Dinar soars on news of oil export deal

Dinar soars on news of oil export deal

BAGHDAD (Reuter): A tentative agreement on procedures for implementing limited Iraqi oil sales has strengthened the local currency against the U.S. dollar, traders and money changers said yesterday.

Iraq's dinar currency soared to 950 to the dollar on Baghdad's black market from about 1,200 early in the week, they said. Government-licensed exchange houses offered 890 dinars for one dollar.

Traders attributed the latest surge in the dinar's value to the resolving of obstacles regarding the selection of overseers to monitor Iraqi oil contracts. They also said absence of criticism on the part of the official press of impediments by the U.S. was also a contributing factor.

Official newspapers yesterday highlighted the agreement in their front pages. The ruling Baath party newspaper said oil sales procedures by U.N. sanctions committee would be ready on Friday.

"The value of the dinar has increased against the dollar as soon as the announcement came from New York that the sanctions committee has finally reached an agreement to sell our oil," one trader said.

Iraq's oil deal with the United Nations allows oil sales worth US$2 billion in six months for relief purposes. The issuing of oil export procedures and agreement to Baghdad's food distribution plan are key requirements for the unleashing of partial exports.

The signing of the oil pact on May 20 pushed the dinar to about 500 to the dollar from 3,000 early in the year.

Prices of essential commodities, traders said, did not react to yesterday's surge in the dinar.

A kilogram (2.2 lb) of sugar was still offered for 700. Similarly a tray of 30 eggs fetched about 2,150, the price prevalent early in the morning.