[Adam Montana] One word: Redenomination.

[Luigi1]

RD is OK. We will break even at LOP at first. After a managed float we will make it down the line only it won't be as much & may take more time.

It still beats Wall Street.

[thegente]

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just not sure it will be the 1000-3000% everyone seems to be expecting.

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You probably mean 100,000 - 300,000% which would be 1,000 - 3,000 times our Capital.....What you wrote (1,000 - 3,000%) would be 10 - 30 times our Capital .. Which wouldn't be bad for me anyway....I'd like to get more than that obviously but in the end I'll accept anything... It's been 8 years already for me you know....

Right!! My math was off that day, thx bud...I'll take whatever I can get!!

[mandysheels]

Right!! My math was off that day, thx bud...I'll take whatever I can get!!

And according to Phlip, thats going to be nothing much!

[hollywood7]

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

I didn't read any of your imho because you don't know crap ,i hope you didn'tbreak a nail or a brain cell!

[Caye98]

I didn't read any of your imho because you don't know crap ,i hope you didn'tbreak a nail or a brain cell!

It's okay to disagree, but please attempt to be a bit more civilized about it. Your reply only makes YOU look bad. IMHO