his crimes against humanity, including raining poisonous gas over Hajaba, killing 5,000 Kurdish villagers. After the trial, the Iraqi court condemned him to death by hanging.

HOW TO KEEP INFORMED ABOUT DINAR NEWS

If you are investing in the Iraqi dinar or plan to invest at some future date, then it’s important for you to stay alert to the foreign exchange rates, economic news about Iraq, and any information suggesting that the Iraqi dinar will revalue. While you could do this by reading Iraqi news websites or visiting the website of the Central Bank of Iraq, it’s often tedious and time-consuming to sort through relevant Iraqi currency news.

Fortunately, many blogs, like Treasury Vault or The Dinar Chronicles have done the heavy lifting for you.

While the Dinar Chronicles Blogspot gives excellent updates, while trying to offer the latest dinar coverage, we feel that the dinar chronicles intel does not go far enough in helping readers get an in-depth understanding about the cultural, political, and economic changes shaping the history of Iraq and the destiny of the Iraqi dinar.

At Treasury Vault, we take a slightly different approach to providing our readers with updates about the Iraqi dinar. Like the Dinar Chronicles, we talk about the Iraqi dinar and try to offer the later dinar intel, but we also talk about other long-term foreign currency you should consider in addition to the Iraqi dinar IQD. We also review what’s happening in the reconstruction of Iraq’s economy and in the global currency markets, as well as offer editorials on the Iraqi dinar to help you understand the potential for the Iraqi currency to revalue.

We don’t rely on a guest post or unsubstantiated tweet to provide our US and global readers with investment advice and dinar news. Instead, we have backgrounds in finance and historical research. We owe it to you, our readers to get the latest updates, dinar recaps, and commentaries. We stay up to date on global currency trends and write articles about how a country’s foreign exchange rate and spot exchange rate work. They are in the best position to read the signs that suggest a possible Iraq dinar revaluation (RV).

HISTORICAL FACTS INVESTORS NEED TO KNOW ABOUT THE IRAQI DINAR

With a better understanding of the history of Iraqi dinar, you are better equipped than most other dinar investors who only focus on rumored dinar intel. You will also be in a much better position to interpret the value of the information you find in popular dinar blog posts. While many people are distracted by the question, “Did Donald Trump buy Iraqi dinar?”, the best investing decisions come with expanded knowledge about the history of Iraq. Keeping a close eye on Iraq’s history will help you interpret the significance of the latest Iraqi news.

The post The Dinar Chronicles: 5 Historical Facts Investors Need to Know About the Iraqi Dinar appeared first on Treasury Vault.

Dinar Intel: 7 Dinar Rumors to Keep an Eye On 4 Oct 2019 6:06 AM (5 years ago)

Dinar investors believe that the Iraqi dinar will rise in value against the United States dollar. The increase in the value of a currency is called a “revaluation,” or “RV” for short. The uncertainty over when a dinar RV will occur has triggered many rumors. In this article, we will review some popular dinar rumors circulating on dinar intel websites, blogs, and forums to help you discern what’s true and false.

DINAR INTEL: 7 DINAR RUMORS TO KEEP AN EYE ON

1. The Central Bank of Iraq will redenominate, revalue, or reissue Iraqi currency.
2. The Iraqi government plans to release the dinar on FOREX.
3. US President Donald Trump spent millions buying Iraqi Dinar.
4. Inflation has undermined the true value of the Iraqi Dinar, so it will rise in value against the USD.
5. The Kuwaiti Dinar revalued to become one of the most valuable currencies in the world.
6. The Iraqi dinar will become a strong currency without revaluation.
7. Many countries have recovered after a devastating war ruined their economy.

It’s important to understand the historical backstory of how Iraqi currency fell in value to appreciate the reason for the unshakeable faith dinar investors have about why the dinar Iraqi currency will revalue someday.

Rumors about how to make a handsome profit from the dinar began shortly after the US-led coalition won the Gulf war and occupied Iraq. Before Saddam Hussein’s military fiasco against Kuwait, Iraq had been a prosperous country with the Iraqi dinar worth $3.20 on the foreign currency exchange rate.

On August 2, 1990, Hussein’s forces invaded the sovereign country of Kuwait, compelling its government leaders to flee to Saudi Arabia. After Iraqi forces occupied Kuwait City, Iraq established a provisional government. At this time, Iraq controlled an astonishing 20 percent of the earth’s oil supply. Although the Iraqi dinar replaced the high-value Kuwaiti dinar, a comprehensive United Nations embargo thwarted Iraq’s efforts to recoup from their financial losses after the Iraq-Iran war. Iraq was unable to gain redemption from their Middle East neighbors who had loaned them $41 billion. Because the embargo prevented Iraq from importing or exporting, it crippled the Iraqi economy, so by August 2002, the dinar fell to a fraction of a US penny.

The value of the dinar fell even lower after the US invaded Iraq on March 20, 2003. The United States government believed Hussein harbored weapons of mass destruction. Since the Iraq dinar had fallen to such a low price, currency investors bought as much as they could afford. They believed that the Iraq dinar would rise again after the UN sanctions lifted its sanctions.

They were partially right. Iraqi dinar news announced that the UN lifted most of its sanctions on May 22, 2003. However, the part investors got wrong was that the Bank of Iraq did not make any efforts at a currency reset. No revaluation occurred because Iraq plummeted into a crisis.

The remaining UN sanctions expanded to restrict Iraqi imports to prevent arms shipments to the Iraqi military. UN Security forces allowed only goods for humanitarian purposes into the country. The restrictions banned basic essentials that most people take for granted. For example, a doctor could not access a medical book, a teacher could not get chalk for a classroom blackboard, and a government clerk could not stock pen and paper. Iraq’s government administration, national health services, and schools began to crumble. Many jobs disappeared and wages dropped to a bare minimum. Famine spread because of the high cost of food and disease spread because water treatment plants could only pump out water but not decontaminate it.

Investors turned their hopes to expect an economic recovery. Rumors circulated about how Iraq planned to rebuild its oil-driven economy and how the dinar would rise in value to match the United States dollar or get closer to its old value of around $3.00 USD dollars. As these events unfolded, US currency investors continued buying Iraqi dinar notes in the hopes of a revaluation.

We will now take a closer look at each of these rumors to see which are plausible. The possibility of an imminent revaluation has sparked many rumors. Here are some of the popular dinar rumors frequently discussed among investors.

Rumor 1: The Central Bank of Iraq will redenominate, revalue, or reissue Iraqi currency.

On May 3rd, 2007, the International Monetary Fund issued a statement about an International Compact with Iraq. This triggered a fresh round of rumors. According to the latest dinar recaps appearing at the time, the Central Bank of Iraq was about to improve the value of Iraq’s currency. Since the exact nature of their intended action was not clear, dinar guru speculated that it could be a redenomination, a revaluation, or a re-issuance of the Iraqi currency.

Investors found many encouraging statements in the official letter to add credence to the rumors. Here are two examples from the official statement:

“Iraq has also embarked on an ambitious structural reform program in order to make the transition to a more market-based economy.”

“To combat inflation, action has been initiated on three fronts. First, the Central Bank of Iraq raised its policy interest rates sharply and allowed a gradual appreciation of the dinar. These measures aimed to de-dollarize the economy in order to enhance the central bank’s control over monetary conditions, and also to reduce imported inflation.”

Things looked even more promising after the value of Iraqi dinar rose by 8.5% over the next few years. In April 2007, one United States dollar equaled 1,270 Iraqi dinars, but by Aug 2014, one United States dollar equaled 1,160 Iraqi dinars.

Although the rate did not continue to improve, this rumor is hard to dismiss as unfounded. While the expected changes did not occur for a long time, it’s possible that the Central Bank of Iraq is still working on taking some action behind the scenes to strengthen the Iraqi currency.

Rumor 2: The Iraqi government plans to release the dinar on FOREX.

Although there is no evidence to suggest that the Iraqi government will release the dinar on the FOREX, this rumor offers speculators a vision of how their stock of dinars could make them wealthy. If the Iraqi government were to release the Iraqi dinar on FOREX, investors would make a lot of money.

Here’s an example: Let’s say you purchased $1,000 worth of Iraqi dinars. At the current rate of exchange (1 United States dollars equals 1,190 Iraqi dinars), you would get 1.19 million IQD. Ideally, you would wait for trustworthy dinar intel to inform you when the Iraqi dinar would rise in value against the United States dollar. Should the Iraqi currency rise to a point where 1 United States dollar (USD) is equal to 1 Iraqi dinar (IQD), you would become a millionaire because your money would now be worth one point 1.19 million United States dollars.

Rumor 3: US President Donald Trump spent millions buying Iraqi Dinar.

Many articles on the Internet began claiming that US President Donald Trump purchased millions of dollars’ worth of Iraqi currency. This led to many internet searches like “Is Donald Trump buying Iraqi dinar,” and “Donald Trump dinar rumors.” Many dinar investors blindly followed his lead and started buying Iraqi dinar, spending as much as they could afford and a little bit more because they expected a large, quick return on their investment.

Some investors jumped to the conclusion that Trump had his finger on the pulse of global currency exchange news and knew what he was doing. Some speculated that Trump recognizes a good deal when he sees it and shrewdly grasped the potential of the Iraqi dinar to revalue. And some investors guessed that he knew the real story of what was happening in Iraq. The rumor grew because of circumstantial evidence. People thought they were connecting the dots.

One clue was that Trump had made a statement on the news that all currencies would soon be on a level playing field. Dinar investors assumed that this was a statement about a global currency reset. However, Trump may just have been reflecting on the trade war with China.

Another clue that Trump followers construed as evidence was that the Trump administration has been highly supportive of the Iraqi government. This idea dovetailed into another rumor that the United States government was secretly helping the Iraqi government revalue its currency. However, this rumor about the US government assisting in the revaluation of Iraqi dinar predates Trump’s presidency. Rumor mills even credited the Bush’s administration with clandestinely nudging the Iraqi dinar up in value.

So, did Donald Trump buy Iraqi dinar? Frankly, we do not know whether he bought the Iraqi currency. There is no evidence that he purchased any dinars, let alone millions of dollars’ worth as some claim.

Rumor 4: Inflation has undermined the true value of the Iraqi Dinar, so it will rise in value against the USD.

The driving force of this rumor is the belief that the Iraqi dinar inflationary trends following the UN sanctions undermined the true value of the Iraqi dinar. Once the central bank fixed this, the Iraqi currency would rise against the United States dollars and might even go back up to its old value. This correction would make a revaluation inevitable.

This rumor confuses two financial concepts, the definition of the words “revaluation” and “redenomination.” These two words are not synonymous.

A revaluation is a price change in the value of a currency in relation to another currency in the fixed exchange rate market. Meanwhile, a redenomination is changing a banknote’s face value because of inflation. Inflation may have made the purchasing value of smaller units of currency worthless so only large denominations have value.

There has been no mention of redenomination, just public speculation that this could be a possible solution.

Rumor 5: The Kuwaiti Dinar revalued to become one of the most valuable currencies in the world.

This rumor, too, confuses the difference between revaluation and redenomination. Yes, the Kuwaiti dinar fell to an all-time low after the Iraqi invasion and then rose again to become one of the most valuable currencies on earth, with an exchange rate of 1 Kuwaiti Dinar equaling 3.29 United States Dollar. However, this impressive change in the value of the Kuwaiti dinar did not happen because of a revaluation. The Kuwaiti central bank released a new series of Kuwaiti dinars because Iraqi forces had looted the central bank of Kuwaiti dinars. So, the redenomination nullified the old issue by replacing the money with a new issue.

The Kuwaiti dinar is as powerful as it is right now because Kuwait has a thriving oil-based revenue. Since Kuwait added no new assets to increase the Central bank’s reserves, it is inaccurate to talk about a Kuwaiti dinar revaluation.

Rumor 6: The Iraqi dinar will become a strong currency without revaluation.

If Iraq can reconstruct and get its oil production back up to the level before Saddam Hussein started his wars against Iran and Kuwait, then a stronger economy would eventually lead to a stronger currency.

Iraqi oil has some unique qualities that could help the country earn billions. It could not only pay off its war reparations to Iran and Kuwait and its loans from Middle East countries for the Iraq-Iran war, a total of around $122 billion, but it would still have plenty left over.

This is actually possible because Iraqi oil is amongst the highest -quality oil in the world and Iraq has about 11% of the world’s proven oil reserves. What’s more, since the oil is only about 1,800 feet below ground, production costs are low, which makes a higher profit yield per barrel.

Estimates for Iraq’s oil reserves range from 200 billion barrels to 400 billion barrels. Economists base the higher number on the fact that geologists have yet to explore many areas of Iraq for oil and natural gas.

Rumor 7: Many countries have recovered after a devastating war ruined their economy.

This “rumor” is true. After the Second World War, allied forces ruined the economy of Germany and Japan with extensive bombing. Yet, today both enjoy a robust economy. Germany has the largest economy in Europe and the fourth largest nominal GDP on earth. Japan had the second largest in the world after the United States from 1968 until 2010. In 2010, China’s economy surpassed it.

Similarly, the Iraqi invasion ruined Kuwait’s thriving economy. Besides looting cash and gold from Kuwait’s central bank, Iraqi forces also set 600 oil fields ablaze when retreating from the US-led coalition. Despite these crushing setbacks, Kuwait’s currency is now the most valuable in the world, and the country is the fourth richest in the world based on per capita.

So, yes, the Iraqi economy could recover.

DINAR RUMORS TO KEEP AN EYE ON

Here at Treasury Vault, we promise to earn our reader’s trust by only basing facts and opinions on real Iraqi dinar news. While Iraqi dinar recaps spiced with rumors might be more engaging, we prefer to share investment advice based on facts from verifiable sources and actual breaking news.

Dinar gurus often base rumors on misconceptions and misinterpretations. Sometimes, too, they extrapolate some recent Iraqi news. For instance, they might extrapolate on a US Treasury Department press release about a visit to Iraq to discuss progress on financial latest issues to suggest the Baghdad government planned on a currency reset.

All too often, rumors are merely hyped-up statements about mere possibilities. For instance, it’s possible that there could be an Iraqi currency auction or Iraqi currency trading in the FOREX market, but unless readers can find Iraqi dinar currency news sources establishing this as a fact, they should dismiss such questionable dinar intel as mere speculation.

Dinar rumors are unnecessary to keep investor’s hopes up because the latest news out of Iraq suggest the Iraqi economy is on the mend. For instance, the central bank is building up its reserves, Iraq has elected a new Prime Minister, and Iraqi forces have almost defeated ISIS. Additionally, oil prices have recovered from a three-year slump, and the new Iraqi government is addressing the country’s economic challenges.

Iraq’s leaders must crackdown on corruption and rebuild the oil industry. Also, Iraq must repay war reparations, as well as pay back the billions the country owes to the Middle East states who funded the Iraq-Iran war. Additionally, Iraq must encourage foreign investments, and its public institutions have to support investments in the private sector, like real estate development or retail enterprises. Many issues remain and Treasury Vault will share the latest updates and breaking news on when the Iraqi government takes proactive steps.

The post Dinar Intel: 7 Dinar Rumors to Keep an Eye On appeared first on Treasury Vault.

3 Ways Isis in Iraq has Affected the Country’s Economy 18 Sep 2019 6:01 AM (5 years ago)

The Islamic State of Iraq and Syria (ISIS) has terrorized many countries in the Middle East and sabotaged the reconstruction of Iraq and prolonged the Syrian Civil War. This group, one of the most virulent extremist groups in history, is a jihadist militant group that originated from an al Qaida splinter group called Jama’at al-Tawhid wal-Jihad. In this article, we will update you on the ISIS situation in Iraq and discuss how these militants disrupted its economy.

3 WAYS ISIS IN IRAQ HAS AFFECTED THE COUNTRY’S ECONOMY

1. ISIS in Iraq has forced many governments to spend billions of dollars on military equipment.
2. ISIS in Iraq has forced the country to divert billions of dollars needed for reconstruction.
3. ISIS in Iraq created a humanitarian crisis.

Isis has negatively impacted the economy of Iraq over the years, ruining every effort by various administrations to rebuild the country after the Iran-Iraq and the Gulf War had damaged the infrastructure and uncompromising UN sanctions imposed during the Saddam Hussein regime had crippled the economy.

Let’s take a closer look at the ways it has frustrated the efforts of various Iraqi government administrations have tried to improve the quality of life of the people of Iraq by rebuilding the economy.

1. ISIS in Iraq has forced many governments to spend billions of dollars on military equipment.

Since 2014, a global coalition of countries led by the US has spent billions of dollars training and equipping Iraqi military forces to fight against ISIS. This coalition included many Western military powers like the United Kingdom, Australia, Canada, Belgium, France, Denmark, and the Netherlands. Besides this massive military and fiscal aid, Iraq still needed to spend millions of dollars of its own money to buy even more weapons from the coalition member countries. Since this was still not enough, they also bought armaments from Russia and its former enemy Iran.

2. ISIS in Iraq has forced the Iraqi government to divert billions of dollars needed for reconstruction.

While Iraq was trying to rebuild its infrastructure from the damage inflicted after the Gulf War, the country also experienced about $45 billion dollars’ worth of damage in battles against ISIS. According to reports issued by Iraqi government officials, as well as reports by World Bank assessors, ISIS destroyed a vast amount of civilian infrastructure, like residential homes, schools, and power plants. Foreign journalists routinely took pictures of streets lined with nothing but rubble because heavily armed militants leveled entire neighborhoods. United Nations officials reported that in Mosul Iraq alone, grenades, missiles, bombs, and artillery fire had destroyed more than 40,000 homes.

Over the course of about nine years, billions of dollars flooded into Iraq from foreign governments following the 2003 invasion to topple the dictatorship of Saddam Hussein. The US alone spent about $15 million a day for the reconstruction of Iraq. Over the course of almost a decade, this amounted to a colossal $60 billion dollars in foreign aid. Iraq could spend all this money on repairing water plants, repairing water pipes, rebuilding schools and other critical infrastructure needs. About $25 billion of this money had to go directly into training and arming the Iraqi military and security forces to combat ISIS militants.

Ironically, despite this massive influx of money over many years, there is little to show for it today. Where the money went was difficult to trace. US government auditors believe that a large amount of it disappeared in armed conflicts against the Islamic State militants. They speculate that Iraq probably wasted the rest on failed reconstruction projects by corrupt US government contractors hired for the reconstruction of Iraq, as well as squirreled into the bank accounts of minor Iraqi bureaucrats.

Today, Iraqi government authorities estimate that the country still needs $88.2 billion to rebuild the country after the Sunni extremists seized vast amounts of territory—including occupying Mosul, the second largest city in Iraq after Baghdad. Out of this money, rebuilding homes destroyed by the military conflicts will account for at least $17 billion dollars.

3. ISIS in Iraq created a humanitarian crisis.

The war against ISIS resulted in over five million displaced Iraqi citizens. After the defeat of ISIS by Iraqi military and security forces, a US-led coalition army ended the reign of terror. However, only half of the missing number of Iraqi people returned home.

FREQUENTLY ASKED QUESTIONS ABOUT ISIS

Here are some common questions that readers often ask about the impact ISIS had on the Middle East, particularly in Iraq and Syria.

What Does ISIS Stand For?

Although the acronym ISIS stands for the Islamic State of Iraq and Syria, this is not its only name or acronym. The jihadist group also goes by many other names. For instance, you may read articles or listen to ISIS news reports that refer to it as the Islamic State of Iraq and the Levant (ISIL), the Islamic State (IS), or Daesh, which is its generic Arabic name.

What Do These Iraqi and Syrian Rebels Fight For?

Like many other jihadist groups in the Middle East, there is a recurring political theme of wanting to return to earlier centuries when Islam flourished. This nostalgia for an earlier time, considered to be a golden or classical age, served as an effective way to recruit many young Muslim men to join the fight against Middle East governments. Essentially, Islamic State militants of Sunni persuasion aspire to recreate a caliphate in Iraq, Syria, and other neighboring countries and displace all Shiite Muslim groups.

The primary aim of ISIS appears to be to build an Islamic society that echoes the assumed glory of the distant past. Although the nuances of their religious doctrines and political aspirations are unclear to outsiders, its agenda is fairly obvious. They want to destabilize governments in the Middle East through the corruption of government officials, police, and other authority figures and incite political violence.

Who Formed ISIS? 

Although journalists have not identified the original ISIS leaders, researchers have found that Jabhat al-Nusra may have inspired the formation of ISIS. Jabhat al-Nusra was another jihadist organization that fought in the Syrian Civil War to overthrow Bashar al-Assad’s Syrian government. They modeled themselves after this group and adopted the same Salafi doctrine of Sunnism that believes in 8th Century Sharia laws.

Jabhat al-Nusra still respected the human rights of Muslim civilians during the Syrian war and focused on ridding the country of the Syrian government and Western influence, particularly of the United States, which they viewed as a satanic world power. However, ISIS had no Islamic-based moralistic compunctions or behavioral restraints. Despite their name as defenders of Islam, they desecrated holy places for religious artifacts and relics that they could sell on the black market and used many terror tactics to control large populations captured in ISIS territory, including crucifixions and executions.

When Did ISIS Start?  

ISIS started in 1999 as a Jihadist group called Jama’at al-Tawhid wal-Jihad, taking part in the insurgency of Jihadist groups into Iraq after the United States led an invasion of Western forces in 2003. The Americans believed Saddam Hussain’s government was hiding weapons of mass destruction.

Who Funded ISIS?

U.S. intelligence believes ISIS has access to billions of dollars of funding, supported by a large network of illegal businesses like crop control, stealing and selling artifacts, and ransom money from kidnapping, smuggling. It’s supported by donations from anonymous wealthy benefactors who believe in its fundamentalist doctrines. It’s supported by legal businesses like mineral mines, oil fields, and banks. ISIS is also supported by taxation revenue imposed on the people of conquered areas.

Where Was ISIS on Iraq’s Map? 

ISIS conquered and lost thousands of miles of territory. The ISIS war map stretched from the south of Baghdad to the coast of the Mediterranean. These lands, including parts of Syria and Iraq, cover tens of thousands of square miles. In 2014, ISIS territory reached 34,000 square miles, but in 2016, US officials estimate it lost about forty percent of this territory in Syria and Iraq.

At the height of its power, Isis had conquered much of North and West Iraq, and occupied major cities like Mosul, Tikrit, Fallujah, and Ramadi. After Iraqi military and security forces got these territories back, they were in ruins. The toll on human lives is unclear, but authorities estimate that ISIS killed about 10,000 people.

Did ISIS Enslave People in ISIS Territory?

The United Nations believes ISIS created a socio-economic system based on slavery. A 2015 United Nations report states that ISIS enslaved women and children from minority groups, particularly Yazidi people captured by ISIS militants.

Is ISIS Still in Iraq?  

ISIS was such a large, wide-spread, fanatical, well-funded, highly organized militant group that the war on ISIS only ended in late 2017.

Although President Trump announced the total defeat of ISIS earlier this year, recent ISIS news suggests that it’s hasn’t entirely disappeared. Fueled by fanatical religious persuasions, jihadist extremists are now conducting guerrilla warfare in Iraq and Syria. In fact, US intelligence and the Iraqi military leaders suspect that ISIS is still trying to recruit people and attempting to rebuild its broken financial empire. Unstable governments in the Middle East region, like Libya, may give ISIS a place to regroup. Although it’s unlikely to regain its previous strength and influence, it’s still a terrorist threat to the security of Iraq. Efforts to keep the peace still involve armed Iraqi police officers and soldiers in small fighting operations in remote areas.

What Happened to ISIS After Its Defeat in Iraq?

After fleeing Iraq, ISIS crossed the border into eastern Syria. However, Kurdish-led Syrian forces, backed by US air attacks, are routing the militants in ISIS territory there.

Did ISIS Prevent a Dinar Revaluation?

Although dinar recaps mainly cover the efforts of the Iraqi government to rebuild the infrastructure and reconstruct the oil industry and the Central Bank of Iraq to organize the Iraqi currency, they seldom mention how ISIS hampered the Iraqi government’s efforts to restore the country to its prosperous pre-war levels.

Since Iraq has defeated ISIS, Iraq is far more likely to experience economic progress in the coming years. It’s reasonable to expect that it will renew its oil-based economy and establish international trade agreements with geopolitical players.

HOW ISIS HAS AFFECTED IRAQ’S ECONOMY

ISIS had a devastating effect on Iraq’s ability to recover from the damage it experienced from previous wars. ISIS devastated large areas of Iraq and frequent outbreaks of political violence and the open murder of civilians demoralized the entire country. For a long time, ISIS’s well-funded and expertly coordinated military occupancy of one major Iraqi city after another appeared unstoppable.

ISIS attacks in Iraq resulted in a large death toll and the largest mass migration of a population since the Second World War. ISIS blew up homes, reduced schools to rubble, and debilitated hospitals and humanitarian agencies from providing medical help to victims. ISIS even caused extensive damage to the canal networks flowing out of the Eastern Euphrates River, causing large areas like Anbar Province to experience drought.

After the enormous human suffering and wide-scale destruction of property, Iraqi leaders, like Prime Minister Adil Abdul-Mahdi al-Muntafiki and President Barham Ahmed Saleh, are now focusing on rebuilding their country and restoring normal life for its citizens.

The post 3 Ways Isis in Iraq has Affected the Country’s Economy appeared first on Treasury Vault.

4 Things to Know About Vietnam President Nguyen Phu Trong 10 Sep 2019 5:59 AM (5 years ago)

In April 2018, Vietnam’s National Assembly elected Nguyen Phu Trong to serve as both the General Secretary of the Community Party of Vietnam and the President of Vietnam. The President has bold plans to reduce state-owned enterprises in favor of further expanding the private sector, which already controls 40 percent of the country’s economy. In this article, we will briefly review his biography and his economic policies, as well as analyze how his proposed economic changes will affect the value of the Vietnamese dong.

4 THINGS TO KNOW ABOUT VIETNAM PRESIDENT NGUYEN PHU TRONG

1. Nguyen Phu Trong is the De Facto Head of the Politburo
2. Nguyen Phu Trong Won the Presidency with 99.79% of the Vote
3. Nguyen Phu Trong Allegedly Suffered a Stroke in April 2019
4. Nguyen Phu Trong Proposes a Free-Enterprise Policy to Improve Vietnam’s Economy

Let us now look at each of these ideas in more detail:

1. Nguyen Phu Trong is the De Facto Head of the Politburo

Nguyen Phu Trong was born in Hanoi in 1944 to a peasant family. After his university studies, he worked for the Communist Review, a political journal, for many years. In the early 1990s, he rose to the position of editor-in-chief of this Vietnamese Communist Party magazine.

Although this was an excellent position in its own right, Nguyen Phu Trong, leveraged everything he had learned as a journalist about Vietnam politics to rise still higher. He accomplished this rite of passage by finding increasingly powerful positions within the Vietnam government.

In 1999, Nguyen Phu Trong became a member of the Politburo, the executive body of the Vietnamese Communist Party. He served as the Hanoi Party Secretary before chairing the National Assembly for two terms. By 2011, he was elected the General Secretary of the Central Committee of the party and won re-election again in 2016.

After becoming the Secretariat of the party, the Secretary of the Central Military Commission, and the de facto head of the Politburo, Nguyen Phu Trong was the most powerful man in Vietnam. Despite his influential position, holding two out of the four top positions, he remained humble and approachable.

Nguyen Phu Trong has a long-established reputation as a “party man,” putting its interests above his own personal ambitions. This reputation has made it easier to share power with Prime Minister Nguyen Xuan Phuc, a man of considerable experience and competence who is playing a crucial role in Vietnamese foreign affairs.

In fact, he recently met with Australian Prime Minister Scott Morrison, who had stopped over on his way to the G7 Summit in France in Hanoi to resolve the escalating tensions over the geopolitics of the South China sea. Earlier in the week, China had illegitimately tried to lengthen its shadows in the South China Sea by sending a Chinese geological vessel escorted by a pair of Chinese coast guard ships. Rather than feeling intimidated by the superpower, Vietnam sent a military vessel to the area to reassert its rights over the area.

2. Nguyen Phu Trong Won the Presidency with 99.79% of the Vote

Running on an anti-corruption platform—an architect that would crackdown on corruption in Vietnam—Nguyen Phu Trong won a landslide victory to become the President of Vietnam. The Vietnamese Communist Party General Secretary won with only one dissenting vote. Political pundits compared his unparalleled success in the National Assembly to that of Xi Jinping, the Chinese president, who had also won an overwhelming number of votes.

Journalists in Hanoi also favorably compared him to the founder of the Communist Party of Vietnam, Ho Chi Minh, who had died in 1969. He, too, had not only been the top de facto leader of Vietnam but also the head of state. In fact, no other Vietnamese leaders or Party bosses other than the wartime leader, Le Duan (who took power from Ho Chi Minh when he was too ill to govern), had consolidated as much political power as Nguyen Phu Trong.

3. Nguyen Phu Trong Allegedly Suffered a Stroke in April 2019

The people of Vietnam became alarmed when Nguyen Phu Trong stopped making public appearances. Mystery shrouded his disappearance and social media exploded with wild speculations that he was seriously ill. To quell the drama, official sources hinted that he had a stroke. Later news revealed that he had recovered, but one of his arms had remained paralyzed. Social media erupted with positive encourage when the news became public.

His death would have had a disastrous effect on Vietnam. It could have destabilized a country that now relied on Nguyen Phu Trong’s unassuming but highly competent leadership. In addition, the Party would have had to explain why they had waived aside their long-established tacit agreement that no single person could hold more than one out of the top four political offices (the Chairman of the National Assembly Nguyễn Sinh Hùng and Prime Minister Nguyen Xuan Phuc hold the other two top positions).

Analysts maintain different theories about how Nguyen Phu Trong could merge the role of general secretary and president.

One popular theory is that he is following in the path of Xi Jinping, who held exactly the same two top positions in China’s communist party. Although this is a plausible explanation, it seems unlikely that Nguyen Phu Trong would try to model Chinese politics, which has a long history of human rights violations.

A far more credible explanation is that his unique position has allowed him to play a more decisive role in international affairs. While the two communist parties in China and Vietnam can communicate directly with each other, this political framework is unique to communism and does not work well in meetings arranged by the Vietnamese foreign ministry with leaders of Western democracies.

In fact, such a foreign relationship meeting occurred on February 27th, 2019, when President Donald Trump met in Hanoi, Vietnam, with President Trong and Prime Minister Phuc prior to his summit meeting with North Korea’s leader Kim Jong Un. After that brief meeting, Vietnam became one of the United States closest allies. Although not the Prime Minister of Vietnam, who is the head of government, Nguyen Phu Trong played a critical role in the meeting. By consolidating the power of the general secretary with the ceremonial office of president, Nguyen Phu Trong could fully represent the interests of the Vietnamese government.

4. Nguyen Phu Trong Proposes a Free-Enterprise Policy to Improve Vietnam’s Economy

Although Vietnam is a communist country, it has pursued a policy to encourage the rapid growth of private businesses. Under Nguyen Phu Trong’s able leadership, Vietnam now aspires to reach a goal of having 1,000,000 private businesses. This is a lofty goal considering, there were only 500,000 private businesses in 2018.

How will Vietnam be able to double its private enterprises? 

One solution proposed by the Vietnam Chamber of Commerce and Industry is to remove barriers that the informal economy faces when trying to build a business, especially to access financing. Vietnam’s informal businesses range from independent motorcycle taxis to sidewalk noodle stands. These have not been formally registered as businesses and form a large sector of the population. While the government of Vietnam still influences the national economy, as much as 56% of Vietnamese, outside farmers and fishers, ply an informal trade to meet their basic needs.

Although mainstreaming the informal economy is not a concept originated by Nguyen Phu Trong, he stands firmly behind it. Encouraging more informal businesses to register will not only allow entrepreneurs to receive the financial incentives they need to improve their businesses, but it will also allow the government of Vietnam to collect far more tax revenue.

The new policy will also encourage the growth of startups from young college graduates out of university. In addition, the country will attract more foreign investors to build companies in Vietnam.

The Vietnamese government is positioning itself as a country that offers many incentives to foreign investors.

There are two reasons why Vietnam is an attractive country for long term investments. First, Vietnam offers cheaper unskilled labor than China. Between 2013 to 2018, wages in China rose by 33%. While wages are also improving in Vietnam, these are still well below China’s wage rates.

Second, since the US-China trade dispute has disrupted the profits of foreign manufacturing companies who had enjoyed the incentives that China had offered their business, Vietnam now looks like a more promising manufacturing base. Many producers and suppliers are moving some of their business out of China and setting up shop in Vietnam. US President Donald Trump’s trade wars have unintentionally reorganized global supply chains. While the US has cooled relationships with China, it has developed warmer relationships with its former enemy, Vietnam.

HOW A MORE ROBUST VIETNAMESE ECONOMY WILL BENEFIT CURRENCY INVESTORS

Although the current regime may appear to echo the Democratic Republic of Vietnam (better remembered as North Vietnam) that existed from 1945 to 1976, modern-day Vietnam remains a communist country. However, Vietnam is no longer a poverty-stricken country and appears to have learned from the lessons of history.

Unlike communist countries like the Union of Soviet Socialist Republics (USSR), the Marxist-Leninist Eurasian state that existed from 1922 to 1991 or North Korea, the Government of Vietnam understands the value of a secondary economy, also known as the informal economy, and is taking steps to absorb private enterprise into its existing political framework.

If you remember, the crackdown on private enterprise, known as the “second economy,” created catastrophic conditions in both the USSR and North Korea. After Mikhail Gorbachev tried to uproot the second economy, the USSR collapsed in 1991 to become the Russian Federation with 15 independent states. In North Korea, a government crackdown on the second economy also proved disastrous. It resulted in the infamous North Korean famine that killed a million people, a long famine that lasted from 1995 to 1998.

Like Hungary, Vietnam has recognized that the second economy balances the flaws in a planned economy. By absorbing the second economy into the system rather than trying to expurgate it, the Hungarian economy flourished. And like China, Vietnam has recognized that it is the capitalism of the private sector, rather than government enterprise alone, that powers huge economic growth.

This radical socio-economic development is good news for Vietnamese currency investors interested in a revaluation of the Vietnamese Dong.

Although still available at a low exchange rate (1 USD equals 23,205.00 Vietnamese dong), this currency has a wonderful future, with a good chance of revaluation. Vietnam has moved away from its long-established political isolation and disinterest in a free enterprise economy. The changes proposed by the President of Vietnam will help the country integrate into the global economy. In fact, the picture looks so promising that Goldman Sachs has projected that Vietnam will probably become the 21st largest economy in the world by 2025. Another prominent financial firm, Price Waterhouse Coopers, agrees with this prediction and believes that Vietnam is one of the fastest-growing countries in the world.

VIETNAM PRESIDENT NGUYEN PHU TRONG

Promising a crackdown on corruption in Vietnam, Nguyen Phu Trong won a landslide victory because the Vietnamese Communist Party and the people of Vietnam immediately recognized that he was the right man for the job, someone who would continue the socioeconomic development that has transformed Vietnam.

Once a centrally planned economy, Vietnam has now become a market economy, transforming from one of the poorest countries in the world to becoming a thriving lower middle-income economy. Vietnam is quickly becoming one of the most robust nations in the Southeast Asian region. Over the course of 30 years, Vietnam has reinvented itself as a rags-to-riches Southeast Asian country because of the wide-sweeping political, economic, and social reforms started by Doi Moi in 1986. There is every reason to believe that General Secretary of the Community Party of Vietnam and the President of Vietnam, Nguyen Phu Trong will continue to follow Doi Moi’s visionary example of how to build a prosperous country.

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Did The UN Iraq Sanctions Affect Iraq’s Economy? 29 Aug 2019 5:56 AM (5 years ago)

In 1990, the United Nations applied stringent economic sanctions against the government of Saddam Hussein. Although they were lifted in 2003, after a US-led military coalition ousted him from power, its residual effects still impact Iraq. In this article, we will discuss how these Iraq sanctions have slowed down the country’s economic recovery.

4 WAYS THE UN’S IRAQ SANCTIONS AFFECTED IRAQ’S ECONOMY  

1. Triggered an Economic Decline
2. Collapsed the National Health Service
3. Ruined the Educational System
4. Resulted in a High Child Mortality Rate

A powerful nation or an international governing body may use economic sanctions as an instrument to curb the activities of one or more sanctioned countries. To understand the reasons for the UN sanctions against Iraq, we need to review the invasion of Kuwait and the Gulf War.

Iraq Invasion of Kuwait  

On August 2nd, 1990, the Iraqi army invaded Kuwait in a two-day military operation and occupied the country for about seven months.

The UN Security Council considered the Iraqi invasion of Kuwait an internationally unacceptable occupation of a sovereign country and implemented United Nations Security Council Resolution 661 to enforce economic sanctions against Iraq.

WHAT SANCTIONS DID THE UN AND US PLACE AGAINST IRAQ?

The purpose of these economic sanctions was not only to help liberate Kuwait but also to destabilize the economy of Iraq enough to stir the people of Iraq to oppose Hussein’s government. However, the economic sanctions alone did not persuade the Iraqi army to withdraw from Iraq, nor did it result in a popular uprising in Iraq against Saddam Hussein.

Since Iraq refused to leave Kuwait by the UN’s mandated deadline, the UN Security Council agreed to mobilize a US-led coalition of military forces to liberate Kuwait. However, before retreating from Kuwait, Iraqi forces robbed the Central Bank of Kuwait, stealing cash ($1.2 billion) and about gold bullion ($950 million), and torched 600 Kuwaiti oil wells.

In 1991, after the Gulf War defeated the Iraqi army, the UN Security Council passed more sweeping economic sanctions to punish Iraq. Resolution 687 expanded on the earlier economic sanctions. This new sanction also sought Iraqi payment for the cost of removing weapons of mass destruction. However, the United States could not find any evidence that Hussein had embarked on a nuclear deal to build secret nuclear weapons.

The sanctions barred trade in any non-essential goods and financial resources. It only allowed Iraq to get commodities related to humanitarian supplies like food and medicine.

Severe UN Iraq Sanctions  

The economic sanctions were so severe that it had a worse effect on the Iraqi people than it did on the government of Iraq.

When UNICEF and WHO revealed how the sanctions were destroying Iraqi socioeconomic conditions, many UN members, human rights groups, and civil organizations called for an end to the economic sanctions because the severity of these sanctions was disrupting the welfare of the Iraqi people. The people of Iraq experienced record-high unemployment, the lowest level of personal income in the world, runaway inflation, epidemic diseases, and mass starvation.

The humanitarian crisis sparked by the sanctions resulted in two top UN officials resigning. First, Hans von Sponeck, the humanitarian program coordinator, resigned. Then a day later, Jutta Purghart, the head of the UN World Food Program in Iraq, also resigned. They wanted to protest against the inhuman conditions imposed on the civilian population by the economic sanctions.

The economic sanctions continued for many years, ruined the economy, and devastated the lives of ordinary Iraqis, particularly the lives of the most vulnerable population — children and the impoverished masses. It also resulted in the collapse of many Iraqi institutions, like education and National Health Service, because it included everything related to education or administration, such as pen, ink, and paper.

Since the US enforced the trade embargo against Iraq, some journalists mistakenly referred to these military-backed operations as US sanctions on Iraq. The occupying US forces only enforced United Nations Security Council Resolution 665 through a US-led Multinational Interception Force. This special military unit inspected all crews and cargoes coming into Iraq through the Strait of Hormuz. They imposed punishment on any ships breaking the embargo by seizing their freight and impounding their vessels.

In 1997, in response to international criticism, the UN created an Oil for Food Program but the humanitarian crisis in Iraq were now at such an acute state that statistics showed the program came too late to rectify the havoc created by the economic sanctions.

On May 22, 2003, UN Security Council Resolution 1483 lifted economic sanctions against Iraq, except for certain provisions in paragraph 10 related to oil revenues. The United Nations removed these remaining sanctions in December 2012.

However, Chapter VII sanctions also lifted a development policy that protected Iraq from paying 5% of its oil revenues to Kuwait for war damages. This suddenly resulted in the financially challenged Baghdad administration defaulting reparations to the Kuwaiti government by $11 billion for all the damage caused by the invasion of Kuwait.

4 WAYS THE UN’S IRAQ SANCTIONS AFFECTED IRAQ’S ECONOMY

The United Nations sanctions against Iraq negatively impacted the lives of the people of Iraq. Here are some ways it destabilized Iraq’s economy.

1. Triggered an Economic Decline

The United Nations sanctions disrupted the Iraqi economy, causing inflation to skyrocket and unemployment numbers to hit record levels. According to the UN Department of Humanitarian Affairs, 20% of the population, or about 4 million people, experienced prolonged suffering and extreme poverty.

In 1990, the exchange rate of the Iraqi dinar began its free fall. In 1990, the Iraqi Dinar was a powerful currency: 1 Iraqi Dinar equaled 3 United States Dollar. But by 1997, 1, 500 Iraqi Dinar equaled 1 United States Dollar.

The Iraqi economy was in shambles for several reasons. Since the war with the US-led coalition had destroyed the country’s infrastructure, Iraq did not have a foundation to rebuild its economy.  The GDP per capita plummeted from $3,500 to $600. Before 1990, the average worker was earning about $100 a month. After the US occupation, the average worker’s earnings fell to $5 a month.

The ever-rising price of food made it difficult for most of the population to buy food. Low wages and high costs forced the Iraqi people to spend 80% of family income on food. Although food rations became available, this only provided a minimal amount of nutrition and calories. Since many Iraqi people were starving by 1995, the United Nations created the Oil for Food (OIP) program. Under UN Security Council Resolution 986, Iraq could sell its oil to the world market for humanitarian supplies like food and medicine. The resolution banned the government of Iraq from using any revenue to strengthen its military.

2. Collapsed the National Health Service

Before the Iraqi invasion of Kuwait, Iraq had an excellent National Health Service. This declined after the US occupation of Iraq because the UN economic sanctions reduced Iraq’s ability to organize, manage, and fund sanitation projects.

By 2001, thousands of Iraqi citizens died because of a shortage of necessary medication, the spread of infectious diseases, poor sanitation, lack of clean drinking water, and malnutrition. Many factors created a high death rate. The war had contaminated the environment with depleted uranium. Health authorities attributed the high death rate of children from cancer to radiation.

Iraq abandoned maintaining sanitation standards after water treatment plants could no longer clean water because of a lack of equipment, a lack of spare parts to fix broken equipment, a lack of water treatment chemicals to decontaminate the water, and a lack of trained staff to maintain the facilities. These plants stopped treating water and merely pumped it out. However, the water rarely reached faucets because of broken or leaking pipes. The war had also destroyed many pipes.

Although public rations were now available, the food often lacked adequate nutrition, and children and the elderly people began to die from malnourishment.

3. Ruined the Educational System 

Since UN sanctions prohibited the importation of non-essential commodities, teachers found it difficult to teach without blackboards, chalks, pens, pencils, ink, paper, and other essential school supplies. Enrollment in school declined because teaching became ineffective and about 84% of the schools needed extensive building repairs.

Although the UN sanctions allowed hospitals to get medication, Iraqi doctors did not have any writing materials to keep patient records nor have any access to reference medical journals or textbooks. It was also difficult for premed students to go to universities abroad or for doctors to attend international medical conferences.

4. Resulted in a High Child Mortality Rate

Initially, surveys of Iraq sanctions death toll reported that about 500,000 children had died because of the Iraq sanctions. Since researchers based this figure on reports created by Iraq government officials during the regime of Saddam Hussein, many researchers questioned the veracity of such a high number. However, a report by Lancet in 1995 placed the number at 567,000 deaths, and a report by UNICEF re-established the figure of 500,000.

Other researchers later stated that the high death rate was incorrect because it added stillbirths and miscarriages to the number of deaths. Comprehensive surveys and interviews after 2003 now place the number at a rate of 40 deaths per 1,000 children. Many children under five years of age died because of malnutrition, pneumonia, and diarrhea. Researchers estimated the mortality rate at 40,000 children a year. By 1997, about 1 million children under five years of age starved to death.

Children over five years of age died because of kidney disease, liver disease, cancer, diabetes, heart attacks, and hypertension. Researchers estimated the mortality rate at 50,000 children a year.

Malnutrition after 1991 increased the death rate of children, and this became a public health emergency after the embargo. According to a 1996 UNICEF report on the humanitarian crisis, 31% of children died from stunting caused by chronic malnutrition, 9-26% from underweight malnutrition, and 3-11% wasting away caused by acute malnutrition.

HOW IS IRAQ’S ECONOMY TODAY?  

Although Iraq’s economy began to recover after the UN lifted its sanctions, the country is still struggling with the aftereffects of the Iraq sanctions. We can see economic struggle reflected in the exchange rate of the Iraqi Dinar.  Currently, 1,193.25 Iraqi Dinar equals 1 United States Dollar.

Still, the situation is not hopeless. Should Iraqi Prime Minister Adil Abdul-Mahdi be able to restore the country’s oil fields back to where they were before the invasion of Kuwait and the Gulf war, Iraq could generate as much as $24 billion in revenue. Long-term, continuous improvement of the oil and natural gas facilities would help Iraq become one of the world’s largest oil-producing nations because export revenues could double within ten years.

However, the prime minister is unlikely to improve the agricultural base because poor farming practices in the 1990s resulted in salinization destroying much of the arable land but will probably focus on reconstructing the oil industry to rebuild the country. As revenues grow, Iraq will focus on improving urbanization and developing manufacturing industries.

However, Iraq is also heavily in debt, shielded for years from claimants by a Security Council resolution established on May 22, 2003, to make the reconstruction of Iraq easier. The Baghdad administration must deal with these outstanding debts before it can normalize its foreign policy and renew its international financial and trade relationships.

Financial analysts Iraq’s debts to range between $42 to $78 billion. These debts include war damage reparation claims by the Teheran administration from the Iran-Iraq war and claims by Kuwait City from the Iraq-Kuwait war, loans from other middle east nations before 1990 to fund infrastructure projects, industrial development, and social services.

Since Iraq must rebuild its economy by reconstructing its oil industry, pay attention to dinar recaps that talk about how Iraq is rebuilding its oil and natural gas industry rather than ask questions like, “Did Donald Trump buy Iraqi dinar?”

While it may be more fun to speculate on the assets in Trump’s portfolio, it’s not as relevant as many currency investors think. Instead, a Central Bank of Iraq dinar revaluation will depend on how well the country can restore its oil industry.

HOW UN IRAQ SANCTIONS AFFECT IRAQ’S ECONOMY  

Although the UN sanctions initially aimed at restricting the growth of the military-industrial complex in Ba’athist Iraq, they expanded in scope after the US-led military coalition ousted Hussein from power.

These more elaborate sanctions were sometimes mistakenly referred to as US sanctions in the media because they included a demand that the Iraqi government must disclose weapons of mass destruction. US Intelligence believed that Iraq had a secret nuclear deal and possessed nuclear weapons. However, these were UN sanctions, and they included many other demands, including the demand that Iraq pay war reparations to Kuwait.

It is these later sanctions that stipulated the onerous trade embargo that disrupted the Iraqi economy, as well as Iraq’s governance, national health, and educational system. It ended up punishing the people of Iraq far more than the government of Iraq. The aftermath of the United Nations sanctions continues to hold Iraq back from rebuilding efforts.

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What Happens When a Country Goes Through Demonetization? 27 Aug 2019 5:54 AM (5 years ago)

A government may demonetize a certain denomination of coins or banknotes to reform their national currency. By outlawing a high denomination, they try to fix monetary problems, like the widespread dissemination of a counterfeit currency note, a history of corporate tax evasion, or a burgeoning black money market economy.

6 COUNTRIES THAT HAVE GONE THROUGH DEMONETIZATION  

1. Demonetization in the Soviet Union
2. Demonetization in North Korea
3. Demonetization in India
4. Demonetization in Venezuela
5. Demonetization in Australia
6. Demonetization in Pakistan

In theory, demonetization can bring about positive monetary changes. A government might use it to end corruption or runaway inflation. They might also use it to improve the country’s macroeconomic policies. But history has repeatedly shown that if done without sufficient planning, demonetization has many negative ramifications that are unexpected. Rather than renewing trust in the government, it can cause a total loss of faith, and rather than establishing order, it can spark chaos. In fact, demonetization can be so disruptive that citizens protest, riot, and loot to vent their frustration.

A wise government will plan a smooth transition. It may, for example, issue a new banknote that looks similar to the previous one but with fewer zeros. This makes it easier for people to identify the currency and recognize its new value. The government will also link the nominal value of the new currency to a familiar foreign currency like the euro or the dollar so that people can understand its macroeconomic value.

WHAT IS DEMONETIZATION?  

Demonetization occurs when a government bans a unit of currency by stripping its status as a legal tender. After a government demonetizes one or more units of currency, it organizes a way to pull the old unit of currency out of circulation and replace it with the new unit of currency. Usually, people go to banks or ATMs to swap out their old money for the new money.

If this currency swap is poorly implemented, it causes widespread confusion and panic within the country and the government faces widespread resistance to the change in the currency’s value. One common problem that occurs is when people continue to use the old currency unit and refuse to go to a bank to swap out their old currency unit because they fear a cash shortage. Therefore, illegal money may continue to circulate if people maintain an informal agreement to continue to honor the value of the deprecated currency unit. This may occur in remote regions of the country if the uneducated rural population did not hear about the new demonetization policy.

Another common problem is that the new currency unit may not replace the value of the old currency unit in circulation quickly. This can occur if the government has not clearly designated when the new money is available. Sometimes, the government gives people an unrealistic schedule to exchange their money. Consequently, people may experience a cash crunch if they do not have enough time to swap out their old currency because financial institutions throughout the country are so congested that people can’t get to banks or ATMs before the deadline.

Advantages and Disadvantages of Demonetization

Demonetization has several advantages. It can bring untaxed money back into circulation and help clamp down on corruption because it forces people to declare their unaccounted money.

Demonetization can also make it easier for a country to transition to a cashless economy by increasing a demand for more debit cards to facilitate electronic payments. Obviously, the more debit cards available to the general population, the higher the likelihood of cashless payments replacing cash-based transactions.

There are also many disadvantages to demonetization. It can create widespread distrust in the government, undermining any other political plans that the government needs popular support to implement. It can also impoverish people who can’t make the swap by the designated deadline because their money suddenly becomes worthless.

Demonetization can stir up massive public unrest. People will clamor for a new government, try to sue the government, express disdain for the new government policy through mass media, and march in protest in public places. Rioting, crime, violence, and looting may occur. This widespread agitation will then result in a government clampdown, which arouses even more public ire and popular uprisings. For example, when India demonetized 500 rupees and 1000 rupees, the Indian National League filed a Public Interest Litigation (PIL) to the Madras Supreme Court, requesting the court to intervene with the government to reverse the demonetisation policy. However, the Supreme Court refused to take any action on the PIL.

Demonetization has been known to disrupt the flow of goods and services throughout the country because people now have to spend hours in long queues at local banks to have time to convert their money from the old currency to the new one. Since standing in long queues takes up the time and attention of potential customers, many businesses lose revenue streams and experience financial losses. The domino effect of a disrupted consumer base affects the stock market and ruins the quarterly income goals of both public and private organizations.

There is also the risk of slowing down a country’s economic growth. Since it may take some time for the nation to acclimatize to the new monetary policy, demonetization often adversely affects the stock market and GDP.

6 COUNTRIES THAT HAVE GONE THROUGH DEMONETIZATION  

Many countries have implemented demonetization. Here are six examples of what happens when a country goes through demonetization.

1. Demonetization in the Soviet Union

On January 22, 1991, Mikhail Gorbachev shocked the Soviet Union by declaring that both the 50-ruble and the 100-ruble note would be invalid at midnight that day. He also gave note holders only three days to exchange the old notes for new notes. Anyone who still possessed 50-ruble or 100-ruble notes would then have to make their appeal before special commissions to get their worthless notes replaced.

The purpose of this demonetization was to disrupt the informal economy—that part of the economy that the government could not formally monitor or tax because of their remote locations. This sudden restriction on the economy had unexpected long-term ramifications. Many economists think it may even have caused the collapse of the USSR, forcing it to adopt a democratic political system, one that communism had vociferously denounced since 1917.

Gorbachev’s demonetization policy stalled economic activity throughout the country. People quickly lost faith in the government, and Ukraine and Kazakhstan experienced an economic crisis. Later, in 1993, Moldova, Turkmenistan, Azerbaijan, and Georgia abandoned the use of the ruble. Instead of starting a currency reform, demonetization in the USSR destabilized the country, caused the collapse of communism, and ended Soviet influence in fifteen states from Armenia to Uzbekistan.

2. Demonetization in North Korea 

Oblivious to what had happened in the USSR, North Korea tried something similar. Like the Soviets, they, too, experienced large-scale economic destabilization.

On November 30, 2009, the government issued a Draconian demonetization policy to crack down on private enterprise. It even confiscated old currency held by note holders. The chaos that ensued was so overwhelming that the government had to retreat and agree to reopen the private enterprise market.

Undeterred by the lessons of their own history, the North Korean government had completely forgotten why their people had become entrepreneurial.

They had forgotten that back in 1990, the North Korean economy had almost collapsed because the government had failed to maintain an efficient centrally planned economic system. By the mid-1990s, a half-million to a million people died of starvation, which was about 3 to 5 percent of the population. To survive the government’s inability to provide a livelihood, the Korean people became highly entrepreneurial with households, local government offices, and even military units developing small-scale private enterprises.

3. Demonetization in India   

The people of India view the Indian rupee with profound respect because of its historical importance. The origins of this currency go back millennia, with the first rupee circulating in the 6th century BCE. This currency is one of the oldest in the world, part of the world’s first coinage, as intrinsic to the history of money as the Lydian stater or the Chinese wen.

When Indian Prime Minister Narendra Modi announced that he would ban 500-rupee notes and the 1000-rupee notes on November 08, 2016, it caused tremendous outrage in the country. In fact, the effects of this India currency demonetisation still stir bitterness in that country to this day. Although Modi started this currency reform to improve the country’s broken monetary system, he infuriated the people of India, who felt that he had violated their rights and used political machinations to steal their money.

Modi demonetized high denomination rupee notes to rid the economy of black money, but his efforts failed on many fronts. The banks only collected 10,720 crore, or $107.2 billion, only a small portion of the 500-rupee and 1000-rupee notes that the government had estimated to be in circulation. But that was not the only calamity: the stock indices of NIFTY 50 and BSE SENSEX also plummeted to six percent and the country’s industrial production and gross domestic growth rate underwent huge losses.

Ironically, despite how vehemently the people of India protested this new demonetization policy, the governments of other countries felt emboldened by Modi’s daring India demonetization policy. They did not even wait to observe the results but hastened to do the same a month later. Consequently, the governments of Venezuela, Australia, and Pakistan also declared that they would demonetize some of their currency units to solve their own monetary problems.

4. Demonetization in Venezuela 

Venezuela was once the envy of South America. After geologists discovered vast oil reserves in the country, it enjoyed exponential GDP growth. By 1950, it was the 4th wealthiest country per capita income in the world. Journalists described the six-year dictatorship of Pérez Jiménez from 1952 to 1958 in glowing metaphors. They compared Venezuela to the oil-rich countries of the Middle East, to the cultural sophistication of the French Riviera, and to the robust economy of West Germany.

Now after decades of corruption, with each new administration blaming the one before it, this once-prosperous country has runaway inflation. At the time Nicolás Maduro’s government demonetized the valuable 100-bolivar bill, the rate of inflation analysts estimated the rate of inflation to be about 475%, with some claiming that it was already at 800% by the end of 2016.

On Dec. 11, 2016, roughly a month after Prime Minister Modi of India had declared demonetization of the rupee, Nicolás Maduro gave the citizens of Venezuela three days’ demonetization notice, warning them that the government would declare the country’s most valuable banknote worthless—although it counted for 77% of the cash in circulation. He fueled the ensuing panic by not declaring a definitive date when the government would replace the 100-bolivar note, only stating a higher denomination, somewhere between 500-bolivar to 20,000-bolivar, would replace the money.

Maduro’s plan was to disrupt the vast black-market sale of Venezuelan bolivars in Colombia, but it created repercussions that surprised him. Since he had given the country such short notice and only a vague outline of how and when the new currency would be available, his declaration sparked wave after wave of looting and violent protests throughout the country. Like the North Korean government seven years earlier, he was forced to retreat from his official stance. Under considerable pressure, he extended the deadline for the demonetization of the 100-Bolivar bill.

5. Demonetization in Australia

On December 14, 2016, Kelly O’Dwyer, Australia’s financial services and revenue minister, made a public announcement about how Australia was planning on demonetizing its $100 notes. Like Maduro, he demonetized the highest denomination; and like Modi, he wanted to shut down the shadow economy. However, unlike the Indian or Venezuelan government, the Australian government did not make the same mistakes. O’Dwyer floated the idea rather than issuing a demand. This led to public debates amongst analysts and did not stir any social upheaval.

6. Demonetization in Pakistan 

On December 19, 2016, the Pakistani Senate, too, took on the gray and black money markets by phasing out the 5,000 rupee note. This note accounted for 30% of the rupees in circulation in Pakistan. Osman Saifullah Khan, the Senator who proposed the motion, was quick to distance himself from Modi since both Pakistan and India had clashed in the Indo-Pakistan war of 1965 over Kashmir and Jammu. However, the notion of demonetization did not stir up any public protests in Pakistan because the government rolled out a long-term 3-5-year schedule.  The Senate also spelled out the benefits of such a move to the press—reduced tax evasion and the accumulation and hoarding of illegal wealth—to win over public sentiment.

How Can Demonetization Affect Currency Investing?  

A currency demonetization will not have an immediate effect on your decisions on when to sell foreign currency because it will not directly affect a country’s foreign exchange rate. It will, however, have an indirect effect on the exchange rate in the long run because it will temporarily reduce the gross domestic product growth and discourage foreign investments.

WHAT HAPPENS WHEN A COUNTRY GOES THROUGH DEMONETIZATION?

Demonetization can cause nationwide protests, looting, and violence if the government suddenly takes a large amount of currency in circulation out of the economy. This causes widespread panic because people fear a cash shortage. Although the government intends to replace the old currency units with a new currency unit, the transition has to be well-organized. People should have enough time to get their financial affairs in order, complete any financial transactions in process, manage any outstanding payments, and they should also be able to get the new currency units as soon as they turn the old ones in. The longer the delay in arranging a swap, the more agitated the population will become.

Still, to do it properly, a government has to take into account its own history. This is what the USSR and North Korea both failed to do, causing irreparable damage to the welfare of the people and the state of the economy.

Another common mistake is to force an accelerated rate of change. This is an error that India and Venezuela made. Australia avoided creating chaos by talking about reviewing the idea rather than taking drastic action. This created space for public debates, discussions about financial inclusion, and public consensus on how to manage a demonetization.

Pakistan handled the process of demonetization in the best way. The Senate first spelled out the benefits of the proposal to the press to avoid creating a shock to the nation. These benefits included curtailing black-market operations, clamping down on tax evaders, removing any fake currency in circulation, and making it more difficult for people to accumulate wealth illegally. They then proposed a long-term plan so that people would have plenty of time to replace their old currency units with new ones. If done the right way, demonetization can bring about positive economic reform.

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