Iraqs budget is 84 Trillion dinar for 2010.
They pay for that budget by selling oil for dollars. They then use those dollars to buy back dinar to spend on the budget.
They would need to be buying back 1.6 Trillion dinar a week to keep the money supply from growing. They are not buying that much back, that's why the money supply continues to grow. If they weren't buying what they have been, then money supply would have sky rocketed and the exchnage rate would have gotten worse.
All of this has just been Iraq demonstating that they can maintain a stable exchnage rate.
Soon they will devide everything by 1000 and continue on their way.
Dow Jones Newswire: A current 25,000 Iraqi dinar banknote will become IQD25, and a dollar will equal only 1.17 dinars.