103 replies to this topic

[lomeygoat]

They would loose credability fast if they screwed the world, and it would be the world they were messing with.

[HopefulTxn]

They would loose credability fast if they screwed the world, and it would be the world they were messing with.

How would they lose credibility fast by performing a value neutral manuever to their currency that has been done numerous times over the past few decades?

It's obviously not the outcome that we want... But Iraq, nor the Iraqi's or foreign investors would lose any value to what they actually had. Even speculators wouldn't lose value to what they held. If it happens that an RD does occur then they would be out the spread that they paid to dealers and such on both ends, but they wouldn't have lost any value from the actual currency.

[Sector]

Let's not kid ourselves here. With this recent news, I am convinced that this is ALL that will happen. The RV *is* the Redenomination and the Redenomination is the RV, plain and simple, nothing more will happen after this - this IS (sadly) the event we've been waiting for and it's not what we had all hoped for.

25000 old dinars will equal 25 NEW dinars.
50 old dinars will equal 0.05 NEW dinars.
etc etc.

It appears that ALL of the old banknotes will be traded in, so if you bought lower denominations in hopes of avoiding the three 0's removal, it won't make any difference as they'll have to phase out this entire batch of old banknotes. The exchange rate would have to change to match the new, redenominated currency, like so:

1000 old dinars x 0.000858001 = USD 0.86
1 new dinar x 0.858001 = USD 0.86

Sorry to ruin everyone's Monday but this is how I see it happening...

Deleting the zero's has nothing to do with the old currency in which we have. 25000 iraq dinar note will always be worth 25000 dinars.

Revaluation is not the same thing as a Redenomination period.

They are two seperate events (in a way) but you have to understand that the redenomination part would be first, and that IS the part that will affect us negatively....

When the redenomination happens you can take the dinar you own now and either exchange it for USD at the 1170 exchange rate or you can trade the bills you hold now for the new notes but it will be at a ratio of 1000 to 1. Only the new notes will actually see the RVd rate.....the old notes will not change value at all (which is the crappy part for us)

In any case, if they choose to redenominate, the only thing we can hope for is that they first of all let people outside the country exchange old notes for new, and that we can hold on to those new notes and hopefully see a 3 dollar rate years down the road....

A revaluation and redenomination are not the same thing no matter how you look at it. The CBI is stating that they will print new currency with out the zero's. They never said anything about revaluation of the Iraqi dinar.

25000 Iraqi dinar will always be worth 25000 dinars

Unfortunately redenomination and revaluation are not necessarily two separate events...

Not all revaluations are redenominations, but all redenominations are revaluations...

Revaluation is simply the change in value per currency unit, whereas redenomination is basically an explanation of how that value change per unit of currency will be achieved.

There are some examples of the term revaluation being used to describe the redenominations of Russia, Turkey and Romania.

That's not comparing those countries economic situations to Iraq, that is simply pointing out that the term revaluation can be used as a more broad descriptor of the event than using the term redenomination.

I say again revaluation is not the same thing as a redenomination. They totally two different meanings. CBI state that they will print new currency with out the zero's then the exchange rate between the new and old currency would be 1:1000. Meaning that a new 50 dinar note would be worth 50000. They never said anything about revaluation of the dinar.

25000 Iraqi dinar note will always be worth 25000 dinars.

[Butifldrm]

I have to ask this! Has there ever been a international reserve currency that has redenominated. I have not found one. It would take too much space to post the research.

For all you lopsters, explain this:

First let’s define a reserve currency. A reserve currency, or anchor currency, is a currency that is held in significant quantities by many governments and institutions[who?] as part of their foreign exchange reserves. It also tends to be the international pricing currency for products traded on a global market, and commodities such as oil, gold, etc.[citation needed]
This permits the issuing country to purchase the commodities at a marginally lower rate than other nations, which must exchange their currencies with each purchase and pay a transaction cost. For major currencies, this transaction cost is negligible with respect to the price of the commodity. It also permits the government issuing the currency to borrow money at a better rate, as there will always be a larger market for that currency than others.

said the Central Bank Adviser Mohammad Saleh appearance: the Iraqi dinar is not an international reserve currency to be treated abroad, we aspire to be the monetary policy of the Iraqi dinar portion of international reserves and this needs time." he said

http://www.microsofttranslator.com/bv.aspx?from=&to=en&a=http%3A%2F%2Fwww.almustakbalpaper.net%2FArticleShow.aspx%3FID%3D8402

[USMCVET]

Are the articles of late, suggesting that perhaps the new denominations exchange rate, is or will be equal to the dollar? I think so. So if I believe that, if and when they remove or delete the zeros from the old currency exchange rate of 1000, we will have our 1 to 1 exchange rate. Have the new denominations already been valued to equal the dollar and this article is stating that the new vs old exchange rate (as of now) is 1 to 1000, making it very easy ( in the near future) to remove the zeros from the old exchange rate? It seems pretty simple, just kidding. I really appreciate and respect all of the hard work and opinions of our Dinar Vet members- Thank You!

"I'm not a smart man, but I know what love is."


Read more: http://dinarvets.com...0#ixzz1njErLJIq

[keepmwlknfny]

A revaluation and redenomination are not the same thing no matter how you look at it. The CBI is stating that they will print new currency with out the zero's. They never said anything about revaluation of the Iraqi dinar.

25000 Iraqi dinar will always be worth 25000 dinars

Didnt say they were the same lol....I think your missing the point.....

They arent the same but they do almost always go hand in hand, and actually almost in all the redenomination articles they do mention that the move would make the dinar stronger in value....you know why? Because by redenominating they cut down the money supply drastically, making the remaining currency worth more.....less currency in circulation makes each unit worth more....

Your right, the 25k dinar will always be a 25k dinar note, but what matters for us is the exchange rate of those dinar. The redenomination would not change the exchange rate of the dinar we hold now, but the new dinar would be affected by it and would carry a higher value then the bills we hold now....you wont be able to take your 25k note and exchange it for 25,000 NEW dinar.....

I suggest you study Turkeys redenomination...that will most likely clear some things up for you....

I have to ask this! Has there ever been a international reserve currency that has redenominated. I have not found one. It would take too much space to post the research.

For all you lopsters, explain this:

First let’s define a reserve currency. A reserve currency, or anchor currency, is a currency that is held in significant quantities by many governments and institutions[who?] as part of their foreign exchange reserves. It also tends to be the international pricing currency for products traded on a global market, and commodities such as oil, gold, etc.[citation needed]
This permits the issuing country to purchase the commodities at a marginally lower rate than other nations, which must exchange their currencies with each purchase and pay a transaction cost. For major currencies, this transaction cost is negligible with respect to the price of the commodity. It also permits the government issuing the currency to borrow money at a better rate, as there will always be a larger market for that currency than others.

said the Central Bank Adviser Mohammad Saleh appearance: the Iraqi dinar is not an international reserve currency to be treated abroad, we aspire to be the monetary policy of the Iraqi dinar portion of international reserves and this needs time." he said

http://www.microsoft...spx%3FID%3D8402

The Euro was redenominated....so was the german mark and the french franc.....they all at one point were reserve currencies.....the german mark and french franc arent used anymore currently but still....

It really doesnt matter though....cause the dinar is not a reserve currency at this time and it will take YEARS to get to that point....its too early to tell if it would ever even happen....

[HopefulTxn]

I say again revaluation is not the same thing as a redenomination. They totally two different meanings. CBI state that they will print new currency with out the zero's then the exchange rate between the new and old currency would be 1:1000. Meaning that a new 50 dinar note would be worth 50000. They never said anything about revaluation of the dinar.

25000 Iraqi dinar note will always be worth 25000 dinars.

I provided links to show where the term revaluation can be, and has been, used to reference a redenomination. Revaluation is simply stating that the value of a currency unit is increasing, while redenomination is a more concise reference that states how that increase will be achieved. As stated before, all redenominations are revaluations, but not all revaluations are redenominations.

Nobody is arguing that a 25,000 note will not be worth 25,000 dinars. The question comes down to whether the exchange rate for that note will change or not when they introduce the new currency. Will it remain to be 25,000 x $0.000857 and the new currency be 25 x $0.857 making it a neutral move? Or will the 25,000 note become $0.857 along with the new 25 note?

Everyone that holds dinar wants it to be the latter option for obvious reasons. But what we want to have happen and what they choose to do may not be the same thing.

[Butifldrm]

Didnt say they were the same lol....I think your missing the point.....

They arent the same but they do almost always go hand in hand, and actually almost in all the redenomination articles they do mention that the move would make the dinar stronger in value....you know why? Because by redenominating they cut down the money supply drastically, making the remaining currency worth more.....less currency in circulation makes each unit worth more....

Your right, the 25k dinar will always be a 25k dinar note, but what matters for us is the exchange rate of those dinar. The redenomination would not change the exchange rate of the dinar we hold now, but the new dinar would be affected by it and would carry a higher value then the bills we hold now....you wont be able to take your 25k note and exchange it for 25,000 NEW dinar.....

I suggest you study Turkeys redenomination...that will most likely clear some things up for you....



The Euro was redenominated....so was the german mark and the french franc.....they all at one point were reserve currencies.....the german mark and french franc arent used anymore currently but still....

It really doesnt matter though....cause the dinar is not a reserve currency at this time and it will take YEARS to get to that point....its too early to tell if it would ever even happen....

Easy, were the people of France and Germany, given fair market value for their currency?
And as far as Turkey is concerned, inflation compared to Iraq was a major issue. Also, did Turkey have an investment of Nearly a trillion dollars by the USA? Just askin.

[dvforumuser]

A redenomination has nothing to do with a revaluation. Totally two separate meanings. Neither one effects us in a negative way.

An RD does effect us negatively as it takes up exchange potential if you will that an RV then can not use. When all the dust settles the final exchange rate for whatever dinars they end up with can't be more than around a dollar (or three if you like). So if an RD increases the rate 1000:1 to nearly 1 dollar, then an RV can not also be 1000:1 since there ins't any room left. If they RD 1000:1 then they could RV say 2:1 or 3:1 (maybe over time) and end up at 1 IQD to $2 USD or $3 USD respectively, but no more (not that a 2x return on investment would not be welcome). So they are related.

[keepmwlknfny]

Easy, were the people of France and Germany, given fair market value for their currency?
And as far as Turkey is concerned, inflation compared to Iraq was a major issue. Also, did Turkey have an investment of Nearly a trillion dollars by the USA? Just askin.

The people of france and germany were given the same value in return for exchanging the currency.....it would be no different from what the CBI is talking about doing. I think france was 100 to 1...dont remember germany off the top of my head.....but the citizens didnt lose anything....

Yes, Turkeys inflation was worse then Iraq, which is why they had 6 zeros instead of 3, but they both suffered the same result....a low valued currency and a heavily inflated currency which brought the USD in country as a preferred choice of currency....Turkey was suffering the same thing Iraq is now with dollarization....

To be honest, the amount of investments pouring into Iraq from the US doesnt affect whether a country should redenominate.....large amount of foreign investments doesnt reduce the money supply....and it doesnt erase the affects from periods of hyperinflation either....which are a few of the main reasons why redenominations are performed....

[Sector]

Not sure what you mean by "they almost go hand in hand"? Redenominations generally involves reducing the value of the currency.

Not sure what you mean by "exchange rate of the dinar we hold now"? The exchange rate compared to the dollar would be the same for both new and old currency. The exchange rate the CBI is referring when they say 1:1000 is between new and old currency. Has nothing to do with the exchange rate to the $ dollar.

Not sure what you mean by "you wont be able to take your 25k note and exchange it for 25,000 NEW dinar"? I'm not planning to exchange my 25000 dinar for new currency. The CBI stated that both currency will co-exsit for 1 year and the old currecny in which i have will be good for 10 years.

Turkey redenomination? What about it? In January 2005, Turkey replaced its currency (the Lira) with the ìNew Turkish Liraî (YTL), with a conversion rate of one million old lira to one new lira. Then they phased out the old lira over a period of time. Not sure how it relates to Iraq.

Since 1960 governments have redenominated their currencies on approximately 70 occasions.

An RD does effect us negatively as it takes up exchange potential if you will that an RV then can not use. When all the dust settles the final exchange rate for whatever dinars they end up with can't be more than around a dollar (or three if you like). So if an RD increases the rate 1000:1 to nearly 1 dollar, then an RV can not also be 1000:1 since there ins't any room left. If they RD 1000:1 then they could RV say 2:1 or 3:1 (maybe over time) and end up at 1 IQD to $2 USD or $3 USD respectively, but no more (not that a 2x return on investment would not be welcome). So they are related.

RD is just a redenomination of the value of currency. They are going to print new currency with out the zero's and then they are going to RD the face value of the new currency times 1000. They haven't said anything about revaluation of of the Irqai dinar. If they did can you please tell me the rate and the date?

The people of france and germany were given the same value in return for exchanging the currency.....it would be no different from what the CBI is talking about doing. I think france was 100 to 1...dont remember germany off the top of my head.....but the citizens didnt lose anything....

Yes, Turkeys inflation was worse then Iraq, which is why they had 6 zeros instead of 3, but they both suffered the same result....a low valued currency and a heavily inflated currency which brought the USD in country as a preferred choice of currency....Turkey was suffering the same thing Iraq is now with dollarization....

To be honest, the amount of investments pouring into Iraq from the US doesnt affect whether a country should redenominate.....large amount of foreign investments doesnt reduce the money supply....and it doesnt erase the affects from periods of hyperinflation either....which are a few of the main reasons why redenominations are performed....

December 10, 2004
REDENOMINATION OF TURKISH LIRA
Effective 1 January 2005, the Republic of Turkey will redenominate its currency by dropping six zeros.
Turkey's currency will be renamed "New Turkish Lira" and "New Kuruş", with one hundred New Kuruş
equal to one New Lira. It is intended that the term "New" will eventually be dropped. Turkey has also
made announcements concerning rounding, references to old lira in legal documents, and Turkish tax.
Information about the redenomination has been published by the Central Bank of the Republic of Turkey
and is available in English at http://www.tcmb.gov.tr/yeni/eng/ under the heading "New Turkish Lira".
Following consultations with Turkish counsel, Ahmed Pekin of Pekin & Pekin, and New York and
English counsel at Allen & Overy LLP, the Association understands the following:
• No plans exist to eliminate any Turkish lira rates or rate panels.
• No changes will be made to the days on which Turkish banks and settlement systems are
scheduled to be open.
• No plans exist to redenominate any outstanding Turkish bonds.
We understand that many ISDA members have already begun taking steps to prepare their systems to
receive New Turkish Lira, and, in the case of outstanding trades, to adjust for the redenomination. Other
members may wish to take similar steps in this regard and notify their counterparties to inform them of
the redenomination, if they have not already done so.
It is worth noting that the redenomination of Turkish lira involves a relatively straightforward change
involving a single currency. In contrast, the participation of multiple currencies in the euro raised
concerns about frustration of outstanding contracts, especially with regard to the elimination of the
commercial purpose of transactions designed to allocate exchange rate risk between two participating
currencies. These continuity concerns, and some of the concomitant tax and accounting concerns, are not
expected to arise with the redenomination of Turkish lira. Under the governing law of the ISDA Master
Agreements (either New York or English law), the redenomination would be extremely unlikely to
constitute the type of radical transformation or impossibility necessary to frustrate an outstanding
contract. In addition, as a matter of Turkish law, all references to old Turkish currency in legal
documents shall be considered to have been made to New Turkish Lira. It is expected that New York and
English law would operate in a similar way by reference to this Turkish rule of law regarding Turkey's
lawful currency (the lex monetae), assuring the continuity of outstanding Turkish lira contracts. ISDAInternational Swaps and Derivatives Association, Inc. 2
Members should note the following documentation issues that have come to our attention:
• The definition of "Turkish Lira" found in Section 1.7(ag) of the Annex to the 2000 ISDA
Definitions (June 2000 version) and in Section 4.3(bj) of Annex A to the 1998 FX and Currency Option
Definitions (September 2000 version) states that "'Turkish Lira' and 'TRL' each means the lawful currency
of the Republic of Turkey". Members should note that the ISO code for New Turkish Lira will be
"TRY", and Turkey will have both TRL and TRY as currency codes in 2005. The Association is already
working with EMTA, Inc. and the Foreign Exchange Committee with regard to the definition of Turkish
Lira found in Section 4.3(bj).
• The rounding rule for Turkish Lira found in Section 8.2 of the Annex to the 2000 ISDA
Definitions (June 2000 version) states, "Round to the nearest whole Turkish Lira (with one half Turkish
Lira being rounded up)". Members should note that the redenomination will mean that the appropriate
rounding rule may instead be to round to the nearest New Kuruş. This would be consistent with the
approach to be taken in Turkey's domestic markets. For outstanding trades, members may wish to clarify
this point with their counterparties. For trades on or after 1 January 2005, at least until such time as the
Annex is updated, members may wish to address this point in their confirmations.
At this time, no other documentation issues regarding New Lira have been brought to our attention.
Please do not hesitate to contact Katherine Darras at kdarras@isda.org if you have any questions.


Turkey has nothing to do with Iraq. Iraq RV process is good to go!!!

25000 Iraqi dinar note will always be worth 25000 dinars!!!!!

Edited by Sector, 28 February 2012 - 10:35 PM.

[Sector]

I provided links to show where the term revaluation can be, and has been, used to reference a redenomination. Revaluation is simply stating that the value of a currency unit is increasing, while redenomination is a more concise reference that states how that increase will be achieved. As stated before, all redenominations are revaluations, but not all revaluations are redenominations.

Nobody is arguing that a 25,000 note will not be worth 25,000 dinars. The question comes down to whether the exchange rate for that note will change or not when they introduce the new currency. Will it remain to be 25,000 x $0.000857 and the new currency be 25 x $0.857 making it a neutral move? Or will the 25,000 note become $0.857 along with the new 25 note?

Everyone that holds dinar wants it to be the latter option for obvious reasons. But what we want to have happen and what they choose to do may not be the same thing.

A revaluation has nothing to do with a RD. The CBI has not said a thing about the RV if they did can you please tell me what the rate and what the date is?

The CBI only stated they are going to remove the zero's from the new currency and RD the new currency 1000 times. Meaning 50 dinar note will equal 50000 dinars, at the current exchange rate of 1166 to $1.

There are to different exchange rates:

1. the exchange rate to the dollar 1166 to $1

2. the exchange rate between the new and old currency which is 1:1000

I have no clue where you get your numbers from.

[keepmwlknfny]

Not sure what you mean by "they almost go hand in hand"? Redenominations generally involves reducing the value of the currency.

Redenominations dont devalue a currency....thats not how it works....If you read up on Turkeys lop, you will see that the old lira kept its value, while the new lira had a value closer on par with the USD....

Not sure what you mean by "exchange rate of the dinar we hold now"? The exchange rate compared to the dollar would be the same for both new and old currency. The exchange rate the CBI is referring when they say 1:1000 is between new and old currency. Has nothing to do with the exchange rate to the $ dollar.

The exchange rate would not be the same for both....again, look deeper into Turkey and the different exchange rates to the USD.....you will see that the new lira and the old lira had two different exchange rates to the USD.....thats what would happen if Iraq redenominates.....




Not sure what you mean by "you wont be able to take your 25k note and exchange it for 25,000 NEW dinar"? I'm not planning to exchange my 25000 dinar for new currency. The CBI stated that both currency will co-exsit for 1 year and the old currecny in which i have will be good for 10 years.

If you plan on exchanging your 25k note for USD, then you would exchange at the 1166 rate.....not the higher rate that would be with the new dinar...all is affected across the board....everything adjusted by three zeros even the exchange rate to the USD....(for the new currency)

Turkey redenomination? What about it? In January 2005, Turkey replaced its currency (the Lira) with the ìNew Turkish Liraî (YTL), with a conversion rate of one million old lira to one new lira. Then they phased out the old lira over a period of time. Not sure how it relates to Iraq.

Your gonna have to read more then that to understand this topic in its entirety.....the other posters here are just trying to help you understand it, but you will have to do some legwork on your own as well....

[keepmwlknfny]

http://www.rferl.org...n/24245867.html

http://translate.goo...s/1-72635-.html

http://www.iraq-busi...s-new-currency/

[HopefulTxn]

A revaluation has nothing to do with a RD. The CBI has not said a thing about the RV if they did can you please tell me what the rate and what the date is?

I guess the examples using the term revaluation when a redenomination occurred just don't count...

Right or wrong, the term revaluation is used many times to describe an RD event.

In regards to CBI not using the term in this manner, here's a LINK.

[keepmwlknfny]

I guess the examples using the term revaluation when a redenomination occurred just don't count...

Right or wrong, the term revaluation is used many times to describe an RD event.

In regards to CBI not using the term in this manner, here's a LINK.

This one is gonna be a doozie! LOL I think we both are doing a good job explaining this topic to him but maybe we arent?

[Farmall]

This one is gonna be a doozie! LOL I think we both are doing a good job explaining this topic to him but maybe we arent?

When a person is convinced in their thought process, it does not matter what else is presented!

Everyone of us will certainly be enlightened when the RD/RV process is completed. We can only hope it works in our favor, although imo it does not look all that wonderful.

[keepmwlknfny]

We can only hope it works in our favor, although imo it does not look all that wonderful.

No kidding!! I got all my fingers and toes crossed!!

[JayP]

When a person is convinced in their thought process, it does not matter what else is presented!

Everyone of us will certainly be enlightened when the RD/RV process is completed. We can only hope it works in our favor, although imo it does not look all that wonderful.

Unfortunately you are right on the mark with this one, if the CBI should follow through with what they have been saying, then it would not be good. I have posted this in the past, and based on some of the comments that I have read above, it would seem that some people have not read this.

I would urge anyone that does not understand the process of a redenomination, the advantages and disadvantages, and why countries opt to go down this road, to read this document, as it is extremely enlightening, and will help people better understand what we may be looking at in terms of potential outcomes.
http://www.unc.edu/~lmosley/APSA%202005.pdf

I read above where someone above wrote that redenominations generally reduce the value of the currency, which is not really true either. The new unit of currency is generally given a new rate moving the decimal over to the left by the amount of zeros removed from the currency, but there are cases, such as the 2003 change of the IQD where old for new was exchanged 1:1, therefore there was not a change in rate as a result. This is not the case this time, as they have specifically stated they desire a 1000:1 old for new exchange.

[quadkidd1]

Just a thought....
How could Iraq come out with anything but these articles that suggest an RD/ Lop.
They couldn't.
Iraq could never spell it out any other way than what they are doing.
If they stated an imminent RV what do you suppose would happen then?
I am not saying there is a guaranteed RV but who really knows anyway.
Lots of misinformation out there
obviously corruption ,
uncertain developments...
and a lot of good pro and con opinions about the IQD future.
I just hope for an RV and try to remain positive!
JMVHO
Quad