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phlip
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Posts posted by phlip
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Prior to the inevitable redenomination of the existing Iraqi Dinar banknotes and coins, the only way to truly invest in the IQD and actually see a return on your investment is to open a Warka Bank account and then wait for an international revaluation of the IQD against the USD.
Altering the face value of a currency without reducing its (fixed) foreign exchange rate is a redenomination, not a lop and not a revaluation.
Revaluation (RV) means a calculated rise in a country’s official (fixed) foreign exchange rate of its own currency, relative to another country’s currency.
Mazhar Mohammad Saleh, a senior member of the CBI Advisory Panel has repeatedly stated publicly that the GOI has adopted a CBI drafted two-pronged plan to restructure the national currency ~ to include physical banknotes and coins and electronic bank accounts.
One prong is the long overdue (domestic) redenomination of the existing large denomination banknotes by introducing new banknotes and coins into circulation.
The other prong is a simultaneous (international) revaluation of the new banknotes and coins to increase the value of the IQD against the USD.
Iraqi Dinar Currency
Buying IQD on the internet and/or holding IQD in cash form, in my opinion is useless for a foreign investor especially since the CBI is about to recall all the existing banknotes and exchange them for the new banknotes (and the new banknotes probably won’t be available for trade-in or purchase via the internet once they are introduced into circulation).
Existing banknotes with the (current) CBI fixed exchange rate of 1: 1166, can only be used inside Iraq, will never be used internationally and will never be able to be universally exchanged outside of Iraq.
Existing IQD Banknotes:
• IQD 25,000 = $US 21.44
• IQD 10,000 = $US 8.58
• IQD 5,000 = $US 4.29
• IQD 1,000 = $US 0.86
• IQD 500 = $US 0.43
• IQD 250 = $US 0.21
• IQD 50 = $US 0.04
There are also IQD 100 and IQD 25 coins but they are not currently in circulation, and are not for sale to foreign investors on the Internet.
New banknotes with the anticipated CBI fixed exchange rate of 1: 1.17 are still yet to be issued, will replace the existing notes and the USD over time; and will be able to be exchanged and used for purchases outside of Iraq ~ only after an official international revaluation has been established and recognized by the IMF, World Bank and the rest of the international community.
New IQD banknotes and coins not yet issued:
• IQD 100 = $US 85.76
• IQD 50 = $US 42.88
• IQD 25 = $US 21.44
• IQD 10 = $US 8.57
• IQD 5 = $US 4.28
• IQD 1 = $US 0.85
• IQD 0.50 = $US 0.42
• IQD 0.25 = $US 0.21
• IQD 0.10 = $US 0.09
• IQD 0.05 = $US 0.04
When the redenomination process starts (reportedly in late 2012 or early 2013) these new banknotes and coins with their new CBI (fixed) exchange rate will be introduced into circulation and will co-exist with the already existing banknotes and their old CBI (fixed) exchange rate along with the USD, until the existing notes and the USD are sufficiently removed from circulation ~ to the satisfaction of the CBI and the GOI.
In the recent past (2003) when the existing notes replaced those with Sadaam’s picture on them the process took approximately 90 days. That was because of the war and the Coalition Provisional Authority (the US and the British) introducing both the USD and the currently used IQD banknotes (made in England) into the Iraqi economy. Everybody was in a hurry so that the economy didn’t collapse completely.
This time around the CBI is going to allow both kinds of banknotes (the newer lower denomination bills and the existing larger denomination bills) to co-exist for a (reportedly) 1 - 2 year period until the CBI is satisfied that the redenomination has been successful.
Redenomination success would mean that the majority of the existing large denomination IQD banknotes are exchanged out of circulation and the Iraqi citizens become confident enough in the value of their own new low denomination currency that the use of USD banknotes is phased out as well.
The Saddam banknotes could not be spent outside of the borders of Iraq.
Instead, there was an international version of the IQD that was made in Switzerland and recognized and exchanged for other currencies by the international community.
Similarly, the existing IQD banknotes cannot be spent outside of the borders of Iraq.
Instead of an international version of the IQD made in Switzerland, the Iraqis currently use the USD, made in the US, and recognized and exchanged for other currencies by most of the international community.
In order for the new low denomination IQD banknotes to replace the USD as the Iraqi international currency, the new low denomination IQD banknotes will have to recognized and be exchangeable by the international community in order for them to be used for the purchase and importation of goods and services into Iraq.
UN Sanctions under Chapter 7 will probably have to be resolved and the Iraqi HCL will have to be in place (and effective) before the international community will unilaterally recognize the new lower denomination Iraqi banknotes (yet to be issued) as the legitimate international (and exchangeable) currency of Iraq.
That being the case, when the redenomination process starts, all three types of currency (the existing high denomination IQD, the new low denomination IQD and the USD) will at first all be recognized, exchanged and used inside the borders of Iraq and only the USD will (still) be spendable outside of Iraq.
The existing large denomination banknotes will be exchanged at the current CBI rate of $1:1166 (or whatever the exchange rate is by the time redenomination starts) and the new lower denomination banknotes will be exchanged at the new rate of $1:1.166.
That way an existing IQD10000 banknote and a new IQD10 banknote will both be able to be exchanged for US$8.57 and the economy will absorb the two different rates and the 3 different currencies (including the USD) smoothly and without a lot of strife.
Iraqi merchants will just have to decide whether to advertise their goods and services at the existing currency rate or the new currency rate. Either way, IQD10000 or IQD10 or US$8.57 will all spend equally.
Since the existing notes will never have the new exchange rate attached to them, they will not even be useful for future interbank transfers inside Iraq and will likely just be destroyed once they have been collected.
The Iraqi people will certainly be able to cope with using three different currencies, because they are already dealing with the existing IQD and the USD.
What the Iraqi people really want is to become international citizens again with their own IQD international currency, instead of having to depend on the USD to purchase goods and services outside of Iraq.
In fact, the Iraqis are so ready for equality that they are already using the existing domestic IQD notes against the USD in a de-facto ‘unofficial’ street level exchange rate of 1: 1000.
For example, right now in Iraq and mainly because there’s no practical way to make small change:
• IQD 25,000 = $US 25
• IQD 10,000 = $US 10
• IQD 5,000 = $US 5
• IQD 1,000 = $US 1
• IQD 500 = $US 0.50
• IQD 250 = $US 0.25
• IQD 50 = $US 0.05
Something that needs to be re-emphasized ~ the existing IQD banknotes and coins can only be used and/or exchanged for USD inside Iraq ~ nowhere else.
So, if anyone is holding the existing large denomination banknotes outside of Iraq, how are they supposed to cash them in for USD outside of Iraq?
The answer is that they are not going to be able to ~ not now, not after the redenomination process starts inside Iraq and not even after the international revaluation of the new Iraq Dinar notes has been declared and recognized.
The reason is that no bank outside of Iraq will ever recognize the existing large denomination banknotes as legitimate international currency and so will refuse to cash them in, even at the existing exchange rate of 1: 1166.
There will of course be exceptions, whereby an enterprising financial institution or even a forward thinking US bank may choose to trade through a third party that is willing to transport the physical notes back to Iraq for the final exchange with the CBI; however, the existing large denomination IQD notes will never be on that same bank’s ‘accepted currencies’ list for foreign exchange with the USD. The larger than normal fee for this (potential ) exceptional service will most certainly wipe out any profit that might be anticipated.
Anyone holding existing IQD notes outside of Iraq won’t even be able to get their costs back outside of Iraq (minus exchange fees).
When an international revaluation takes place and the IQD is again recognized by the global community, it will be only the new notes with the new rate that will be recognized and exchanged and/or accepted as payment outside of Iraq ~ not the existing notes with the larger denominations.
There is at least one “Dinar Guru” out there with three internet sites tied to an IQD news network that claims that he will be able to get the best group rate available when it comes time to “cash in” your IQD banknotes.
All you have to do to get this great exchange rate for your existing IQD banknotes is join his VIP group and pool your banknotes together with a larger group for the leverage of a bulk exchange to take advantage of the best rates available.
His stance is confusing because he seems to combine the redenomination process and the international RV into one event and at the same time ignores or seems to dismiss what the CBI senior board members have already put out to the public regarding the redenomination of the existing banknotes.
Here is a November 2011 quote from him:
“If the RV is at a dime and there is a mandatory turn-in of old notes, I am going to cash out half or more ~ I will be happy with that return. Then, I’ll reinvest the other half back into Dinar, so that I can take advantage of the future rate increases. Many people who have never heard of the Dinar will hear about it, and they will buy Dinar at US$0.10 because honestly, once the rate goes that high I don’t think it will go down. It will only go up and others will think so too. So, the notion that nobody will invest at a low rate of US$0.10 is just wrong in my opinion. Regarding the lower notes (the existing IQD500, IQD 250 and IQD50 notes), if there is a recall or a mandatory cash in of the notes, it will be across the board. Don’t listen to the pumpers that say low notes will be safe. That’s just a sales pitch”
This guy has about 30,000 to 35,000 followers (his estimate) holding IQD cash who are heeding his advice and expecting to be able to cash in their existing IQD banknotes through him when the time comes. I’m sure that his popularity has increased in this regard, since most who have inquired about cashing in IQD with their local bank have probably already been told that it’s a ‘scam’ and can’t be done. Now, he is their only hope.
A foreign investor holding the existing large denomination notes outside of Iraq may be able to at least retain what value the CBI gives the notes now by immediately converting the physical notes into USD cash (via EBay or an online IQD trader) and then wire the USD cash into an electronic line item in a bank account ~ provided the bank will support an IQD account. There are not too many (if any) of those banks around outside of Iraq.
Even though the value the CBI has assigned to the notes at the current rate of 1: 1166 might be far less than what the foreign investor paid for them over the Internet; it would still be a way of rescuing the investment from being a total loss, and might even be a way of gaining more value (at least up to par) through financial products that such a bank has to offer ~ such as Certificates of Deposit or Savings Accounts with higher rates of interest than are currently offered by US banks.
Out of necessity, such a bank would have to be a private bank and probably would also have to be located in Iraq in order to accept physical notes for a deposit.
One such bank is the Warka Bank for Investment and Finance with 120 plus branches and 350 plus ATM machines scattered throughout Iraq. www.warka-bank.com
Right now Warka Bank is under the Guardianship of the CBI due to liquidity problems which have made it temporarily insolvent, but that state of affairs will soon be adjusted by an independent Auditor appointed by the CBI.
Warka Bank IQD Account
Once you have opened an account at Warka ~ with both USD and IQD savings accounts ~ you can wire transfer USD to your Warka account and then choose to deposit the funds in either your USD or your IQD account.
Besides remarkably higher interest rates offered for both USD and IQD savings accounts and certificates of deposit, Warka also has an Iraqi Stock Exchange (ISX) department which acts as a broker for anyone wanting to invest in the ISX.
Current interest rates are:
4% interest on a USD Savings account
5% interest on a USD Certificate of Deposit
7% interest on an IQD Savings account
8.5% on a 3 month IQD Certificate of Deposit
9.5% on a 6 month IQD Certificate of Deposit
10.5% on a 12 month IQD Certificate of Deposit
There is strong historical evidence from other (recent) currency redenominations that when the redenomination process is started in Iraq, electronic IQD bank accounts will also have their balances adjusted by the same method as the physical banknotes and coins. That is, the total bank account balance will be reduced a thousand fold with the movement of the decimal point 3 places (to the left), but at the same time the exchange rate will be increased upward a thousand fold so that the value in USD remains the same after the redenomination as it was before the redenomination. In such a case, all electronic accounts in IQD would be affected worldwide; including the foreign currency reserves held by the various central banks and governments around the world.
Emotionally, it might be wise to accept that even thousands of USD invested in an electronic IQD bank account won’t make anyone an instant overnight millionaire ~ and that would hold true for Iraqi Citizens as well as foreign investors outside of Iraq.
The advantage of a Warka Bank account (and other private bank accounts inside Iraq) is that because they are electronic they will be uniquely positioned to take advantage of future international revaluations of the IQD ~ possibly even up to past exchange rates of US$2+ to US$3+ per IQD. That could double or even triple the initial investment.
The Iraqi Stock Exchange (ISX)
Trading on the ISX through a Warka ISX Department broker could mean explosive potential as the country and core infrastructure companies grow with the economy.
The process to be eligible to trade on the ISX with Warka Bank appears to be at least a 4 month process to receive a Warka ISX trading account number but may well be worth the effort for future wealth.
In 2011 the aggregate growth of the Iraqi Stock Market was 36% for the year.
It is expected to do as well or better in 2012.
Until the Warka Bank Audit process is over you won’t be able to wire transfer USD back to the States or purchase stock on the ISX through the Warka Bank ISX Department.
It would be wise to visit www.iraq-businessnews.com/category/banking-finance often in order to keep up on the latest news of Warka Bank, the Iraqi Stock Market and the Iraqi Dinar Re-denomination process.
I don’t see the USD ever recovering from its decades long decline, so I’m sticking with gold, silver and copper bullion and the IQD at Warka to put my savings into.
The IQD Revaluation (RV)
When all of this redenomination has successfully taken place, the Iraqi currency as a whole (including the new lower denomination IQD banknotes, electronic Warka accounts and stock prices on the ISX) will (finally) be in a position to incorporate a significant revaluation to match the growing Iraqi economy.
A revaluation could take the exchange rate from $1:1.166 to $1:1 or even more; but while the rest of the world (and especially IQD foreign investors) wouldn’t mind a revaluation to $2:1 or even $3:1, the CBI and the GOI are going to want to keep that exchange rate as low as possible in order to be competitive exporting Iraqi oil, natural gas, gold, silver, dates, copra, etc……
The GOI will also want to encourage tourism and foreign investment into its infrastructure, so it will serve the Iraqi economy best to be the new international “bargain” by keeping the exchange rate of its currency as low as possible.
For us IQD investors it will mean a chance to possibly double or triple our Warka investments in the future; but in the meantime while we are waiting, we can still enjoy 7% on savings, 8.5%, 9.5% and 10.5% on CD’s and possibly even more by investing in the ISX.
You never know when an Iraqi company might suddenly take off and become the next “Microsoft” of the investing world, especially with the encouragement of foreign investment and technology.
No foreign investor or any Iraqi citizen for that matter is suddenly going to be a millionaire based just on a new revaluation of the IQD, but that doesn’t mean the investment is a bad idea. In fact, in my opinion it’s still the best choice available to the average investor.
For additional information on the owner’s of Warka Bank go to:
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20 MillionDinar:
Thanks for your condolences; however, there is no loss here. The money simply stayed in the aforementioned Warka Client’s account.
The Warka Client mentioned in this post is still earning 7% on the money when it’s in his IQD account and 4% when it’s in his USD account.
I myself managed successfully to wire transfer funds from my own account 3 times within the last 12 months and am witness to another Warka Client being recently successful also.
My wire transfer last September took 14 days, my wire transfer this past November – December took 17 days and my last wire transfer just this past February – March took 24 days to complete. I also witnessed a friend’s wire transfer that was completed in just 9 days this past February. The Warka Client mentioned in the post was apparently just a little bit too late with his request.
The major problem I believe is that Citibank, NY is refusing to do business with Warka Bank while Warka remains insolvent. Since there is no alternative US based correspondent bank offered by Warka, there is no way for wired funds to re-enter into the Federal Reserve Bank’s system and therefore no way for them to be forwarded onward to someone’s individual bank.
For wire transfers going the other way (that is, from a local US bank to Warka), Warka Bank has already informed those clients that have asked that they are now directed to use Warka’s corresponding bank in Germany ~ Commerzbank.
This is according to Warka’s “updated” working procedures; even though, on their website, they still list Citibank, NY as their US correspondent bank.
So, it appears that we can still deposit funds into our Warka accounts via the Commerzbank in Germany; but we won’t be able to wire transfer funds back to the US or to purchase stock on the ISX through the Warka ISX department until Warka finalizes its affairs with the Iraqi Company Registration Office and the bank’s working capital increases to a point where it is again considered to be solvent.
Basically, it looks like Warka will be allowed to deposit all the incoming cash it can get to raise the balance sheet in its favor; whereas the Auditor won’t allow outgoing cash for either wire transfers or ISX purchases until he finds a way for Warka to boost its operations by either selling assets or collecting outstanding debt owed to it. From an accounting point of view it makes sense.
The point is that although wire transfers from Warka through Citibank, NY to a stateside account are probably not possible right now, they most likely will be again when the Iraqi Central Bank Auditor completes his work and Warka’s liquidity problems have been solved.
As examples of what I’ve outlined above, here are some reprinted email correspondences from Warka Bank to clients as found on certain forum posts at www.dinarvets.com:
In answering one Warka Client’s inquiry regarding ISX stock purchases, Warka answered with:
The CBI has been appointed guardian and trustee of the bank to support the bank in finalizing its capital increase and boost its operations as well as collecting its debt from creditors
The daily operations of the bank are running smoothly and regularly where we are accepting deposits and opening accounts standard daily practice
With regards to Warka stock once we finalize our affairs with the Iraqi Company Registration Office and Capital Increase we will trade regularly on the ISX
Thank you for banking with us!
Best Regards,
ISX Department
Warka Bank for Investment and Finance
As to the problem of having recent wire transfer (deposit) funds bounce back from Citibank, NY; on 10 April 2012 Warka answered an email inquiry with the following:
According to our updated working procedures your wire transfers are to be directed to our corresponding bank in Germany through Commerzbank in accordance with the wire instructions confirmed by our bank
Below are Warka Bank for Investment and Finance account details at Commerzbank in which you direct your USD bank wire transfer to fund your account at our bank noting that it is important to also include your Warka USD savings account number and full name when sending funds to our bank.
Receiving Bank Name: Commerzbank
Receiving Bank Branch: AG Frankfurt, Germany
Receiving Bank Branch Address: 60261 Frankfurt, Neue Mainzer Stasse 32 – 36, Frankfurt, Germany
Receiving Bank Branch ID: BLZ 50040000
Receiving Bank Account Name: Warka Bank for Investment and Finance
Receiving Bank Account Number: 400875402000
SWIFT Address: COBADEFFXXX
Beneficiary Account Name: (Your Government Issued ID full name here)
Beneficiary Account Number: 790 / ###### / 2 / 2521 / 000
Upon sending your funds please notify our customer accounts department at c.accounts@warka-bank-iq.com to send you a confirmation once your funds have been received and credited to your account noting that it takes 4 – 5 business days to receive an international payment where Friday and Saturday is a weekend in Iraq.
The USD funds transferred will be exchanged to IQD and further credited to your account noting that the minimum balance will be maintained in your USD account $150.
The bottom line is that we’ll just have to wait for the Auditor to finish before wire transferring USD back to the US or purchasing stock on the ISX through Warka’s ISX Department.
In the meantime it looks like we can still send USD for deposit and purchase CD’s.
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Below is a linked list of articles posted at www.iraq-businessnews.com:
• 17 May 2010 ~ Removing Three Zeros from Iraqi Dinar will Help the Economy
• 30 June 2010 ~ Knocking Zeros Off Currency a Long Process
• 15 July 2010 ~ Government Criticized on Value of the Iraqi Dinar
• 24 August 2010 ~ Zeros Will Not be Removed from Iraqi Currency
• 14 September 2010 ~ Central Bank Wants to Drop Zeros from Iraqi Dinar?
• 25 September 2010 ~ Redenomination an unlikely priority for the CBI
• 17 October 2010 ~ Alsumaria TV to Re-Run Dinar Re-Denomination Prog
• 20 October 2010 ~ Removing Zeros From Iraq’s Currency Requires ‘Consultation’
• 21 October 2010 ~ The Future for the Iraqi Dinar
• 26 October 2010 ~ Japanese Iraqi Dinar Scam
• 7 December 2010 ~ History’s lesson for the dinar
• 9 March 2011 ~ Iraq May Legislate on Currency Exchange
• 29 march 2011 ~ Iraqi Dinar Revaluation Enthusiasts are Unaware of Bernie Madoff’s Fame
• 30 March 2011 ~ IMF Suggests Stable Iraqi Dinar
• 14 April 2011 ~ Iraq Central Bank ‘To remove 3 Zeroes from Dinar”
• 27 June 2011 ~ Iraq Prepares to Redenominate its Currency
• 29 June 2011 ~ Reports of New Fake Dinars in Circulation
• 18 July 2011 ~ Iraq’s Central Bank Considers New Currency
• 17 August 2011 ~ Wisconsin Warns About Iraqi Dinar
• 31 August 2011 ~ New Iraqi Dinar to be Harder to Counterfeit
• 4 September 2011 ~ New Iraqi Dinar – “Corruption and Money Laundering”
• 6 September 2011 ~ Iraq: $58bn in Currency Reserves, Should Redenominate Soon
• 10 September 2011 ~ Video on Rumoured Revaluation of Iraqi Dinar
• 7 October 2011 ~ Colorado Pulls Plug on Dinar Promoter
• 1 November 2011 ~ Your Guide to the Iraqi Dinar
• 28 November 2011 ~ Iraqi Central Bank to Issue New Notes
• 4 December 2011 ~ Impact Iraq: Can the Country Save Itself from Global Economic Crises?
• 14 December 2011 ~ CBI Discusses Dropping Three Zeroes from Currency
• 19 December 2011 ~ Fake Dinar Gang Busted
• 3 January 2012 ~ Central Bank Defends Weak Iraqi Dinar
• 12 January 2011 ~ Iraqi Dinar Under Attack
• 24 January 2011 ~ Iraqi Dinar Increases in Value
• 21 February 2011 ~ Removing Zeros from Iraqi Dinar to Start in Sept
• 22 February 2011 ~ Al-Qaeda Believed to be Behind Iraqi Dinar Racket
• 27 March 2012 ~ More Details of New Iraqi Dinars
• 1 April 2012 ~ APRIL FOOL: Worldwide Celebrations as Iraqi Dinar Revalues 1:1000!
• 4 April 2012 ~ Central Bank Tightens Rules on Buying Dollars
• 11 April 2012 ~ Iraq Has Cash Reserves to Fight Dinar Depreciation
• 13 April 2012 ~ Iraq Halts Plans to Drop 3 Zeros from Dinar
These articles are posted under the Banking and Finance Section and reach back over the last two years. The articles were selected to focus on the Iraqi currency and the redenomination process in order to provide the biggest picture possible about the reality of investing in the Iraqi Dinar by actually buying and holding the cash.
Buying IQD on the internet and/or holding IQD in cash form, seems useless for a foreign investor especially since the CBI is about to recall all the existing banknotes and exchange them for the new banknotes (and the new banknotes probably won’t be available for trade-in or purchase via the internet once they are introduced into circulation).
It will be the new low denomination banknotes that will be subject to revaluation, and eventual recognition by the international community, not the existing high denomination banknotes that everyone is holding now (including all the Iraqi citizens).
When the then local IQD banknotes (with Saddam’s picture on them) were phased out and exchanged for the currently used banknotes and/or USD, it took about 90 days until the Saddam banknotes were declared void.
That was because of the war and the Coalition Provisional Authority (the US and the British) introducing both the USD and the currently used IQD banknotes (made in England) into the Iraqi economy. Everybody was in a hurry so that the economy didn’t collapse completely.
This next time around the CBI is going to allow both kinds of banknotes (the newer lower denomination bills and the existing larger denomination bills) to co-exist for a (reportedly) 1 - 2 year period until the CBI is satisfied that the redenomination has been successful.
Redenomination success would mean that the majority of the existing large denomination IQD banknotes are exchanged out of circulation and the Iraqi citizens become confident enough in the value of their own new low denomination currency that the use of USD banknotes is phased out as well.
The Saddam banknotes could not be spent outside of the borders of Iraq.
Instead, there was an international version of the IQD that was made in Switzerland and recognized and exchanged for other currencies by the international community.
Similarly, the existing IQD banknotes cannot be spent outside of the borders of Iraq.
Instead of an international version of the IQD made in Switzerland, the Iraqis currently use the USD, made in the US, and recognized and exchanged for other currencies by most of the international community.
In order for the new low denomination IQD banknotes to replace the USD as the default Iraqi international currency, the new low denomination IQD banknotes will have to recognized and be exchangeable by the international community so that they can be used for the purchase and importation of goods and services outside of Iraq.
UN Sanctions under Chapter 7 will probably have to be resolved and the Iraqi HCL will have to be in place (and effective) before the international community will unilaterally recognize the new lower denomination Iraqi banknotes (yet to be issued) as the legitimate international (and exchangeable) currency of Iraq.
That being the case, when the redenomination process starts, all three types of currency (the existing high denomination IQD, the new low denomination IQD and the USD) will at first all be recognized, exchanged and used inside the borders of Iraq and only the USD will (still) be spendable outside of Iraq. The existing large denomination banknotes will be exchanged at the current CBI rate of $1:1166 (or whatever the exchange rate is by the time redenomination starts) and the new lower denomination banknotes will be exchanged at the new rate of $1:1.166.
That way an existing IQD10000 banknote and a new IQD10 banknote will both be able to be exchanged for US$8.57 and the economy will absorb the two different rates and the 3 different currencies (including the USD) smoothly and without a lot of strife.
Iraqi merchants will just have to decide whether to advertise their goods and services at the existing currency rate or the new currency rate. Either way, IQD10000 or IQD10 or US$8.57 will all spend equally.
When the rest of the international community finally recognizes and accepts the new lower denomination IQD banknotes as legitimate payment for goods and services outside of Iraq, then they will be exchangeable for the USD and all the rest of the accepted international currencies outside of Iraq. At that time, the CBI and the GOI will undoubtedly institute laws and policies that will severely limit the use of the USD inside Iraq in order to cut down on black market activities and also to help install confidence in the new currency on the part of the Iraqi citizens.
When all of this redenomination has successfully taken place, the Iraqi currency as a whole (including the new lower denomination IQD banknotes, electronic Warka accounts and stock prices on the ISX) will (finally) be in a position to incorporate a significant revaluation to match the growing Iraqi economy.
A redenomination followed by a revaluation could take the exchange rate from $1:1.166 to $1:1 or even more; but while the rest of the world wouldn’t mind a revaluation to $2:1 or even $3:1, the CBI and the GOI are going to want to keep that exchange rate as low as possible in order to be competitive exporting Iraqi oil, natural gas, gold, silver, dates, copra, etc……
The GOI will also want to encourage tourism and outside investment into its infrastructure, so it will serve the Iraqi economy best to be the new international “bargain” by keeping the exchange rate of its currency as low as possible.
Read the articles listed above to see the reasoning behind the statements above.
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Below is a list of articles posted at www.iraq-businessnews.com under the Banking and Finance Section which reach back over the last two years.
These articles were selected to focus on Warka Bank and the Iraqi Banking Sector insofar as it affects Warka Bank; in order to provide the biggest picture possible as to why Warka Bank is experiencing its current liquidity problems.
While Warka Bank will not be folding any time soon, its current problems are still making it difficult for depositors to withdraw and wire transfer USD out of Iraq.
Read the articles and find out why.
• 8 June 2010 ~ Rafidain-Warkaa Banks Renew Relationship
• 15 June 2010 ~ Rafidain Bank Decides Re-dealing with Werkaa Bank
• 28 July 2010 ~ Warka rights mystery deepens
• 25 August 2010 ~ Banks Urge Privatisation of State Lenders
• 20 September 2010 ~ Has Warka Bank Collapsed?
• 22 September 2010 ~ Warka Bank Hits Back at Rumours
• 18 October 2010 ~ Bank capital increase deadlines a red herring
• 27 October 2010 ~ Iraq Banks Told to Raise $7 Billion
• 22 November 2010 ~ Private Banks Perform Better Than State-Owned – CBI
• 15 January 2011 ~ Warka’s moment of truth
• 22 January 2011 ~ Warka’s moment of truth postponed
• 25 January 2011 ~ Maliki “Coup” Denounced by Critics
• 25 January 2011 ~ Iraq Central Bank Assets at Risk?
• 31 January 2011 ~ Bad news for the central bank
• 8 February 2011 ~ Iraqi Banks Urged to Merge
• 30 March 2011 ~ Iraq Growth ’12%’, CBI to Stay Independent
• 5 April 2011 ~ AsiaCell to Bankrupt Warka Bank?
• 11 May 2011 ~ Iraqi Central Bank Allows Cash Transfers up to $50,000
• 20 May 2011 ~ An iBoost For Iraq’s Private Banks
• 22 July 2011 ~ Iraqi Banks Struggle with Limited Services and Capital
• 22 August 2011 ~ Standard Chartered in Talks to Buy Warka Bank
• 2 November 2011 ~ Perspectives on Iraqʼs Private Banks: Growth, Consolidation and Outlook
• 1 December 2011 ~ Bankers Flock to Iraq Despite Dangers
• 11 January 2011 ~ Warka Bank enters Djibouti Market
• 5 March 2012 ~ Warka Bank placed under ‘Guardianship’
• 29 March 2012 ~ Warka Bank Saga Shows Iraq Political, Business Tensions
To illustrate the current problem of wire transferring USD from Warka Bank Accounts out of Iraq and back into the US review the email messages displayed below.
These recent messages were actually sent to and received from Warka Bank by a US Warka Client during a more than one month long attempt by the Warka Client to wire transfer USD back to the US.
They are shown starting from the most recent and progress back to the initial email sent to Warka.
----- Forwarded Message -----
From: Warka Client
To: Central Bank Of Iraq <cbi@cbi.iq>
Cc: Mohammad Issa <ifrd@warka-bank-iq.com>; Wire Transfer Department <nasser@warka-bank-iq.com>; "swift.m@warka-bank-iq.com" <swift.m@warka-bank-iq.com>; Rowaida Mohammed <c.services@warka-bank-iq.com>
Sent: Sunday, April 15, 2012 7:43 PM
Subject: Warka Bank's Insolvency and Wire Transfer Issues
Central Bank of Iraq
Dear Sir:
Please review the email transmissions to and from Warka Bank for Investment and Finance as they are shown in chronological order below.
As you will see, I have encountered great difficulty for over one month with my requests to Warka Bank for a wire transfer of USD from my Warka USD Savings Account out of Iraq and back to my US Account.
The staff at Warka Bank has not responded well to my repeated attempts to wire transfer my own funds.
I am aware of several articles posted at www.iraq-businessnews.com under the Banking and Finance section regarding Warka Bank’s current insolvency issues and the Central Bank’s appointment of an Auditor.
It is my most sincere wish that Warka Bank solves its current insolvency problems and returns to its former practice of expedient responses to client requests.
I especially would like Warka Bank to survive this audit financially intact, since I have a substantial portion of my savings invested with them and very much want to continue to enjoy the interest rates offered for both Savings and Certificates of Deposit Accounts.
I definitely do not want to lose my life savings and neither do the one dozen or so fellow Warka Bank Clients that I am associated with.
Sir, I would be very grateful if you could please advise me as to the current state of Warka Bank’s ability to wire transfer USD from a client’s account back to the US.
If Warka Bank is now prohibited under the Guardianship regulations to wire transfer outgoing funds until your Auditor has completed his work, then kindly please advise me of this.
If Warka Bank is not prohibited under the Guardianship regulations to wire transfer outgoing funds and my inability to successfully request one for my own funds is simply due to a Warka Bank internal policy implemented by their staff, then kindly advise me of this.
I will be extremely grateful for any advice you might be able to offer in this matter and will be pleased to forward your response to my fellow Warka Bank depositors.
Thank you very much for taking the time to review this transmission.
Very truly yours,
Warka Client
# 8XXXXX
________________________________________________________________________
----- Forwarded Message -----
From: Warka Client
To: Mohammad Issa <ifrd@warka-bank-iq.com>; Wire Transfer Department <nasser@warka-bank-iq.com>
Cc: "swift.m@warka-bank-iq.com" <swift.m@warka-bank-iq.com>; Rowaida Mohammed <c.services@warka-bank-iq.com>
Sent: Saturday, April 14, 2012 8:07 PM
Subject: 6th Attempt of 8XXXXX to Wire Transfer USD out of Iraq
Warka Bank International Foreign Relations Department
Warka Bank Wire Transfer Department
Dear Mr. Mohammad K Issa
As you can see from the email below, the funds that I want to be transferred out of my Warka Account and out of Iraq and back into my US Bank of America Account have again been made available in my Warka Bank USD Savings Account since 10 April 2012.
As of the date of this email, 14 April 2012, I have received no acknowledgement at all from either you or your staff, regarding my 5th attempt to wire transfer these funds.
Please note that I do not want your Customer Service Department to put the funds back into my IQD Account again.
I want the funds transferred as per the instructions on my Application for Outward Remittance of USD dated 11 March 2012. My application is now more than one month old and this is my 6th attempt to wire transfer these funds. So far you and your staff refuse to comply with my request.
I do not understand the reason for your delay and non-compliance.
The funds that I have requested to be transferred are desperately needed for an extremely critical financial transaction that I am legally obligated to complete. I cannot avoid this obligation and I need this money as soon as possible.
My understanding is that Warka Bank for Investment and Finance is a private bank; however, if for some reason you and your staff are under orders from the Central Bank of Iraq to refuse compliance with outgoing wire transfers, please advise.
If you and your staff are under orders from the Bunnia Family owners of the bank to refuse compliance with outgoing wire transfers, then please advise.
Mr. Issa, if you and your staff are under no such orders of non-compliance from either the Central Bank or the Director of Warka Bank, then please direct your Wire Transfer Department and your Swift Department Manager to withdraw the funds from my USD Savings Account, assign the transaction a Swift Transfer Reference number and complete my wire transfer request as soon as possible.
I say again that these funds are desperately needed for a critical financial transaction that I am obligated to.
I look forward to your immediate acknowledgement of the receipt of this email transmission as well as the confirmation that my wire transfer has been completed.
Thank you for your attention to my request.
Best regards,
Warka Client
8XXXXX
__________________________________________________________________________
----- Forwarded Message -----
From: Warka Client
To: Mohammad Issa <ifrd@warka-bank-iq.com>; Swift Department Manager <swift@alsawn.com>
Cc: Central Bank Of Iraq <cbi@cbi.iq>; Wire Transfer Department <nasser@warka-bank-iq.com>; Rowaida Mohammed <c.services@warka-bank-iq.com>
Sent: Monday, April 9, 2012 6:52 PM
Subject: 5th Attempt of 8XXXXX Application for Outward Remittance of USD out of Iraq
Warka Bank Wire Transfer Department
Warka Bank International Foreign Relations Department
Dear Mr. Issa
Attached to this transmission please find:
• A copy of my IQD Savings Account Online Statement printed 10 April 2012
• My Application for Outward Remittance of USD out of Iraq dated 11 March 2012
• A copy of my USD Savings Account Online Statement printed 10 April 2012
As you can see from my (attached) IQD Savings Account Statement and my (attached) USD Savings Account Statement, I used my E-banking subscription to move IQD3626860 from my IQD Savings Account to my USD Savings Account on 7 March 2012.
I did this for the purpose of wire transferring USD$3024 out of Iraq and back to my Bank of America Account in the US.
As you can see from the emails below, I have contacted Warka Bank repeatedly since 10 March 2012 asking that your Wire Transfer Department and your SWIFT Operations Team acknowledge my (attached) Application for Outward Remittance of USD and complete my wire transfer of US$3024 back to my Bank of America Account in the US.
Your staff has not acknowledged my request for this wire transfer for almost one month.
Instead, according to the email directly below, you have directed Rowaida Mohammed in the Customer Services Department to withdraw the funds from my USD Account and put them back into my IQD Account and have charged me IQD15380 to do so.
It should be obvious from my (attached) Application for Outward Remittance of USD out of Iraq and from the emails shown below that transferring the funds back into my IQD Account is not what I have been asking Warka Bank to do.
Why have you directed Rowaida Mohammed to do this?
As you can also see from my (attached) IQD Account Online Statement I have again transferred IQD3626604 out of my IQD Savings Account into my USD Savings Account so that US$3076 is again deposited into my USD Account.
By once again attaching my Application for Outward Remittance of USD out of Iraq, I am once again attempting to wire transfer US$3024 out of Iraq and back to my Bank of America Account in the US.
At your very earliest convenience, please send confirmation of receipt of this 5th email request including the corresponding Swift Transfer Reference Number of my completed wire transfer.
Thank you.
Best regards,
Warka Client
8XXXXX
_________________________________________________________________________________
----- Forwarded Message -----
From: c.services <c.services@warka-bank-iq.com>
To: Warka Client
Sent: Sunday, April 8, 2012 4:10 AM
Subject: RE: 8XXXXX 3rd Application for Outward Remittance of USD out of Iraq
Dear Warka Client
I drew USD $ 3076 from your USD account and exchanged it to IQD at the CBI exchange rate of IQD 1166 after deducting our commission fees I credited you IQD account with the amount of: IQD 3586616.
Your IQD account balance is: 4672920.239
Your USD account balance is: 150.18
Best regards.
Customer Services Dept
International Affairs
This e-mail is confidential and the information contained in it is privileged. It should not be read, copied or used by anyone other than the intended recipient. If you have received it in error, please contact the sender immediately by return email, and delete the e-mail and do not disclose its contents to any person.
_____________________________________________________________________________________________________
----- Forwarded Message -----
From: Warka Client
To: Swift Department Manager <swift@alsawn.com>; Swift Operations Team <swift.m@warka-bank-iq.com>
Cc: "cbi@cbi.iq" <cbi@cbi.iq>; Wire Transfer Department <nasser@warka-bank-iq.com>; Mohammad Issa <ifrd@warka-bank-iq.com>; Rowaida Mohammed <c.services@warka-bank-iq.com>
Sent: Thursday, April 5, 2012 10:46 PM
Subject: 8XXXXX 4th attempt for Application for Outward Remittance of USD out of Iraq
Warka SWIFT Department Manager
SWIFT Operations Team
Warka Wire Transfer Department
Dear Sirs:
The funds I have requested to be transferred have been available in my USD Account since 10 March 2012.
As of today, 5 April 2012 the funds have not yet been removed from my Warka USD Account as a Swift Transfer with a Reference Number.
I do not understand the reason for such an unprofessional delay to complete a simple wire transfer operation. I am increasingly frustrated with Warka Bank’s lack of response to any of my emails to date.
According to your own website:
“Warka Bank for Investment and Finance implements the S.W.I.F.T system that guarantees advanced, rapid, secure and accurate money transfers through the international banking network. Whether you’re sending money abroad or receiving money, Warka Bank for Investment and Finance ensures your money transfer is conducted successfully using its worldwide correspondent bank network”.
Please instruct your Wire Transfer Department to initiate the withdrawal from my USD Account so that your Swift Department Manager and your Swift Operations team can assign a transaction reference number and complete my Wire Transfer.
At your very earliest convenience, please send confirmation of receipt of this 4th email request including the corresponding Swift Transfer Reference Number.
Thank you.
Best regards,
Warka Client
8XXXXX
__________________________________________________________________________________________________
From: Warka Client
Sent: Monday, April 02, 2012 3:59 AM
To: fadi; fadi
Cc: nasser; Mohammad K. Issa; Customer Services
Subject: 8XXXXX 3rd Application for Outward Remittance of USD out of Iraq
SWIFT Operations Team
Warka SWIFT Department Manager
Warka Wire Transfer Department
Dear Sirs:
Attached to this transmission please find my original Application for Outward Remittance of USD dated 10 March 2012.
As of today's date the funds have not yet been removed from my Warka USD Account as a Swift Transfer with a Reference Number.
Please instruct your Wire Transfer Department to initiate the withdrawal from my USD Account so that the Swift Department Manager and Swift Operations team can complete my Wire Transfer.
Please, send confirmation of receipt of this 3rd email request including the corresponding Swift Transfer Reference Number.
Thank you.
Best Regards,
Warka Client
8XXXXX
____________________________________________________________________________________________________
----- Forwarded Message -----
From: Warka Client
To: "nasser@warka-bank-iq.com" <nasser@warka-bank-iq.com>
Cc: Mohammad Issa <ifrd@warka-bank-iq.com>
Sent: Thursday, March 22, 2012 7:28 AM
Subject: Fw: Application for outward remittance of USD out of Iraq
Warka Bank Wire Transfer Department
Warka Bank swift Department Manager
Dear Sir:
SAME REQUEST AND SECOND EMAIL....PLEASE SEE ATTACHMENTS: TO WIRE USD BACK TO MY USA BANK ACCOUNT.
Attached to this transmission please find a color copy of my government issued I.D. and my signed application for outward remittance of USD out of Iraq.
Please send confirmation of receipt of this email.
Thank you.
Best Regards,
Warka Client
8XXXXX
____________________________________________________________________________________________________
From: Warka Client
To: "nasser@warka-bank-iq.com" <nasser@warka-bank-iq.com>
Cc: Mohammad Issa <ifrd@warka-bank-iq.com>
Sent: Saturday, March 10, 2012 10:16 PM
Subject: Application for outward remittance of USD out of Iraq
Warka Bank Wire Transfer Department
Warka Bank swift Department Manager
Dear Sir:
Attached to this transmission please find a color copy of my government issued I.D. and my signed application for outward remittance of USD out of Iraq.
Please send confirmation of receipt of this email.
Thank you,
Best Regards,
Warka Client
8XXXXX
-
This message is meant to be absorbed and then forwarded to anyone you know who has invested in the IQD via a Warka Bank Account and especially to anyone who might be considering wiring USD from their Warka Account back to a Stateside Account.
Anyone that now finds it prudent, necessary or desirable to wire transfer Warka funds out of Iraq and back into the US should use their Warka E-banking to access their accounts online and move the funds from their IQD Account over to their USD Account. Then they might also want to prepare the following on Word documents so that they can be copied and pasted into email messages later:
1. Wire Transfer Request Email ~ decide on an appropriate email subject name, refer to the documents that should be attached (such as an Application for Outward Remittance of USD out of Iraq and a color copy of the ID used to open the account originally) plus include some message language that is direct and specific for best effect. You can use Word to customize the message and then copy and paste it into the message box of the actual email being sent. Using Word will allow you to tweak the message with whatever style and size of font you want (for emphasis) and also allow you to check for spelling and grammatical errors before you copy and paste it into your actual email message box. It also helps if you use rich text instead of plain text when composing your email message.
2. Application for Outward Remittance of USD out of Iraq ~ create the form with Word using your own individual bank wire transfer information, save the customized version (for possible future wire transfers) print it, sign it, scan it, name the scan and save it somewhere convenient and ready to attach to your initial wire transfer request email. A suggested name for the scanned document (and also for the subject of the email) using your six digit Warka Account number might be: 8xxxxx Application for Outward Remittance of USD. That way when Warka receives it they’ll know exactly what it is and from whom.
3. Follow Up to Wire Transfer Request Email ~ decide what the subject name might be, and include some message language to use for best effect when Warka initially ignores your request to move the funds from your USD Account over to a SWIFT transfer line item (with a reference number) or when they (seemingly) misinterpret your request and do something completely different with your accounts ~ like putting the USD you want transferred to a stateside account back into your IQD account.
Note: And this is especially important. After you’ve sent your initial email (with attachments) requesting your wire transfer from Warka, one of two things will continue to happen: Either Warka will answer you with an email and you’ll need to respond to it, or Warka will ignore your email request and you’ll have to follow up. Either way, I think it’s important to keep all of the email transmissions to and from Warka in a single string so that the entire history of your wire transfer request is always shown with each transmission and there is less chance of confusion (on Warka’s part) as to what you’re trying to do.
To accomplish this you will always be faced with two options:
1. When Warka responds to your email, select the Reply option to send your answering email
2. When Warka ignores your email, select the Forward option to send a follow up email
It took 26 days to complete my last wire transfer in February – March 2012. The previous wire transfer in November – December of 2011 took a total of 17 days to complete and the one previous to that in September 2011 took a total of 14 days.
It should be noted that another Warka client that I know managed to receive a successful wire transfer within 9 days in January 2012, but that might be the exception to the rule now because of Warka’s insolvency issues.
At present, I know of still another Warka client who initially applied for a wire transfer of USD back to a stateside account over a month ago and all that the Warka staff has done so far is pluck the funds out of his USD account and put them back into his IQD account.
Fairly frustrating, especially since the signed Application, the initial email and the 3 follow up emails he sent all contain language that is pretty succinct as to what his request actually is.
Bottom line is be prepared to dig in and nag (politely) if you’re determined to wire funds back before the insolvency issues are resolved. Hopefully, that won’t take too long though.
The email addresses that you’ll need to be aware of are as follows:
• Warka Wire Transfer Department ~ nasser@warka-bank-iq.com
• Warka SWIFT Department Manager ~ swift.m@warka-bank-iq.com
• SWIFT Operations Team ~ swift@alsawn.com ~ outside of Warka
• Mohammad K Issa ~ ifrd@warka-bank-iq.com ~ Warka Bank International Foreign Relations Department Director at the main branch in Baghdad.
• Rowaida Mohammed ~ c.services@warka-bank-iq.com ~ Warka Bank Customer Services for International Foreign Relations at the main branch in Baghdad.
• Central Bank of Iraq ~ cbi@cbi.iq ~ for when Warka keeps ignoring you or misinterpreting your request and you have to include a cc to a higher authority.
In order to understand what is currently going on with the IQD and with Warka Bank, it might be good to read articles at www.iraq-businessnews.com under the Banking and Finance link.
You might have to keep scrolling and continue to click on the Older Entries link at the bottom of the page to find and see them all, but here are the titles and links to some of the articles to read:
• APRIL FOOL: Worldwide Celebrations as Iraqi Dinar Revalues 1:1000! (2 pages)
• Warka Bank Saga Shows Iraq Political, Business Tensions
• Warka Bank placed under ‘Guardianship’
• Cash Only: Why the Messy Banking Sector Endangers Iraqi Development (4 pages)
• Removing Zeros from Iraqi Dinar to Start in Sept
• Iraq has More than $60 billion in Foreign Reserves
• Iraqi Dinar Increases in Value
• Iraq to Grow 36% in Three Years
• Warka Bank enters Djibouti Market
• Central Bank Defends Weak Iraqi Dinar
• Impact Iraq: Can the Country Save Itself from Global Economic Crises? (3 pages)
Of course, there are plenty of other articles to read at this site, but these few should inform you as to the current state of an Iraqi Dinar/Warka Bank Account investment. Sometimes it is helpful to read the comments attached at the bottom of each article, sometimes not; but at least some of the comments may widen the scope of the article for a better understanding as to what it actually means to be an IQD investor.
After going through 3 extended Warka wire transfer sagas myself, helping 2 other people to get through their wire transfer ordeals and reading all of the above mentioned articles, my take on the current IQD investment situation is this:
• Warka Bank is still the largest private bank in Iraq and is not about to go under.
• The Central Bank of Iraq won’t allow Warka to go under because it needs the 300 plus ATMs and the 100 plus branch banks that Warka’s owners (the Bunnia family) created in order for the CBI to deal with the upcoming redenomination of the IQD.
• Warka Bank might have grown too fast for its own good, but that only makes it an extremely successful bank, not a bad one.
• There is also an (unreasonable) mindset of distrust of private banks in Iraq and perhaps even throughout the other Arab nations in the region as well; which only serves to hinder all private enterprise growth. This prejudice against and envy of individual success is rampant, unfortunately.
• Warka Bank being under the guardianship of the Central Bank will (I think) serve to calm down all the local haters of success and eventually will mean a lasting stability for us foreign investors as well as for Iraqi depositors to bank on.
• The question which has been apparent for approximately a year now is whether or not the Bunnia family owners are willing to give up controlling interest in Warka Bank (presently they own 56%) in order to achieve a greater liquidity with the influx of cash which a merger and the subsequent reduction of control would bring.
• When Warka started experiencing liquidity problems, they entertained offers of a merger from the British based bank Standard Chartered and while those negotiations were going on Warka borrowed 100 Billion IQD (US$91 Million) from the Central Bank of Iraq as a bridge loan until the deal was completed.
• The Standard Chartered deal fell through (probably because Standard Chartered wanted a 51% stake in Warka) and so Warka was left with the same liquidity problems as before plus an additional debt to the Central Bank.
• The auditor which will be appointed under the guardianship of the CBI will probably be actually working for the CBI (even if publically he claims neutrality) and so will probably come up with a solution which will mean that the Bunnia family and Warka Bank will get a public sector partner (such as a State run bank) ~ whether they like it or not.
• The Bunnia’s might hate it, but in the end it will be good for depositors who are trying to withdraw their dough.
I’ve had to withdraw from Warka lately to pay bills, but I’d rather have left the investment alone for the long run up to a significant revalue of the IQD.
When I am again flush enough to afford it, I plan to replace all that I’ve withdrawn so that I can again have the chance to get 7% on savings, 10.5% on CD’s, (hopefully) more than 10.5% by investing in the ISX and (possibly) double or triple everything I’ve invested when the IQD starts to revalue past 1 to 1 with the USD towards 2 or even 3 to 1 with the USD ~ similar to what the Jordanian Dinar or the Bahraini Dinar or the Kuwaiti Dinar are today.
I don’t see the USD recovering from its decades long decline any time soon (if at all), so I’m sticking with gold, silver and copper bullion and the IQD in a Warka Account to put my USD savings into.
Buying IQD on the internet and/or holding IQD in cash form, in my opinion is useless for a foreign investor especially since the CBI is about to recall all the existing banknotes and exchange them for the new banknotes (and the new banknotes probably won’t be available for trade-in or purchase via the internet once they are introduced into circulation).
It will be the new low denomination banknotes that will be subject to revaluation, and eventual recognition by the international community, not the existing high denomination banknotes that everyone is holding now (including all the Iraqi citizens).
I was in Iraq when the then local IQD banknotes (with Saddam’s picture on them) were phased out and exchanged for the currently used banknotes and/or USD. It took about 90 days back then; before the Saddam banknotes were declared void.
That was because of the war and the Coalition Provisional Authority (the US and the British) introducing both the USD and the currently used IQD banknotes (made in England) into the Iraqi economy. Everybody was in a hurry so that the economy didn’t collapse completely.
This time around the CBI is going to allow both kinds of banknotes (the newer lower denomination bills and the existing larger denomination bills) to co-exist for a (reportedly) 2 year period until the CBI is satisfied that the redenomination has been successful.
Redenomination success would mean that the majority of the existing large denomination IQD banknotes are exchanged out of circulation and the Iraqi citizens become confident enough in the value of their own new low denomination currency that the use of USD banknotes is phased out as well.
The Saddam banknotes could not be spent outside of the borders of Iraq.
Instead, there was an international version of the IQD that was made in Switzerland and recognized and exchanged for other currencies by the international community.
Similarly, the existing IQD banknotes cannot be spent outside of the borders of Iraq.
Instead of an international version of the IQD made in Switzerland, the Iraqis currently use the USD, made in the US, and recognized and exchanged for other currencies by most of the international community.
In order for the new low denomination IQD banknotes to replace the USD as the Iraqi international currency, the new low denomination IQD banknotes will have to recognized and be exchangeable by the international community in order for them to be used for the purchase and importation of goods and services into Iraq.
UN Sanctions under Chapter VII will probably have to be resolved and the Iraqi HCL will have to be in place (and effective) before the international community will unilaterally recognize the new lower denomination Iraqi banknotes (yet to be issued) as the legitimate international (and exchangeable) currency of Iraq.
That being the case, when the redenomination process starts, all three types of currency (the existing high denomination IQD, the new low denomination IQD and the USD) will at first all be recognized, exchanged and used inside the borders of Iraq and only the USD will (still) be spendable outside of Iraq. The existing large denomination banknotes will be exchanged at the current CBI rate of $1:1166 (or whatever the exchange rate is by the time redenomination starts) and the new lower denomination banknotes will be exchanged at the new rate of $1:1.166.
That way an existing IQD10000 banknote and a new IQD10 banknote will both be able to be exchanged for US$8.57 and the economy will absorb the two different rates and the 3 different currencies (including the USD) smoothly and without a lot of strife.
Iraqi merchants will just have to decide whether to advertise their goods and services at the existing currency rate or the new currency rate. Either way, IQD10000 or IQD10 or US$8.57 will all spend equally.
When the rest of the international community finally recognizes and accepts the new lower denomination IQD banknotes as legitimate payment for goods and services outside of Iraq, then they will be exchangeable for the USD and all the rest of the accepted international currencies outside of Iraq. At that time, the CBI and the GOI will undoubtedly institute laws and policies that will severely limit the use of the USD inside Iraq in order to cut down on black market activities and also to help install confidence in the new currency on the part of the Iraqi citizens.
When all of this redenomination has successfully taken place, the Iraqi currency as a whole (including the new lower denomination IQD banknotes, electronic Warka accounts and stock prices on the ISX) will (finally) be in a position to incorporate a significant revaluation to match the growing Iraqi economy.
A revaluation could take the exchange rate from $1:1.166 to $1:1 or even more; but while the rest of the world wouldn’t mind a revaluation to $2:1 or even $3:1, the CBI and the GOI are going to want to keep that exchange rate as low as possible in order to be competitive exporting Iraqi oil, natural gas, gold, silver, dates, copra, etc……
The GOI will also want to encourage tourism and outside investment into its infrastructure, so it will serve the Iraqi economy best to be the new international “bargain” by keeping the exchange rate of its currency as low as possible.
For us IQD investors it will mean a chance to possibly double or triple our Warka investments in the future; but in the meantime while we are waiting, we can still enjoy 7% on savings, 8.5%, 9.5% and 10.5% on CD’s and possibly even more by investing in the ISX.
You never know when an Iraqi company might suddenly take off and become the next “Microsoft” of the investing world, especially with the encouragement of foreign investment and technology.
No foreign investor or any Iraqi citizen for that matter is suddenly going to be a millionaire based just on a new revaluation of the IQD, but that doesn’t mean the investment is a bad idea. In fact, in my opinion it’s still the best choice available to the average investor.
For additional information on the owner’s of Warka Bank go to:
http://www.al-bunnia.com/HMBS.pdf
The Bunnias also have a substantial stake in Baghdad Soft Drinks which has the majority (approximately 90%) of the Pepsi distributing rights in Iraq.
The Bunnia’s are an old and wealthy family and the privately owned company (HMBS) is over 100 years old so they are not going to let go of the success of Warka Bank without a fight.
By sticking with your deposits in Warka, and investing in Warka Bank (BWAI) and Baghdad Soft Drinks (IBSD) on the ISX you’d be bettin’ with the Bunnias ~ which might not be a bad idea as the East inevitably rises towards and eventually passes the West financially.
-
This message is meant to be absorbed and then forwarded to anyone you know who has invested in the IQD via a Warka Bank Account and especially to anyone who might be considering wiring USD from their Warka Account back to a Stateside Account.
Anyone that now finds it prudent, necessary or desirable to wire transfer Warka funds out of Iraq and back into the US should use their Warka E-banking to access their accounts online and move the funds from their IQD Account over to their USD Account. Then they might also want to prepare the following on Word documents so that they can be copied and pasted into email messages later:
1. Wire Transfer Request Email ~ decide on an appropriate email subject name, refer to the documents that should be attached (such as an Application for Outward Remittance of USD out of Iraq and a color copy of the ID used to open the account originally) plus include some message language that is direct and specific for best effect. You can use Word to customize the message and then copy and paste it into the message box of the actual email being sent. Using Word will allow you to tweak the message with whatever style and size of font you want (for emphasis) and also allow you to check for spelling and grammatical errors before you copy and paste it into your actual email message box. It also helps if you use rich text instead of plain text when composing your email message.
2. Application for Outward Remittance of USD out of Iraq ~ create the form with Word using your own individual bank wire transfer information, save the customized version (for possible future wire transfers) print it, sign it, scan it, name the scan and save it somewhere convenient and ready to attach to your initial wire transfer request email. A suggested name for the scanned document (and also for the subject of the email) using your six digit Warka Account number might be: 8xxxxx Application for Outward Remittance of USD. That way when Warka receives it they’ll know exactly what it is and from whom.
3. Follow Up to Wire Transfer Request Email ~ decide what the subject name might be, and include some message language to use for best effect when Warka initially ignores your request to move the funds from your USD Account over to a SWIFT transfer line item (with a reference number) or when they (seemingly) misinterpret your request and do something completely different with your accounts ~ like putting the USD you want transferred to a stateside account back into your IQD account.
Note: And this is especially important. After you’ve sent your initial email (with attachments) requesting your wire transfer from Warka, one of two things will continue to happen: Either Warka will answer you with an email and you’ll need to respond to it, or Warka will ignore your email request and you’ll have to follow up. Either way, I think it’s important to keep all of the email transmissions to and from Warka in a single string so that the entire history of your wire transfer request is always shown with each transmission and there is less chance of confusion (on Warka’s part) as to what you’re trying to do.
To accomplish this you will always be faced with two options:
1. When Warka responds to your email, select the Reply option to send your answering email
2. When Warka ignores your email, select the Forward option to send a follow up email
It took 26 days to complete my last wire transfer in February – March 2012. The previous wire transfer in November – December of 2011 took a total of 17 days to complete and the one previous to that in September 2011 took a total of 14 days.
It should be noted that another Warka client that I know managed to receive a successful wire transfer within 9 days in January 2012, but that might be the exception to the rule now because of Warka’s insolvency issues.
At present, I know of still another Warka client who initially applied for a wire transfer of USD back to a stateside account over a month ago and all that the Warka staff has done so far is pluck the funds out of his USD account and put them back into his IQD account.
Fairly frustrating, especially since the signed Application, the initial email and the 3 follow up emails he sent all contain language that is pretty succinct as to what his request actually is.
Bottom line is be prepared to dig in and nag (politely) if you’re determined to wire funds back before the insolvency issues are resolved. Hopefully, that won’t take too long though.
The email addresses that you’ll need to be aware of are as follows:
• Warka Wire Transfer Department ~ nasser@warka-bank-iq.com
• Warka SWIFT Department Manager ~ swift.m@warka-bank-iq.com
• SWIFT Operations Team ~ swift@alsawn.com ~ outside of Warka
• Mohammad K Issa ~ ifrd@warka-bank-iq.com ~ Warka Bank International Foreign Relations Department Director at the main branch in Baghdad.
• Rowaida Mohammed ~ c.services@warka-bank-iq.com ~ Warka Bank Customer Services for International Foreign Relations at the main branch in Baghdad.
• Central Bank of Iraq ~ cbi@cbi.iq ~ for when Warka keeps ignoring you or misinterpreting your request and you have to include a cc to a higher authority.
In order to understand what is currently going on with the IQD and with Warka Bank, it might be good to read articles at www.iraq-businessnews.com under the Banking and Finance link.
You might have to keep scrolling and continue to click on the Older Entries link at the bottom of the page to find and see them all, but here are the titles and links to some of the articles to read:
• APRIL FOOL: Worldwide Celebrations as Iraqi Dinar Revalues 1:1000! (2 pages)
• Warka Bank Saga Shows Iraq Political, Business Tensions
• Warka Bank placed under ‘Guardianship’
• Cash Only: Why the Messy Banking Sector Endangers Iraqi Development (4 pages)
• Removing Zeros from Iraqi Dinar to Start in Sept
• Iraq has More than $60 billion in Foreign Reserves
• Iraqi Dinar Increases in Value
• Iraq to Grow 36% in Three Years
• Warka Bank enters Djibouti Market
• Central Bank Defends Weak Iraqi Dinar
• Impact Iraq: Can the Country Save Itself from Global Economic Crises? (3 pages)
Of course, there are plenty of other articles to read at this site, but these few should inform you as to the current state of an Iraqi Dinar/Warka Bank Account investment. Sometimes it is helpful to read the comments attached at the bottom of each article, sometimes not; but at least some of the comments may widen the scope of the article for a better understanding as to what it actually means to be an IQD investor.
After going through 3 extended Warka wire transfer sagas myself, helping 2 other people to get through their wire transfer ordeals and reading all of the above mentioned articles, my take on the current IQD investment situation is this:
• Warka Bank is still the largest private bank in Iraq and is not about to go under.
• The Central Bank of Iraq won’t allow Warka to go under because it needs the 300 plus ATMs and the 100 plus branch banks that Warka’s owners (the Bunnia family) created in order for the CBI to deal with the upcoming redenomination of the IQD.
• Warka Bank might have grown too fast for its own good, but that only makes it an extremely successful bank, not a bad one.
• There is also an (unreasonable) mindset of distrust of private banks in Iraq and perhaps even throughout the other Arab nations in the region as well; which only serves to hinder all private enterprise growth. This prejudice against and envy of individual success is rampant, unfortunately.
• Warka Bank being under the guardianship of the Central Bank will (I think) serve to calm down all the local haters of success and eventually will mean a lasting stability for us foreign investors as well as for Iraqi depositors to bank on.
• The question which has been apparent for approximately a year now is whether or not the Bunnia family owners are willing to give up controlling interest in Warka Bank (presently they own 56%) in order to achieve a greater liquidity with the influx of cash which a merger and the subsequent reduction of control would bring.
• When Warka started experiencing liquidity problems, they entertained offers of a merger from the British based bank Standard Chartered and while those negotiations were going on Warka borrowed 100 Billion IQD (US$91 Million) from the Central Bank of Iraq as a bridge loan until the deal was completed.
• The Standard Chartered deal fell through (probably because Standard Chartered wanted a 51% stake in Warka) and so Warka was left with the same liquidity problems as before plus an additional debt to the Central Bank.
• The auditor which will be appointed under the guardianship of the CBI will probably be actually working for the CBI (even if publically he claims neutrality) and so will probably come up with a solution which will mean that the Bunnia family and Warka Bank will get a public sector partner (such as a State run bank) ~ whether they like it or not.
• The Bunnia’s might hate it, but in the end it will be good for depositors who are trying to withdraw their dough.
I’ve had to withdraw from Warka lately to pay bills, but I’d rather have left the investment alone for the long run up to a significant revalue of the IQD.
When I am again flush enough to afford it, I plan to replace all that I’ve withdrawn so that I can again have the chance to get 7% on savings, 10.5% on CD’s, (hopefully) more than 10.5% by investing in the ISX and (possibly) double or triple everything I’ve invested when the IQD starts to revalue past 1 to 1 with the USD towards 2 or even 3 to 1 with the USD ~ similar to what the Jordanian Dinar or the Bahraini Dinar or the Kuwaiti Dinar are today.
I don’t see the USD recovering from its decades long decline any time soon (if at all), so I’m sticking with gold, silver and copper bullion and the IQD in a Warka Account to put my USD savings into.
Buying IQD on the internet and/or holding IQD in cash form, in my opinion is useless for a foreign investor especially since the CBI is about to recall all the existing banknotes and exchange them for the new banknotes (and the new banknotes probably won’t be available for trade-in or purchase via the internet once they are introduced into circulation).
It will be the new low denomination banknotes that will be subject to revaluation, and eventual recognition by the international community, not the existing high denomination banknotes that everyone is holding now (including all the Iraqi citizens).
I was in Iraq when the then local IQD banknotes (with Saddam’s picture on them) were phased out and exchanged for the currently used banknotes and/or USD. It took about 90 days back then; before the Saddam banknotes were declared void.
That was because of the war and the Coalition Provisional Authority (the US and the British) introducing both the USD and the currently used IQD banknotes (made in England) into the Iraqi economy. Everybody was in a hurry so that the economy didn’t collapse completely.
This time around the CBI is going to allow both kinds of banknotes (the newer lower denomination bills and the existing larger denomination bills) to co-exist for a (reportedly) 2 year period until the CBI is satisfied that the redenomination has been successful.
Redenomination success would mean that the majority of the existing large denomination IQD banknotes are exchanged out of circulation and the Iraqi citizens become confident enough in the value of their own new low denomination currency that the use of USD banknotes is phased out as well.
The Saddam banknotes could not be spent outside of the borders of Iraq.
Instead, there was an international version of the IQD that was made in Switzerland and recognized and exchanged for other currencies by the international community.
Similarly, the existing IQD banknotes cannot be spent outside of the borders of Iraq.
Instead of an international version of the IQD made in Switzerland, the Iraqis currently use the USD, made in the US, and recognized and exchanged for other currencies by most of the international community.
In order for the new low denomination IQD banknotes to replace the USD as the Iraqi international currency, the new low denomination IQD banknotes will have to recognized and be exchangeable by the international community in order for them to be used for the purchase and importation of goods and services into Iraq.
UN Sanctions under Chapter VII will probably have to be resolved and the Iraqi HCL will have to be in place (and effective) before the international community will unilaterally recognize the new lower denomination Iraqi banknotes (yet to be issued) as the legitimate international (and exchangeable) currency of Iraq.
That being the case, when the redenomination process starts, all three types of currency (the existing high denomination IQD, the new low denomination IQD and the USD) will at first all be recognized, exchanged and used inside the borders of Iraq and only the USD will (still) be spendable outside of Iraq. The existing large denomination banknotes will be exchanged at the current CBI rate of $1:1166 (or whatever the exchange rate is by the time redenomination starts) and the new lower denomination banknotes will be exchanged at the new rate of $1:1.166.
That way an existing IQD10000 banknote and a new IQD10 banknote will both be able to be exchanged for US$8.57 and the economy will absorb the two different rates and the 3 different currencies (including the USD) smoothly and without a lot of strife.
Iraqi merchants will just have to decide whether to advertise their goods and services at the existing currency rate or the new currency rate. Either way, IQD10000 or IQD10 or US$8.57 will all spend equally.
When the rest of the international community finally recognizes and accepts the new lower denomination IQD banknotes as legitimate payment for goods and services outside of Iraq, then they will be exchangeable for the USD and all the rest of the accepted international currencies outside of Iraq. At that time, the CBI and the GOI will undoubtedly institute laws and policies that will severely limit the use of the USD inside Iraq in order to cut down on black market activities and also to help install confidence in the new currency on the part of the Iraqi citizens.
When all of this redenomination has successfully taken place, the Iraqi currency as a whole (including the new lower denomination IQD banknotes, electronic Warka accounts and stock prices on the ISX) will (finally) be in a position to incorporate a significant revaluation to match the growing Iraqi economy.
A revaluation could take the exchange rate from $1:1.166 to $1:1 or even more; but while the rest of the world wouldn’t mind a revaluation to $2:1 or even $3:1, the CBI and the GOI are going to want to keep that exchange rate as low as possible in order to be competitive exporting Iraqi oil, natural gas, gold, silver, dates, copra, etc……
The GOI will also want to encourage tourism and outside investment into its infrastructure, so it will serve the Iraqi economy best to be the new international “bargain” by keeping the exchange rate of its currency as low as possible.
For us IQD investors it will mean a chance to possibly double or triple our Warka investments in the future; but in the meantime while we are waiting, we can still enjoy 7% on savings, 8.5%, 9.5% and 10.5% on CD’s and possibly even more by investing in the ISX.
You never know when an Iraqi company might suddenly take off and become the next “Microsoft” of the investing world, especially with the encouragement of foreign investment and technology.
No foreign investor or any Iraqi citizen for that matter is suddenly going to be a millionaire based just on a new revaluation of the IQD, but that doesn’t mean the investment is a bad idea. In fact, in my opinion it’s still the best choice available to the average investor.
For additional information on the owner’s of Warka Bank go to:
http://www.al-bunnia.com/HMBS.pdf
The Bunnias also have a substantial stake in Baghdad Soft Drinks which has the majority (approximately 90%) of the Pepsi distributing rights in Iraq.
The Bunnia’s are an old and wealthy family and the privately owned company (HMBS) is over 100 years old so they are not going to let go of the success of Warka Bank without a fight.
By sticking with your deposits in Warka, and investing in Warka Bank (BWAI) and Baghdad Soft Drinks (IBSD) on the ISX you’d be bettin’ with the Bunnias ~ which might not be a bad idea as the East inevitably rises towards and eventually passes the West financially.
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Another attempt to clear up the ongoing confusion and misuse of the terms redenominate and revalue:
In 2010, the Central Bank of Iraq announced its plans to redenominate the Iraqi Dinar to ease cash transactions.
The intention would be to drop three zeros from the nominal (face) value of bank notes; but the (actual) value of the dinar would remain unchanged.
That would mean that an existing 1,000 IQD note (pre-redenomination) and a new 1 IQD note or coin (post-redenomination) would both be worth the same amount in US Dollars (currently about $0.85).
Although the announcement stated that the change would take place by the end of 2010, there has been no redenomination as of December 2011.
However, as of September 2011, the Iraqi Cabinet or Council of Ministers now has the CBI draft plan in hand with the task of turning it into a workable law that can be voted on by the Iraqi Parliament.
No telling when that law will finally be passed, but look for the redenomination law to be passed and the redenomination process (at least starting) to happen before an actual RV can take place ~ since the RV rate will be applied to the newer, lower denomination international banknotes and coins, but not the existing higher denomination domestic banknotes which can only be used for purchases inside Iraq.
The redenomination process could take anywhere from 90 days to 3 years to complete.
As stated by the Central Bank of Iraq, its mandate is to "ensure domestic price stability and foster a stable, competitive market based financial system."
For further references on the redenomination process (which is not an RV of the Iraqi Dinar ~ “in-country” or otherwise) you might want to visit these links (or not):
http://www.iraq-businessnews.com/tag/redenomination/
http://www.iraq-businessnews.com/2011/04/20/redenomination-and-the-spinal-tap-fallacy/
http://www.iraq-businessnews.com/2011/04/14/iraq-central-bank-to-remove-3-zeroes-from-dinar/
http://www.rferl.org/articleprintview/1950504.html
http://www.rferl.org/articleprintview/24245867.html
http://arabnews.com/economy/article484640.ece
http://www.investorsiraq.com/showthread.php?151879-Redenomination-confusion
Regarding the ability to fund a Warka Account with physical IQD banknotes:
I just sent an email inquiry to the Customer Accounts Department at Warka Bank with a cc to the Customer Services Department and a cc to the International Foreign Relations Department. In it, I said the following:
Dear Sirs:
When I first inquired about opening an account with Warka Bank, you sent me an email which contained (in part) the following message:
Thank you for choosing our bank and taking interest in our fine services.
It is possible to send your Iraqi Dinars by courier service to the following mailing address:
Warka Bank for Investment and Finance - Main Branch – Baghdad Iraq
International Foreign Relations Department - Attn: Mohammad K. Issa
Watheq Square – Salman Faiq St. – Hay Alwihda – Sec. 902 – 14th St.
Upon receiving your package it will be counted both by hand and machine in the presence of three dedicated bank employees under my supervision and we will credit the exact amount received to your account.
Best regards,
Customer Accounts Dept
International Affairs
Since that time, I have sent Iraqi Dinars by FedEx to this address numerous times and have helped others to do the same.
However, lately I have become concerned because currently there is a rumor circulating among Iraqi Dinar investors that it is no longer Warka’s policy to accept physical Iraqi Dinar banknotes by courier to fund our accounts.
At your earliest convenience, please confirm that the above mentioned mailing address is still correct and that it is still Warka Bank’s policy to accept physical Iraqi Dinar banknotes sent by courier (FedEx) to fund our accounts.
I greatly appreciate your time to reply to my request and look forward to your confirmation.
Thank you again for your fine service and attention to my accounts.
Best Regards,
Please, see the answer I just received from Mohammad K. Issa below:
Please note that in accordance with the regulations set by the CBI, Iraqi banks are not permitted to hold IQD accounts at their corresponding bank and are prohibited from receiving deposits or wire transfers in IQD currency where the only legal method of funding your account is through a USD bank to bank wire transfer.
Furthermore, and as posted on our website, Iraqi Customs no longer permits courier companies operating in Iraq to receive and deliver packages containing funds of any currency and will be confiscated accordingly.
Should you have any further questions or inquiries please take a moment to visit our website www.warka-bank.com news bulletin to view the latest notices and contact details of the related departments that will best handle your inquiries. We have several departments that will specifically handle each banking affair to your best interest by contacting them directly as they handle customer inquiries and transactions.
Best regards,
Mohammad K. Issa
Deputy Managing Director
Senior Executive
Warka Bank for Investment and Finance
This e-mail is confidential and the information contained in it is privileged. It should not be read, copied or used by anyone other than the intended recipient.
I have searched Warka’s website and still cannot find where it says: Iraqi Customs no longer permits courier companies operating in Iraq to receive and deliver packages containing funds of any currency and will be confiscated accordingly.
Nevertheless, I still stand corrected with egg on my face.
Those friends of mine who were planning to move their cash over to their Warka accounts via FedEx to Baghdad are not going to be pleased.
Especially since even if they label the FedEx waybill as Business Documents with a value under $100 to get past Iraqi Customs, the Warka folks are not going to be happy being complicit in smuggling activities and may refuse to accept the package anyway.
I guess the key phrase is Iraqi Customs no longer permits what was once allowed or at least what was once encouraged by Warka.
BrokeNoMore is correct in saying Can’t, Can’t, Can’t and it was me who was ignorant of the actual (current) facts.
TrinityeXchange is also correct in his assessment.
I extend my apologies to both for my (ignorant) contradiction of their statements.
What I still like about Warka as opposed to holding the investment in cash:
4% interest on a USD Savings account
5% interest on a USD Certificate of Deposit
7% interest on an IQD Savings account
8.5% on a 3 month IQD CD
9.5% on a 6 month IQD CD
10.5% on a 12 month IQD CD
Note: Warka’s CD purchase policy now is for a minimum of IQD 1,000,000 (One Million Iraqi Dinar)
The interest really adds up and helps to alleviate the pain of waiting for an RV.
Plus, once the cash is actually in an Iraqi bank as an electronic line item it is far easier to move around than having to go find someone or some institution willing to consider exchanging (soon to be out of circulation) large denomination banknotes.
Warka’s rules for opening an ISX trading account through their in house ISX Department:
To participate in the Iraqi Stock Exchange according to the firm regulations and requirement set by the ISX to purchase stocks under your name you must first have the following documents certified by the Iraqi Embassy or Iraqi Consulate in your country.
1- Valid Clear Colored Passport Copy and Valid Clear Colored ID Copy
2- Address and contact details.
3- Your three signatures for verification.
The documents must bear the Iraqi Embassy seal and are to be sent to our mailing address where it will be submitted to the ISX for verification and approval. Once approved the ISX (Iraqi Stock Exchange) will register your name and information in their electronic system issuing your investment trading number within a period of 2- 3 weeks where once issued our ISX department isx@warka-bank-iq.com will confirm to proceed accordingly with purchasing stocks in your good.
To buy stocks please send a signed buy order by email to our ISX department isx@warka-bank-iq.com indicating the company and number shares that you are interested in purchasing authorizing our bank to deduct the purchase amount and commission fees and by visiting the official ISX website www.isx-iq.net bulletin and reports - electronic bulletin you can view a list of the companies that are currently trading and updated market prices to base your stock order noting that the minimum buy order is 200000 shares per company per session and that the commission fee is 1% per buy order. The same fee and procedure is applied when selling shares.
For any further information please feel free to contact on our mailing address isx@warka-bank-iq.com to be of best assistance.
Best regards,
ISX Department
Warka Bank for Investment and Finance
Next a review of The Iraqi Embassy requirements:
Iraq Commercial Office
Embassy of the Republic of Iraq
1155 15th St. NW Suite # 1100
Washington, DC 20051
Tel: 202-822-2088
Fax: 202-822-8113
From the Iraq Commercial Office website: www.ico-us.org
For Legalization of Documents at the Iraqi Commercial Office:
1. Notarize applicable documents.
2. The documents must then be sent to your State for certification.
3. The documents will then need to be sent to the Department of State at the address below:
US Department of State
Authentication Office
518 23rd Street NW Sa-1
Columbia Plaza
Washington, DC 20037
Tel: 202-647-5002
Email: aoprgsmauth@state.gov
Fax: 202-663-3636
www.state.gov
.
4. Documents must then be delivered to the Iraqi Commercial Office either by courier or mail (DHL, FedEx, etc…) with a pre-paid return envelope.
Iraq Commercial Office
1155 15th Street NW Suite #1100
Washington, DC 20005
5. All commercial documents including the original certificate of origin must be enclosed with a $160.00 for each document (MONEY ORDER ONLY) made payable to Iraqi Embassy/Commercial Office.
Note: it may be that the personal ID document cost is only $5.00 and not $160.00 but that needs to be confirmed.
6. All the documents submitted for legalization MUST include the full address of the company (physical address: Building Number, Street, City, State, Zip Code) in additional to the official telephone and Fax numbers, email, and the company website.
7. Documents will finally be legalized and ready to be picked up (or sent back) within 3-4 business days.
Anybody that can get all that done in 2 days time is a better man than me, Gunga Din.
TrinityeXchange must be using a different method to open an ISX trading account.
It’s good to have faith in something, but I don’t consider my views on the future of the IQD investment to be a belief system.
Rather, I am trying to do my best to correctly interpret the facts as presented by the two institutions that matter most (to me) in this deal ~ the CBI and Warka Bank.
It’s taken me 7-1/2 years of ownership and 2 solid years of extensive research to come from the position that everybody gets to keep their zeros (whether holding IQD in cash or electronically) and will be millionaires come the RV, down to the interpretation that although I won’t be an instant millionaire, Warka and the ISX might still be the best financial investment currently available ~ especially because of the interest on savings and certificates of deposit and the potential growth of the ISX.
I think the key to my change in thinking came from finally understanding the publically announced redenomination process versus the (so far never publically mentioned) revaluation of currency that can be spent and exchanged internationally.
Once I understood the terms, it has been impossible for me to regain my former interpretation where everybody (including every single Iraqi citizen with at least one million dinar of the currently circulating IQD in his fist) gets to be an overnight millionaire.
I want to go back, but I just can’t get there from here.
I am grateful for having already depositing all my cash via FedEx with Warka when it was still OK to do so and am likewise grateful for finally getting my ISX trading account with Warka.
Now I’m on the hunt for the Iraqi version of Apple or Microsoft.
I extend many thanks to both BrokeNoMore and TrinityeXchange for causing me to send that email to Mohammad at Warka in order to find out the real deal.
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Rather than try to answer every single reply posted to my previous: Investing in Iraqi Dinar ~ Cash, Warka or ISX, I will instead provide some background bona fides and a follow up post.
I completed 3 consecutive tours at Forward Operating Bases in Iraq from the summer of 2004 to the summer of 2007; at which time I was forced to de-mobilize because of injuries.
I started investing in IQD as soon as I got there in 2004 at the CBI rate of $US1 buys IQD1500.
The way it worked is I would engage an Iraqi National who worked inside the FOB, but who went home at least twice a week. I’d give him USD and he’d come back with IQD. Always honest ~ never failed. He’d make what I considered to be an extremely small mark up in the exchange and I always found each transaction to be satisfactory. So did he.
I was, however, always concerned about my future ability to “cash in” stateside after an RV took place, because on every R&R stateside I’d try to find a local US bank who would even consider exchanging the existing large denomination IQD notes for USD. I struck out every time with the label ‘scam’ ringing loudly in my sub-conscious.
Even so, I was not to be discouraged from becoming an instant millionaire who wouldn’t have to re-deploy into combat zones anymore in order to make the income necessary to go on living in the land of the free and the home of the brave with some sense of dignity.
From the very beginning, I was always aware of this Dinar Speculation website and of Warka Bank; but because of the time I’d spent in-country, I considered opening a bank account inside of Iraq as ludicrous due to the (then) instability of the local environment.
Between the summer of 2006 and the spring of 2007 ~ when the Bush administration initiated ‘The Surge’ ~ we were required to wear our 45 pounds of battle rattle, including Kevlar head gear and OTV chest, back and groin protective gear 24/7, whether we were inside the FOB or outside ‘the wire’, because of the daily sniper, RPG and mortar attacks.
To view that particular FOB from a safe distance, go to www.maps.google.com and input these longitude/latitude coordinates exactly as shown here: 33.283444,44.520482.
Camp Rustamiyah ~ home of the Iraqi Military Academy at Al-Rustamiyah (IMAR) ~ formerly known as Camp Muleskinner (from the 7th Cavalry), and then Camp Quervo (from the last name of the first soldier to die there while taking it from the Iraqis). It was turned back to the Iraqis in the spring of 2009 and now they’ll have to train their own 2nd Lieutenants and rookie policemen.
During the entire time that I was deployed, it was against Iraqi law to transport IQD outside of Iraq because (being an almost all cash society) they needed the dough to stay inside the borders in order to prevent cash shortages.
That being the case, civilians were searched at Baghdad airport on their way out of Iraq and if caught with IQD in their possession were labeled as smugglers, had their IQD confiscated (usually with no USD compensation) and were banned from reentering the country. On the other hand, the US Military exited Iraq via Kuwait through a US Customs check point and nobody cared if you took home a duffle bag full of the stuff ~ especially (no doubt) due to Bush Executive Orders protecting Iraqi Investments. Obama has renewed those Executive Orders.
At one time, I spoke to a young civilian contractor who had somehow ‘acquired’ 50 million IQD from departing soldiers in Kuwait and who had successfully deposited it all into a Swiss bank account. He had transferred from Kuwait to see some ‘real action’ in Iraq but lasted less than a year at a FOB before he went back to Kuwait and then de-mobbed.
That encounter encouraged me to believe it was possible to deposit all of the IQD I had successfully sent home into an offshore bank account not located inside of Iraq. I subsequently tried to deposit my IQD cash (carried in a backpack) on R&R’s to Latvia, St Kitts & Nevis and Hong Kong and failed each time. IQD was not acceptable due to US and UN sanctions, I was told. Even the Swiss bank that the kid from Kuwait had used didn’t want to hear about it unless you had a minimum of $US250,000 to deposit along with it. Somehow, he had apparently charmed a bank rep into opening a Swiss account for him. I’m fairly sure that the 50million IQD being worth over $US40,000 had something to do with it.
Fast forward to the fall of 2009 when I was informed of a rumor that after the annual November G-20 currency exchange meeting, the IMF had imposed an ultimatum on the GOI whereby if they didn’t RV by the end of 2009 ~ at an (unknown) acceptable international rate ~ then the IMF would impose a rate of $US1.89 per IQD1.
Of course, it turned out to be only one of many rumors; but at the time I still felt compelled to get my IQD cash secured into an offshore account ASAP. Consequently, I opened a Warka account.
Below, please find some email excerpts from inquires I sent to Warka, followed by email excerpts from Warka after I successfully FedExed some of my IQD cash to fund the account.
Dear Sir,
Thank you for choosing our bank and taking interest in our fine services.
It is possible to send your Iraqi Dinars by courier service to the following mailing address:
Warka Bank for Investment and Finance - Main Branch – Baghdad Iraq
International Foreign Relations Department - Attn: Mohammad K. Issa
Watheq Square – Salman Faiq St. – Hay Alwihda – Sec. 902 – 14th St.
Upon receiving your package it will be counted both by hand and machine in the presence of three dedicated bank employees under my supervision and we will credit the exact amount received to your account.
Best regards,
Customer Accounts Dept
International Affairs
This e-mail is confidential and the information contained in it is privileged. It should not be read, copied or used by anyone other than the intended recipient. If you have received it in error, please contact the sender immediately by return email, and delete the e-mail and do not disclose its contents to any person
The FedEx number for a cost quote for an International Express Service package to Baghdad is: 1-800-463-3339
Since 2009, costs have gone from $59 to $80 to $130 probably because of increased fuel costs.
FedEx used to stop in Dubai, but now goes straight through to Baghdad International.
Use FedEx Tracking Number: 871694314959 at www.fedex.com to see proof of delivery and the person’s name who signed for it.
It’s the same person who sent me the e-mail shown below.
Dear Sir
Thank you for choosing our bank we are looking forward in providing you with all your financial needs and requirements in Iraq, it give us great pleasure to deal with you and to provide you with a very best services and care.
Please note that I deposited your IQD funds in the amount of (IQD 7420000) in your IQD account.
I deposited your USD funds in the amount of ($150) in your USD account.
Your IQD account balance is: IQD 9876039
Your USD account balance is: $ 150
For any further inquiries please do not hesitate to contact us as it is a pleasure you to provide with our sincere services and best customer care.
Many thanks and best regards,
Rowaida Mohammed
Customer Services
International Foreign Relations Dept.
This e-mail is confidential and the information contained in it may be privileged. It should not be read, copied or used by anyone other than the intended recipient. If you have received it in error, please contact the sender immediately by return email, and delete the e-mail and do not disclose its contents to any person.
I’ve actually successfully sent IQD cash via FedEx no less than 4 times to fund my own Warka account, helped others do it no less than 8 times as they switched from strictly cash to Warka accounts and in fact am about to do it one more time again as soon as 4 different people combine their last (hold-out) IQD cash stashes into a single package to save money on the $130 fee.
Just saying Can’t, Can’t, Can’t and describing the process as a ‘factual error’ because you’re actually ignorant of the real facts doesn’t mean it can’t be done.
I actually did encounter several long delays at customs going in, but the contents were never confiscated ~ not even once.
When I finally contacted FedEx about the delays, I discovered (after I had already sent several of the packages) that any package that has its total value listed as more than $100 is automatically stopped at customs and inspected. However, it has been my experience that even after delay and inspection the packages have always made it ~ as evidenced by emails and increased account balances.
I subsequently discovered that the key to avoiding long delays is to make the package as flat as possible, describe the contents on the International Air Waybill simply as Business Documents and always list the total value as less than $100.
Note that the package with tracking number 871694314959 was delivered in just 6 days because FedEx now goes directly into Baghdad International instead of stopping in Dubai first.
In the 2 years since the fall of 2009 until now ~ the fall of 2011 ~ I’ve done nothing else but recover from Iraq, go to funerals, try to get fit enough to re-deploy and research this IQD investment.
Until now, I’ve had no interest in posting my findings on this Dinar Speculation/Dinar Vets website, but instead have concentrated on updating my closest friends and relatives as to my research findings via emails.
Out of the approximately 30 people that I’ve approached with the investment, only 12 have actually made the commitment; and as a result I’ve felt responsible to make sure that at least those 12 know what I have discovered about it ~ and that includes answering the many ‘emotional’ rumors generated from this and other dinar rumor websites.
I’ve sent those 12 investors over 30 blogs attached to individual emails and the one called Investing in IQD ~ Cash, Warka or ISX was actually number 32 out of a total of 35.
Getting calluses from patting myself on the back for having produced a book on the IQD investment and passing the hardest (No 65) financial investment test known to mankind hasn’t interested me either, whereas discovering the real truth of the investment for the sake of the dozen people I’ve influenced into it has.
I’ve been conducting my own independent research since 2004, which I’m sure is simply parallel to many others; and for whatever reason lately, have felt obliged to share my findings with others outside the immediate circle of my dozen closest friends and relatives.
I’ve felt obliged to insert these two posts into the obvious mix of emotion, denial, confusion and misunderstanding that I’ve seen coming from not only this site but from other sites as well.
That being said, it certainly won’t hurt my feelings if someone doesn’t want to invest in the IQD at all.
By the same token, if someone just wants to hang on to their IQD cash and hope for the best instead of converting what they have into an electronic line item on a bank statement (that is accessible from the comfort of their own home via the internet), then that also will be their own individual choice. Freedom, baby ~ yeah!
If looking at the options makes you want to burn your dinar or tell small children the truth about Santa Claus and the Easter Bunny, then there’s nothing I can do about that either. Have at it.
Because of the US Military’s continued presence in Kuwait (even before the 2003 invasion of Iraq) I’m sure you can still purchase and/or exchange your current large denomination IQD at Banks and Currency Exchange sites in Kuwait if for no other reason than to accommodate the US Military and DoD civilian contractors rotating out of the American Embassy in Baghdad.
Likewise, I’m also positive that the exchange rates will be as described in the post called Investing in Iraqi Dinar ~ Cash, Warka or ISX. Once the redenomination process starts, you’ll be able to exchange your large denomination IQD notes for either the new (lower denomination) notes or for USD but at the rates described.
Be aware that this redenomination process is not an international RV and also isn’t just some whim to be delivered by the current GOI any time they think it’s right to do so.
The CBI through Mazhar Mohammad Saleh, a senior member of the CBI Advisory Panel has repeatedly stated publicly that the GOI has adopted a CBI two-pronged plan to restructure the national currency ~ physical banknotes and coins.
What that really means is the CBI draft plan to restructure has been presented to Maliki’s Cabinet of Ministers and those Ministers have had it at least since September 2011. It’s now up to this same Council of Ministers to form the draft plan into workable legislation that can be presented to and eventually passed by the Iraqi Parliament into law.
It’s not going to be some sneaky little secret imposed on the Iraqi citizens by surprise, but instead will be accompanied by a massive amount of public education designed to inform everyone of what the deal is. It will be big news and there’ll be plenty of time to get ready for its actual implementation.
Economic analyst Hilal al-Tahhan told Radio Free Europe that the CBI’s move to re-denominate its currency is long overdue. He said he expects the currency change to go smoothly because of the decision to allow both the old and the new banknotes and coins to co-exist, leading to less turbulence in the economy.
Remember that Warka Bank is at least one bank that has 120 branches and about 350 ATM’s scattered all over Iraq. Warka may even have more of both by now and there are probably other banks inside Iraq and Kuwait following the same model to attract foreign investment as well.
What that means is that there are probably plenty of Iraqi citizens who have learned a thing or two from the invasion forces and now have electronic accounts and ATM cards as well as cash stashed under the mattress or in a home safe.
Try to imagine that the law is finally passed and the redenomination process (not the RV) has started. Now also imagine that you’re either a DoD civilian contractor or a serving member of the US Military working out of the Embassy; but whatever the case, you’re right there in Iraq or Kuwait when it starts. Here’s a fictional scenario to consider:
• The redenomination process starts and it becomes time to turn in those (40) IQD25,000 notes or that wad of (100) IQD10,000 notes or whatever combination you ended up with when you bought your one million IQD from that local dude who runs the internet café, or from that bank or currency exchange site in Kuwait.
• So, you suit up in your Kevlar and your OTV and catch a ride from the Embassy to a downtown bank to cash in.
• As you’re lined up at the bank counter, you notice that all the other bank customers are in fact Iraqi Citizens with the exact same idea as you ~ lose the big notes ASAP!
• The teller offers you (10) of the new international IQD100 notes in exchange for your wad and since the CBI exchange rate is now $US1 to IQD1.17 for those newer notes, their value comes out to $US854.70.
• That works out to $US0.85 per dinar, making the USD stronger than the IQD, not the other way round; but in any case, is just what you paid for the large denomination notes at the CBI rate of 1:1170.
• According to the teller, these new international notes still aren’t allowed to leave the country just yet, because an actual international RV has not yet happened and since Iraq is still a mostly cash society it needs an ample amount of it to remain in country and in circulation.
• It would still be against Iraqi law to transport them outside the borders before an actual (international) RV has occurred, even though serving US military personnel could probably get away with it by going through Kuwait and a US Customs checkpoint on their way home instead of risking getting searched flying out of Baghdad International.
• Since you are planning to go home soon and could de-mobilize tomorrow, given the right circumstances, you decide to take the $US854.70, because it would be the same deal you would get in Kuwait anyway.
• If you could just get the new IQD notes out of the country, out of Kuwait and then back home before the international RV happened, and then you are able to wait for an exchange rate of say $US2.50 to IQD1.00, you could then turn in those new (10) IQD100 notes for $US250 each at your local bank or airport currency exchange site.
• That would be $US2500, less (2%) bank fees for the exchange, or about $US2450, which would be a total profit of $US1595.30 or about 185.65% over your original $US854.70 spent. Way better than a poke in the eye with a sharp stick, or taking a sniper round on the way out of town, but not exactly in the millionaire class status.
• Even an international RV at 1 to 1 would be a 15% increase to what has already been publicly proposed for the redenomination process at 1 to 1.17.
• An international RV at $US0.10 (ten cents) to IQD1.00 would be an extreme devaluation of the currency, would in fact reverse the entire CBI/GOI redenomination plan’s intent and actually makes ZERO SENSE when you take the time to think about it.
Some questions to consider in this fictional scenario are:
What makes you think that you’re going to get $US854,700.00 for your 1million IQD in large denomination notes (at the rate of $US0.85 per IQD1.00) instead of just $US854.70 (at the rate of $US1.00 per IQD1170.00)?
Can you really picture yourself walking out of that Iraqi bank with six figures in USD while all the rest of the Iraqi clients in the bank doing the same thing at the same time get less than a grand in USD?
Why would that be ~ just because you’re an Amrikan?
On the other hand, if you do get all those big bucks, does that mean all of those Iraqi citizens holding large denomination notes in the bank with you on the day and indeed all over the country are also instant millionaires as well?
The whole country goes from abject poverty to overnight instant wealth?
Which of those new Iraqi millionaires would even go to work anymore?
When has that ever happened in history?
If it were true, why would anybody trade in their large denomination notes for the small denomination notes?
The small denomination notes couldn’t begin to compete with the large denomination notes in terms of value in USD, so who would really want them?
What about the CBI/GOI publicly stated plan to restructure the national currency by allowing the older notes to co-exist with the new notes inside of Iraq ~ especially since the new notes are meant to make purchases easier by providing a means of making change for a soft drink or a pack of gum or a pack of cigarettes or an ice cream cone?
What about those lucky Iraqis or those forward thinking foreign investors who just happen to have Warka or other similar electronic bank accounts?
Do electronic accounts get to keep all their zeros during the redenomination process, thereby making their owners instant millionaires, while at the same time those folks with cash only have to lose big value when they turn in their cash?
Wouldn’t that make the majority of the Iraqi population mad as hell? Talk about civil unrest! It would be chaos!
If it can’t be true right there in Iraq and Kuwait, how could it possibly be true here in Amrika or the UK or anywhere else for that matter?
What about investing in the ISX? Would that be a way to save the zeros?
Here’s another fictional scenario to consider:
• Let’s say the worth of Ali Baba Carpet Company traded as ABCC on the ISX is based on the number of shares it has @ IQD1 per share.
• The number of ABCC shares @ IQD1 per share is based on the number of carpets ABCC has in inventory; which are selling at an average of, let’s say, IQD100,000 or $US85.47 per unit, based on today’s exchange rate of $US1 per IQD1170.
• ABCC currently has 10,000 carpets in stock, so at IQD100,000 per unit, the worth of the company is IQD1 Billion, which translates to $US854,700.
• So, before the re-denomination process starts ABCC has 1,000,000,000 (One Billion) shares trading at IQD1 per share.
• When the re-denomination process starts, ABCC will be able to accept either the existing currency in (10) IQD10000 notes, or the new currency in (10) IQD10 notes or the new currency in (1) IQD100 note or $US85 to purchase one of its fine quality IQD100,000 carpets ~ whichever pleases you, Baba, your wish is my command!
• ABCC will quickly realize that to be hep and get with the new program, and also to move some bleedin’ inventory for the sake of Allah; it will have to start advertising prices based on the new CBI valuation of the IQD against the USD @ $US1 per IQD1.17.
• ABCC quickly changes its per unit price from IQD100,000 to IQD100 and stages a major TV advertising campaign declaring that they don’t call the owner of ABCC “Crazy Ali” for nothing!
• Because he has opted to recognize the new currency valuation, Ali now has to face the fact that his company ABCC is not worth the One Billion Shares it once was at the previous IQD valuation against the USD.
• ABCC shares after the re-denomination would be reduced from One Billion to one Million shares, but at the new valuation of $US1 per IQD1.17; so the company would still be worth $US854,700 ~ just like it was before the re-denomination started.
• If you happen to be holding ABCC shares in your ISX portfolio, you will indeed experience a thousand fold drop in the number of shares you own and at the same time a thousand fold jump in the price per share ~ a small miracle, Effendi ~ not to worry……..really!
• The worth of the shares before and after the re-denomination will be exactly the same as expressed in USD. No huge gain, Dude, but nobody loses either ~ instead, think of the potential growth of the company when the whole world learns that Ali of ABCC in Baghdad, Iraq is certifiably the “Craziest” carpet dealer on the planet.
• Maybe Ali will become the next Bill Gates and ABCC the next Microsoft.
• In any case, you’ll be able to buy all of Ali’s Persian carpets you want at Amazon.com ~ tell your friends.
At the end of the day, I want to be totally wrong about the scenarios I’ve presented in these two posts.
I want to be an uber millionaire, not just a working stiff looking at the possibility of having to work until I’m dead.
I want everybody who is brave enough to invest in the IQD (and there’s really not that many of us worldwide) to be fellow uber millionaires flying around in charted jets at 30,000 feet, yakking our heads off on the plane’s $5.00 per minute phones, while on our way to having umbrella drinks on the sand in some exotic location.
And, oh yeah, while we’re there, let’s call on the local banker to see what financial products he has to offer our newly formed International Business Corporations with bank accounts in Chinese Yuan, Vietnamese Dong, Vanguard International Funds of baskets of currencies and other such up and coming currencies set to go the way of our IQD’s.
Of course, there will be gold and silver bullion in the safe at home ~ set aside for possible future hard times, but in any case held in Trust to pass on to the next generation.
Focusing on all those zeros has kept me on a natural high for 7 years and allowed me to really own the feeling of being extremely grateful for all my good luck and wealth ~ which just happens to be the key to the universal law of attraction.
I’m still confident wealth can happen to me ~ one way or another, with or without the IQD ~ and so will always be grateful for my time in Iraq and for the introduction to this IQD investment.
When wealth does happen, I plan to form a Trust to preserve it and also to give away millions through my own Foundation and really do some good with my favorite charities.
At the exact same time that I finally came to these inevitable conclusions about the IQD investment that I’ve outlined in these two posts, I was already anxious from waiting for my (long delayed) renewed passport, for my (one month overdue) ISX trading numbers from Warka and for a substantial wire transfer in route from Warka back to my US account to pay some bills (that in the end took 18 days to complete) ~ all of this waiting occurring at the same time.
When I finally did come to these conclusions, I was already a wreck and it was like the straw that broke the camel’s back.
I actually became physically ill and extremely depressed for at least a week from thinking about it.
I have no real desire to do the same to anyone at this site who reads the posts, but in the end personal integrity demands that I can do no less than state the conclusions as I’ve come to view them.
I apologize for the feeling that these posts are sure to give anyone who cares to think about them for very long.
In retaliation, feel free to do your own (extensive) research to prove me wrong. I’d love to hear about it ~ especially a scenario where we get to keep all of our zeros in our Warka accounts and in the number of ISX stocks that we hold.
Don’t worry about hurting my feelings (sticks and stones, etc…..); instead worry about putting your own foot in your mouth when attacking the messenger. Once it’s out there, it’s hard to take back.
Don’t depend on anyone to do your thinking or your (extensive) research for you. Not to slight any woman already invested, but it’s time to man up and do it yourself or you’ll never own the feeling of confidence that you should have when investing like this.
If you really want to keep up on the latest news out of Iraq try visiting these sites regularly:
http://www.iraq-businessnews.com/
http://www.rferl.org/articleprintview/1950504.html
http://www.isx-iq.net/isxportal/portal/homePage.html?currLanguage=en
Good luck to us all.
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This is an attempt to re-emphasize that: prior to the inevitable redenomination of the existing Iraqi Dinar banknotes and coins, the only way to truly invest in the IQD and actually see a return on your investment is to open a Bank account inside Iraq and then wait for an international revaluation of the IQD against the USD.
Note the following:
In economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation’s money supply.
The other part of a nation’s money supply consists of bank deposits (sometimes called deposit money), ownership of which can be transferred by means of cheques, debit cards, or other forms of electronic money transfer.
Nearly all contemporary money systems are based on fiat money ~ that is to say modern currency has value only by government order (fiat) and is not backed by gold or silver or oil or even sea shells. Having a lot of oil does not necessarily mean a country will have a high value currency.
Usually, the government declares the fiat currency (typically notes and coins issued by the central bank) to be legal tender, making it unlawful to not accept the fiat currency as a means of repayment for all debts public and private.
In most cases, each private central bank has a monopoly control over the supply and production of its own currency.
To facilitate trade between these currency zones, there are different exchange rates, which are the prices at which currencies (and the goods and services of individual currency zones) can be exchanged against each other.
Currencies can be classified as either floating currencies or fixed currencies based on their exchange rate regime.
Altering the face value of a currency without reducing its (fixed) foreign exchange rate is a redenomination, not a revaluation.
Revaluation (RV) means a calculated rise in a country’s official (fixed) foreign exchange rate of its own currency, relative to another country’s currency.
Mazhar Mohammad Saleh, a senior member of the CBI Advisory Panel has repeatedly stated publicly that the GOI has adopted a CBI two-pronged plan to restructure the national currency ~ physical banknotes and coins.
One prong is the long overdue (domestic) redenomination of the existing large denomination banknotes by introducing new banknotes and coins into circulation.
The other prong is an (international) revaluation of the new banknotes and coins to increase the value of the IQD against the USD.
Iraqi Dinar Currency
Existing banknotes with the (current) CBI fixed exchange rate of 1:1170, can only be used inside Iraq, will never be used internationally and will never be able to be universally exchanged outside of Iraq.
Existing IQD Banknotes:
• IQD 25,000 = $US 21.37
• IQD 10,000 = $US 8.55
• IQD 5,000 = $US 4.27
• IQD 1,000 = $US 0.85
• IQD 500 = $US 0.43
• IQD 250 = $US 0.21
• IQD 50 = $US 0.04
There are also IQD 100 and IQD 25 coins but they are not currently in circulation, and are not for sale to foreign investors on the Internet.
New banknotes with the anticipated CBI fixed exchange rate of 1:1.17 are still yet to be issued, will replace the existing notes and the USD over time; and will be able to be exchanged and used for purchases outside of Iraq ~ only after an official international revaluation has been established.
New IQD banknotes and coins not yet issued:
• IQD 100 = $US 85.47
• IQD 50 = $US 42.74
• IQD 25 = $US 21.37
• IQD 10 = $US 8.55
• IQD 5 = $US 4.27
• IQD 1 = $US 0.85
• IQD 0.50 = $US 0.43
• IQD 0.25 = $US 0.21
• IQD 0.10 = $US 0.09
• IQD 0.05 = $US 0.04
When the redenomination process starts these new banknotes and coins with their new CBI (fixed) exchange rate will be introduced into circulation and will co-exist with the already existing banknotes and their old CBI (fixed) exchange rate until the existing notes are sufficiently removed from circulation ~ to the satisfaction of the CBI.
In the recent past (2003) when the existing notes replaced those with Saddam’s picture on them inside Iraq, the process took approximately 90 days.
Since the existing notes will never have the new exchange rate attached to them, they will not even be useful for future interbank transfers inside Iraq and will likely just be destroyed once they have been collected.
In a practical everyday sense, it will be as if there were two separate currencies being used inside Iraq ~ both of them named the Iraqi Dinar.
The Iraqi people will certainly be able to cope with using two different currencies, because they are already dealing with the existing IQD and the USD.
What the Iraqi people really want is to become international citizens again with their own IQD international currency, instead of having to depend on the USD to purchase goods and services outside of Iraq.
In fact, the Iraqis are so ready for equality that they are already using the existing domestic IQD notes against the USD in a de-facto ‘unofficial’ street level exchange rate of 1:1000.
For example, right now in Iraq and mainly because there’s no practical way to make small change:
• IQD 25,000 = $US 25
• IQD 10,000 = $US 10
• IQD 5,000 = $US 5
• IQD 1,000 = $US 1
• IQD 500 = $US 0.50
• IQD 250 = $US 0.25
• IQD 50 = $US 0.05
Something that needs to be re-emphasized ~ the existing IQD banknotes and coins can only be used and/or exchanged for USD inside Iraq ~ nowhere else.
So, if anyone is holding the existing large denomination banknotes outside of Iraq, how are they supposed to cash them in for USD outside of Iraq?
The answer is that they are not going to be able to ~ not now, not after the redenomination process starts inside Iraq and not even after the international revaluation of the new Iraq Dinar notes has been declared.
The reason is that no bank outside of Iraq will ever recognize the existing large denomination banknotes as legitimate international currency and so will refuse to cash them in, even at the existing exchange rate of 1:1170.
There will of course be exceptions, whereby an enterprising financial institution or even a forward thinking US bank may choose to trade through a third party that is willing to transport the physical notes back to Iraq for the final exchange with the CBI; however, the existing large denomination IQD notes will never be on that same bank’s ‘accepted currencies’ list for foreign exchange with the USD. The larger than normal fee for this exceptional (potential) service will most certainly wipe out any profit that might be anticipated.
Anyone holding existing IQD notes outside of Iraq won’t even be able to get their costs back outside of Iraq (minus exchange fees).
When an international revaluation takes place and the IQD is again recognized by the global community, it will be only the new notes with the new rate that will be recognized and exchanged and/or accepted as payment outside of Iraq ~ not the existing notes with the larger denominations.
There is at least one “Dinar Guru” out there with three internet sites tied to an IQD news network that claims that he will be able to get the best group rate available when it comes time to “cash in” your IQD banknotes.
All you have to do to get this great exchange rate for your existing IQD banknotes is join his VIP group and pool your banknotes together with a larger group for the leverage of a bulk exchange to take advantage of the best rates available.
His stance is confusing because he seems to combine the redenomination process and the international RV into one event and at the same time ignores or seems to dismiss what the CBI senior board members have already put out to the public time and time again regarding the redenomination of the existing banknotes.
Here is a November 2011 quote from him:
“If the RV is at a dime and there is a mandatory turn-in of old notes, I am going to cash out half or more ~ I will be happy with that return. Then, I’ll reinvest the other half back into Dinar, so that I can take advantage of the future rate increases. Many people who have never heard of the Dinar will hear about it, and they will buy Dinar at US$0.10 because honestly, once the rate goes that high I don’t think it will go down. It will only go up and others will think so too. So, the notion that nobody will invest at a low rate of US$0.10 is just wrong in my opinion. Regarding the lower notes (the existing IQD500, IQD 250 and IQD50 notes), if there is a recall or a mandatory cash in of the notes, it will be across the board. Don’t listen to the pumpers that say low notes will be safe. That’s just a sales pitch”
This guy has about 30,000 to 35,000 followers (his estimate) holding IQD cash who are heeding his advice and expecting to be able to cash in their existing IQD banknotes through him when the time comes. I’m sure that his popularity has increased in this regard, since most who have inquired about cashing in IQD with their local bank have probably already been told that it’s a ‘scam’ and can’t be done. Now, he is their only hope.
A foreign investor holding the existing large denomination notes outside of Iraq may be able to at least retain what value the CBI gives the notes right now by converting the physical notes into an electronic line item in a bank account ~ provided the bank will support an IQD account. Not too many (if any) of those banks are around outside of Iraq.
Even though the value the CBI has assigned to the notes at the current rate of 1:1170 might be far less than what a foreign investor paid for them over the Internet; it would still be a way of rescuing the investment from being a total loss, and might even be a way of gaining more value (at least up to par) through financial products that such a bank has to offer ~ such as Certificates of Deposit or Savings Accounts with higher rates of interest than are currently offered by US or UK banks.
Out of necessity, such a bank would have to be a private bank and probably would also have to be located inside Iraq in order to accept physical notes for a deposit.
One such bank is the Warka Bank for Investment and Finance with 120 branches and 350 ATM machines scattered throughout Iraq. www.warka-bank.com
Warka Bank IQD Account
Once you have opened an account at Warka ~ with both USD and IQD savings accounts ~ the bank will accept FedEx shipments of physical IQD banknotes and even USD banknotes for deposit. You can also wire transfer USD to your Warka account and then choose to deposit the funds in either your USD or your IQD account.
Besides remarkably higher interest rates offered for both USD and IQD savings accounts and certificates of deposit, Warka also has an Iraqi Stock Exchange (ISX) department which acts a broker for anyone wanting to invest in the ISX.
There is strong historical evidence from other (recent) currency re-denominations that when the redenomination process is started in Iraq; despite the fact that they are bank deposits and not actually physical banknotes and coins, electronic IQD bank accounts will also have their balances adjusted by the same method as the physical banknotes and coins. That is, the total balance will be reduced a thousand fold with the movement of the decimal point 3 places, but at the same time the exchange rate will be increased upward a thousand fold so that the value in USD remains the same after the redenomination as it was before the redenomination.
The retention of the same value in USD before and after the redenomination process is a point that the CBI has emphasized time and time again through interviews with senior CBI bank officials.
The CBI is interested in regaining the Iraqi Citizen's confidence in their own currency, and cannot afford to mislead them regarding the future value in terms of the USD ~ which is currently the default international currency in Iraq.
In such a case, all electronic accounts in IQD would be affected worldwide; including the foreign currency reserves held by the various central banks and governments.
Emotionally, it might be wise to accept that even thousands of USD invested in an electronic IQD bank account won’t make anyone an instant overnight millionaire ~ and that would hold true for Iraqi Citizens as well as foreign investors outside of Iraq.
The advantage of a Warka Bank account (and other private bank accounts inside Iraq) is that because they are electronic they will be uniquely positioned to take advantage of future international revaluations of the IQD ~ possibly even up to past exchange rates of US$2 to US$3+ per IQD. That could double or even triple the investment.
In addition, trading on the ISX through a Warka broker could mean explosive potential as the country and core infrastructure companies grow with the economy.
The Iraqi Stock Exchange (ISX)
The process to be eligible to trade on the ISX is at least a 4 month process in order to receive a trading account number, but may well be worth the effort for future wealth.
The next 'Microsoft' could easily be born out of the ashes of the Iraqi economy, especially in light of the recent surge in foreign investment pouring into Iraq.
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[Adam Montana] One word: Redenomination.
in RV & Dinar Questions
Posted
Prior to the inevitable redenomination of the existing Iraqi Dinar banknotes and coins, the only way to truly invest in the IQD and actually see a return on your investment is to open a Warka Bank account and then wait for an international revaluation of the IQD against the USD.
Altering the face value of a currency without reducing its (fixed) foreign exchange rate is a redenomination, not a lop and not a revaluation.
Revaluation (RV) means a calculated rise in a country’s official (fixed) foreign exchange rate of its own currency, relative to another country’s currency.
Mazhar Mohammad Saleh, a senior member of the CBI Advisory Panel has repeatedly stated publicly that the GOI has adopted a CBI drafted two-pronged plan to restructure the national currency ~ to include physical banknotes and coins and electronic bank accounts.
One prong is the long overdue (domestic) redenomination of the existing large denomination banknotes by introducing new banknotes and coins into circulation.
The other prong is a simultaneous (international) revaluation of the new banknotes and coins to increase the value of the IQD against the USD.
Iraqi Dinar Currency
Buying IQD on the internet and/or holding IQD in cash form, in my opinion is useless for a foreign investor especially since the CBI is about to recall all the existing banknotes and exchange them for the new banknotes (and the new banknotes probably won’t be available for trade-in or purchase via the internet once they are introduced into circulation).
Existing banknotes with the (current) CBI fixed exchange rate of 1: 1166, can only be used inside Iraq, will never be used internationally and will never be able to be universally exchanged outside of Iraq.
Existing IQD Banknotes:
• IQD 25,000 = $US 21.44
• IQD 10,000 = $US 8.58
• IQD 5,000 = $US 4.29
• IQD 1,000 = $US 0.86
• IQD 500 = $US 0.43
• IQD 250 = $US 0.21
• IQD 50 = $US 0.04
There are also IQD 100 and IQD 25 coins but they are not currently in circulation, and are not for sale to foreign investors on the Internet.
New banknotes with the anticipated CBI fixed exchange rate of 1: 1.17 are still yet to be issued, will replace the existing notes and the USD over time; and will be able to be exchanged and used for purchases outside of Iraq ~ only after an official international revaluation has been established and recognized by the IMF, World Bank and the rest of the international community.
New IQD banknotes and coins not yet issued:
• IQD 100 = $US 85.76
• IQD 50 = $US 42.88
• IQD 25 = $US 21.44
• IQD 10 = $US 8.57
• IQD 5 = $US 4.28
• IQD 1 = $US 0.85
• IQD 0.50 = $US 0.42
• IQD 0.25 = $US 0.21
• IQD 0.10 = $US 0.09
• IQD 0.05 = $US 0.04
When the redenomination process starts (reportedly in late 2012 or early 2013) these new banknotes and coins with their new CBI (fixed) exchange rate will be introduced into circulation and will co-exist with the already existing banknotes and their old CBI (fixed) exchange rate along with the USD, until the existing notes and the USD are sufficiently removed from circulation ~ to the satisfaction of the CBI and the GOI.
In the recent past (2003) when the existing notes replaced those with Sadaam’s picture on them the process took approximately 90 days. That was because of the war and the Coalition Provisional Authority (the US and the British) introducing both the USD and the currently used IQD banknotes (made in England) into the Iraqi economy. Everybody was in a hurry so that the economy didn’t collapse completely.
This time around the CBI is going to allow both kinds of banknotes (the newer lower denomination bills and the existing larger denomination bills) to co-exist for a (reportedly) 1 - 2 year period until the CBI is satisfied that the redenomination has been successful.
Redenomination success would mean that the majority of the existing large denomination IQD banknotes are exchanged out of circulation and the Iraqi citizens become confident enough in the value of their own new low denomination currency that the use of USD banknotes is phased out as well.
The Saddam banknotes could not be spent outside of the borders of Iraq.
Instead, there was an international version of the IQD that was made in Switzerland and recognized and exchanged for other currencies by the international community.
Similarly, the existing IQD banknotes cannot be spent outside of the borders of Iraq.
Instead of an international version of the IQD made in Switzerland, the Iraqis currently use the USD, made in the US, and recognized and exchanged for other currencies by most of the international community.
In order for the new low denomination IQD banknotes to replace the USD as the Iraqi international currency, the new low denomination IQD banknotes will have to recognized and be exchangeable by the international community in order for them to be used for the purchase and importation of goods and services into Iraq.
UN Sanctions under Chapter 7 will probably have to be resolved and the Iraqi HCL will have to be in place (and effective) before the international community will unilaterally recognize the new lower denomination Iraqi banknotes (yet to be issued) as the legitimate international (and exchangeable) currency of Iraq.
That being the case, when the redenomination process starts, all three types of currency (the existing high denomination IQD, the new low denomination IQD and the USD) will at first all be recognized, exchanged and used inside the borders of Iraq and only the USD will (still) be spendable outside of Iraq.
The existing large denomination banknotes will be exchanged at the current CBI rate of $1:1166 (or whatever the exchange rate is by the time redenomination starts) and the new lower denomination banknotes will be exchanged at the new rate of $1:1.166.
That way an existing IQD10000 banknote and a new IQD10 banknote will both be able to be exchanged for US$8.57 and the economy will absorb the two different rates and the 3 different currencies (including the USD) smoothly and without a lot of strife.
Iraqi merchants will just have to decide whether to advertise their goods and services at the existing currency rate or the new currency rate. Either way, IQD10000 or IQD10 or US$8.57 will all spend equally.
Since the existing notes will never have the new exchange rate attached to them, they will not even be useful for future interbank transfers inside Iraq and will likely just be destroyed once they have been collected.
The Iraqi people will certainly be able to cope with using three different currencies, because they are already dealing with the existing IQD and the USD.
What the Iraqi people really want is to become international citizens again with their own IQD international currency, instead of having to depend on the USD to purchase goods and services outside of Iraq.
In fact, the Iraqis are so ready for equality that they are already using the existing domestic IQD notes against the USD in a de-facto ‘unofficial’ street level exchange rate of 1: 1000.
For example, right now in Iraq and mainly because there’s no practical way to make small change:
• IQD 25,000 = $US 25
• IQD 10,000 = $US 10
• IQD 5,000 = $US 5
• IQD 1,000 = $US 1
• IQD 500 = $US 0.50
• IQD 250 = $US 0.25
• IQD 50 = $US 0.05
Something that needs to be re-emphasized ~ the existing IQD banknotes and coins can only be used and/or exchanged for USD inside Iraq ~ nowhere else.
So, if anyone is holding the existing large denomination banknotes outside of Iraq, how are they supposed to cash them in for USD outside of Iraq?
The answer is that they are not going to be able to ~ not now, not after the redenomination process starts inside Iraq and not even after the international revaluation of the new Iraq Dinar notes has been declared and recognized.
The reason is that no bank outside of Iraq will ever recognize the existing large denomination banknotes as legitimate international currency and so will refuse to cash them in, even at the existing exchange rate of 1: 1166.
There will of course be exceptions, whereby an enterprising financial institution or even a forward thinking US bank may choose to trade through a third party that is willing to transport the physical notes back to Iraq for the final exchange with the CBI; however, the existing large denomination IQD notes will never be on that same bank’s ‘accepted currencies’ list for foreign exchange with the USD. The larger than normal fee for this (potential ) exceptional service will most certainly wipe out any profit that might be anticipated.
Anyone holding existing IQD notes outside of Iraq won’t even be able to get their costs back outside of Iraq (minus exchange fees).
When an international revaluation takes place and the IQD is again recognized by the global community, it will be only the new notes with the new rate that will be recognized and exchanged and/or accepted as payment outside of Iraq ~ not the existing notes with the larger denominations.
A foreign investor holding the existing large denomination notes outside of Iraq may be able to at least retain what value the CBI gives the notes now by immediately converting the physical notes into USD cash (via EBay or an online IQD trader) and then wire the USD cash into an electronic line item in a bank account ~ provided the bank will support an IQD account. There are not too many (if any) of those banks around outside of Iraq.
Even though the value the CBI has assigned to the notes at the current rate of 1: 1166 might be far less than what the foreign investor paid for them over the Internet; it would still be a way of rescuing the investment from being a total loss, and might even be a way of gaining more value (at least up to par) through financial products that such a bank has to offer ~ such as Certificates of Deposit or Savings Accounts with higher rates of interest than are currently offered by US banks.
Out of necessity, such a bank would have to be a private bank and probably would also have to be located in Iraq in order to accept physical notes for a deposit.
One such bank is the Warka Bank for Investment and Finance with 120 plus branches and 350 plus ATM machines scattered throughout Iraq. http://www.warka-bank.com
Right now Warka Bank is under the Guardianship of the CBI due to liquidity problems which have made it temporarily insolvent, but that state of affairs will soon be adjusted by an independent Auditor appointed by the CBI.
Warka Bank IQD Account
Once you have opened an account at Warka ~ with both USD and IQD savings accounts ~ you can wire transfer USD to your Warka account and then choose to deposit the funds in either your USD or your IQD account.
Besides remarkably higher interest rates offered for both USD and IQD savings accounts and certificates of deposit, Warka also has an Iraqi Stock Exchange (ISX) department which acts as a broker for anyone wanting to invest in the ISX.
Current interest rates are:
4% interest on a USD Savings account
5% interest on a USD Certificate of Deposit
7% interest on an IQD Savings account
8.5% on a 3 month IQD Certificate of Deposit
9.5% on a 6 month IQD Certificate of Deposit
10.5% on a 12 month IQD Certificate of Deposit
There is strong historical evidence from other (recent) currency redenominations that when the redenomination process is started in Iraq, electronic IQD bank accounts will also have their balances adjusted by the same method as the physical banknotes and coins. That is, the total bank account balance will be reduced a thousand fold with the movement of the decimal point 3 places (to the left), but at the same time the exchange rate will be increased upward a thousand fold so that the value in USD remains the same after the redenomination as it was before the redenomination. In such a case, all electronic accounts in IQD would be affected worldwide; including the foreign currency reserves held by the various central banks and governments around the world.
Emotionally, it might be wise to accept that even thousands of USD invested in an electronic IQD bank account won’t make anyone an instant overnight millionaire ~ and that would hold true for Iraqi Citizens as well as foreign investors outside of Iraq.
The advantage of a Warka Bank account (and other private bank accounts inside Iraq) is that because they are electronic they will be uniquely positioned to take advantage of future international revaluations of the IQD ~ possibly even up to past exchange rates of US$2+ to US$3+ per IQD. That could double or even triple the initial investment.
The Iraqi Stock Exchange (ISX)
Trading on the ISX through a Warka ISX Department broker could mean explosive potential as the country and core infrastructure companies grow with the economy.
The process to be eligible to trade on the ISX with Warka Bank appears to be at least a 4 month process to receive a Warka ISX trading account number but may well be worth the effort for future wealth.
In 2011 the aggregate growth of the Iraqi Stock Market was 36% for the year.
It is expected to do as well or better in 2012.
Until the Warka Bank Audit process is over you won’t be able to wire transfer USD back to the States or purchase stock on the ISX through the Warka Bank ISX Department.
It would be wise to visit http://www.iraq-businessnews.com/category/banking-finance often in order to keep up on the latest news of Warka Bank, the Iraqi Stock Market and the Iraqi Dinar Re-denomination process.
I don’t see the USD ever recovering from its decades long decline, so I’m sticking with gold, silver and copper bullion and the IQD at Warka to put my savings into.
The IQD Revaluation (RV)
When all of this redenomination has successfully taken place, the Iraqi currency as a whole (including the new lower denomination IQD banknotes, electronic Warka accounts and stock prices on the ISX) will (finally) be in a position to incorporate a significant revaluation to match the growing Iraqi economy.
A revaluation could take the exchange rate from $1:1.166 to $1:1 or even more; but while the rest of the world (and especially IQD foreign investors) wouldn’t mind a revaluation to $2:1 or even $3:1, the CBI and the GOI are going to want to keep that exchange rate as low as possible in order to be competitive exporting Iraqi oil, natural gas, gold, silver, dates, copra, etc……
The GOI will also want to encourage tourism and foreign investment into its infrastructure, so it will serve the Iraqi economy best to be the new international “bargain” by keeping the exchange rate of its currency as low as possible.
For us IQD investors it will mean a chance to possibly double or triple our Warka investments in the future; but in the meantime while we are waiting, we can still enjoy 7% on savings, 8.5%, 9.5% and 10.5% on CD’s and possibly even more by investing in the ISX.
You never know when an Iraqi company might suddenly take off and become the next “Microsoft” of the investing world, especially with the encouragement of foreign investment and technology.
No foreign investor or any Iraqi citizen for that matter is suddenly going to be a millionaire based just on a new revaluation of the IQD, but that doesn’t mean the investment is a bad idea. In fact, in my opinion it’s still the best choice available to the average investor.
For additional information on the owner’s of Warka Bank go to:
http://www.al-bunnia.com/HMBS.pdf