As a newbie, I have been reading everything I can on the Dinar, and what might happen to it, in the future.
I cannot predict what price it might RV at, or when it may RV. I can’t even predict if
We might see a redenomination or a LOP.
However, what I can do is put down what I THINK could happen, based on what I’ve learned and read so far.
I’ve brought together a combination of things I have read, certain speculative ideas and assumptions, and a healthy dose of good ole common sense.
I’m looking at all the different denoms currently available (I have 4 full sets), and I’m also trying to visualize what might happen if the dinar revalues at, lets say $3.00.
I’m also trying to grasp what that would mean to the average Iraqi family….who might have, lets say, a 25000 dinar note stashed away in their mattress. I understand the people over there are quite poor and many are unemployed. So it’s not like they all have millions of dinars stuffed in a sock drawer. If the dinar RV’s at $3.00….that family would suddenly have the equivalent of $75,000 dollars. WoooHoooo…..
Um….Honestly, I don’t see the dinar RVing at that high a price. But I do think that a supportable and sustainable RV could be between .30 and $1.50. Thats based on the current point that Iraq finds itself in it’s restructuring, and rebuilding. ( including oil exports).
So for the purpose of my post, I’m gonna use .50 as a basic starting point for the RV.
It gives that Iraqi family $12,000 to get themselves back on their feet, pay off debts, and..
…and repays them for over 30 years of war, strife, and oppression. Not so much to destabilize the economy, but more than enough to energize it.
Now onto how the high denoms might be delt with. But for this to work smoothly, a few parameters must be set, and some assumptions’ also be recognized
1 – the dinar is locked at .50
2- a 120 window is also set for the first round of cashing in.
3 – very few of the lower denoms are in circulation ( we already know this)
So…. Within the first 120 day window, the vast majority of Iraqi’s would probably cash in their 25000, 10000, 5000, 1000, & 500 dinar notes ( if they have these lower denoms).
Many of use will also cash in the vast majority of our total holdings as well.
Of course we will…I mean .50 WoooHoooo/ YaaaHooo…party time baby !
And here’s what happens. In that 120 window. Almost all larger denoms are returned to the CBI and can be cancelled. Here’s is the beauty of this….
Those notes can be cancelled and deemed worthless after 120 days, which gets all of them off the market.
Side note: if you did not want to cash in at .50 you could exchange your larger denoms
for smaller denoms and wait until after the 120 day window to see what will happen with
the rate. You would probably end up with a big box of smaller denoms, like the 250 & 50 notes.( keeping in mind this happened something like 3 -4 times with the Kuwaiti dinar, and people had to trade in old Kuwati dinars for new as the new notes came out).
Now… new notes can be printed, replacing those old large notes, and these new notes would take their place at the lower end of the currency.
Eg: a new 25 dinar note would replace the old 25000 note.
A 10 dinar note replaces the old 10000 note
A 5 dinar note replaces the old 5000 note
And a 1 dinar note replaces the old 1000 note.
The old 500 dinar note either goes away or is converted to a coin.
Now we have a whole new restructured currency, that looks like this (at .50)
Coinage : whatever works best but possibly structured after our coinage.
1 dinar: worth .50 US
5 dinar: worth $2.50 US
10 dinar: worth $5.00 US
25 dinar: worth $12.50 US
50 dinar: worth $25.00 US
250 dinar: worth $125.00 US ( this note could be changed out for a new 100 dinar note)
In the above example, a number of complex changes have taken place.
1 – the currency has been RV’d at an controllable & fair price.
2 – redenomination has taken place
3 – LOP has happened in the transition .
4 – massive amounts of currency can be reduced to a manageable size.
After the 120 day window is over, I can envision the Iraqi dinar being allowed to now trade freely on the Forex exchange. If it rises to par with the US dollar, then they now have currency (notes), that somewhat mirror those we have, and that of other leading currencies worldwide.
If it rises to $3.00 then that just reflects the strength of the Iraqi economy and it’s exports.
My thoughts: I don’t see the dinar suddenly RVing at $3.00 - $5.00. But I do see it RVing at a rate that is reflective of Iraq’s current state of growth.
To RV at a high rate is too destabilizing, and is not much different than Saddams
arbitrary $3.22, that he SAID the dinar was worth way back then.
We may have to exchange our dinars for new issue dinars once or twice ( that’s if you want to hold out for the big returns)…but it might take some time.
But I also think a modest RV is coming soon, for many reasons, including such things as world parity, external monetary trade difficulties, rebuilding efforts, sale of oil, new contracts, civil unrest, governmental stability, and a host of other solid reasons.
All of the above is only a newbies thoughts on what could or might happen, and is based on a limited knowledge of monetary policies.
Fell free to dissect and comment, as that is how we learn
The best things in RV
yak