Can Folk here explain to us in details and clear from this old article back in 1991?.

[ALBUNDY]

AFTER THE WAR; No Electricity but Kuwait Reopens Its Banks

By DONATELLA LORCH, Special to The New York Times

Published: March 25, 1991

It still has no water and little electricity or food, but Kuwait revived its banking system today, introducing a new currency.

Banks reopened for the first time since Iraqi occupation forces shut them down in December. Thousands of people lined up to exchange their old Kuwaiti dinars for crisp new ones and to withdraw a limited amount of money.

Without electricity, the banks services were slow, limited to money exchange and withdrawal. There was no telex, no electronic money transfer and no telephones. The computers were unusable, so all transactions had to be entered by hand.

"It's like going back 20 years," said Mohammed al-Yahya, the manager of the Commercial Bank of Kuwait, the nation's second-largest bank. Seized Dinars Canceled

The Central Bank is canceling the value of Kuwaiti dinars that were seized from the Central Bank and put into circulation by the Iraqis. The invalid serial numbers were posted today in front of all banks in the city.

All other old dinars can be exchanged for new ones on a one-to-one rate until May 7, when the old dinars become invalid. The new official exchange rate is 3.47 American dollars for one new Kuwaiti dinar.

Although it is severly handicapped without electricity, the Commercial Bank, like many other major banks, was able to open for business because its records had been saved from the Iraqis. Mr. Yahya hid the bank's balance sheets in his home and sent its computer records to London via Syria with an Indian employee, who packed the tapes into the back of a trailer.

The banks also face serious personnel shortages. Only 11 of the Commercial Bank's 35 branches opened today, with 137 out of 1,300 workers.

Before the Iraqi invasion, only 17 percent of the bank's staff was Kuwaiti. Many of the foreign workers -- Jordanians, Palestinians and Indians -- fled and now cannot re-enter the country.

For those exchanging money today, there was little they could buy in Kuwait. Many of those in line said they planned to use their money for vacations or for shopping trips to Saudi Arabia to buy generators and food.

"I need to get away from this pressure," said Abdul Mohammed Hussein, a computer engineer in his early 40's who said he was withdrawing 1,500 new dinars to take a vacation in the United Arab Emirates. "Everywhere you go you find lines. At the supermarket, you find lines. To get petrol for the car, you find lines."

Abdul Hamed al-Atar, a 50-year-old retired Interior Ministry official, said this was the first time he had set foot in a bank since September, and he seemed relieved. "Kuwaits always keep a lot of cash with them," he said as he was handed crisp new piles of money that he stuffed into a small bag. "It's a comfort to have money in my hands."

LINK : http://www.nytimes.com/1991/03/25/world/after-the-war-no-electricity-but-kuwait-reopens-its-banks.html?pagewanted=1

Eventhough it is old articles, but it is quiet interesting to read how Kuwait did RI/RV their currency ( sudden rise with a high rate )and compare Iraq with kuwait..

So If Kuwait Dinar 1 = US$ 3.47, is it called a revaluation or reinstatement? Is a reinstatement ( RI ) same as revaluation? How does a reinstatement work? Let’s say if Kuwait dinar 1 = US$ 3.47, if someone had 1 million Kuwait dinar at that time back 1991 that mean it is equal to= US$ 3.47 million, is it right?is this what it is called a reinstatement or revaluation? Can folks , a currency and economist expert, here elaborate and explain for us here in details. Can folks here tell me where do they exchange their old dinar for a new dinar, except banks in Kuwait country ( Is it “ In-Country “ RV/RI ONLY )? Where does it say that they can exchange it outside the Kuwait country ( NO “ Out-Country “ RV/RI )? Can Folks here tell us which other countries to exchange, except Banks in Kuwait country? For those exchanging money today, there was little they could buy in Kuwait , what is that supposed to mean by little? was it too cheap or expensive to buy stuff in Kuwait at that time? Come on folks , help us out here, please. Does Iraq has the same situation and condition as Kuwait when Iraq RV?

[SWFloridaGuy]

In Fall of 1990, Iraq invades and replaces the Kuwaiti dinar with the Iraqi dinar as the official currency. The Kuwaiti government was essentially in exile. However, because of the way currencies were managed in the early 1990’s the official rate for the KWD never changed. The UN condemned the invasion and no one of any consequence recognized the right of Iraq to replace the government and currency of Kuwait.

In Winter of 1991, people claim to have been able to buy KWD on the black market during this period but the official exchange rate was still the same. The old Kuwaiti government was restored following the withdrawal of Iraqi troops.

In September of 1991, the KWD was redenominated with new bills in 1991. 1 to 1 (no ratio).

Bottom line, Kuwait never revalued their currency. The central bank did not change the rate. Saddam outlawed the Kuwaiti dinar and it fell in value. He told people to trade in their Kuwaiti dinar for Iraqi dinar before Oct. 6, 1990. When the U.S. stepped in, the value did again rise. This was not due to the bank changing the rate but rather the black market, similar to what Saddam did with the dinar in the late 80s. The Kuwait Central Bank never adjusted the rate below 3 dollars. They were occupied by Iraq and business was halted. Seven months later when Kuwait was back on their feet, they redenominated with the previous exchange rate. Actually, this was neither a RI or RD, by the true definition. This was a unique circumstance due to the invasion.

None of this means Iraq can't or won't revalue the IQD. It just show that Kuwait is probably not a good comparison and that it was a very different set of circumstances, both economically and politically.

[jeepguy]

but this would be very cool if they did re-value the iraq dinar too even close too 2 too 1 ,,, and we had a chance too cash-in the notes we have at banking locations here in states !!!

[RVPleaseToday]

Clearly, unless Iraq collapses into civil war, or succumbs to another dictator, Iraq's economy is going to grow significantly over time. But I think many have a growing awareness that the belief that there will be a significant overnight RV of the dinar is based on...nothing. The mythical Kuwait "RV" has been debunked many times now, and it was used to sell a lot of Dinar. I think we have to consider the possibility that while investment in Iraq's economy is a pretty good investment bet, investment in the Iraqi currency may not be.

Perhaps there should be more discussion among us of investment vehicles other than currency for investing in what should one day be a lucrative economy.

[umbertino]

Quote

Perhaps there should be more discussion among us of investment vehicles other than currency for investing in what should one day be a lucrative economy.

End Quote

Agreed and it does make sense.

[IMTIRED]

In Fall of 1990, Iraq invades and replaces the Kuwaiti dinar with the Iraqi dinar as the official currency. The Kuwaiti government was essentially in exile. However, because of the way currencies were managed in the early 1990’s the official rate for the KWD never changed. The UN condemned the invasion and no one of any consequence recognized the right of Iraq to replace the government and currency of Kuwait.

In Winter of 1991, people claim to have been able to buy KWD on the black market during this period but the official exchange rate was still the same. The old Kuwaiti government was restored following the withdrawal of Iraqi troops.

In September of 1991, the KWD was redenominated with new bills in 1991. 1 to 1 (no ratio).

Bottom line, Kuwait never revalued their currency. The central bank did not change the rate. Saddam outlawed the Kuwaiti dinar and it fell in value. He told people to trade in their Kuwaiti dinar for Iraqi dinar before Oct. 6, 1990. When the U.S. stepped in, the value did again rise. This was not due to the bank changing the rate but rather the black market, similar to what Saddam did with the dinar in the late 80s. The Kuwait Central Bank never adjusted the rate below 3 dollars. They were occupied by Iraq and business was halted. Seven months later when Kuwait was back on their feet, they redenominated with the previous exchange rate. Actually, this was neither a RI or RD, by the true definition. This was a unique circumstance due to the invasion.

None of this means Iraq can't or won't revalue the IQD. It just show that Kuwait is probably not a good comparison and that it was a very different set of circumstances, both economically and politically.

Thanks for your logical explanation.

Every time that I have attempted to explain the Kuwait non-RV on other sites I have been banned for not sipping the koolaid.

[jackster]

The RVs of Germany and Kuwait are the foundations of why the Iraqi Dinar will RV. These were the arguments and reasons that people were told that the Iraqi Dinar would also RV.

A few gurus have also called the Kuwaiti RV as false.

These days, the Iraqi Dinar RV will happen because "Iraq is different or special". "An RV of this type has never happened before". But it will. Somehow, it will.

[Luigi1]

There was no Kuwait RV.

The KD was devistated from the Iraq occupation.

After liberation, the KD was restored to it's former rate.

[ALBUNDY]

Luigi1. You said that there was no Kuwait RV and after liberation, the KD was restored to it's former rate. Then, My question to you is do you know what is the RATE for KUWAIT ( KD ) BEFORE and AFTER Liberation? And, also do you know what is the RATE for IRAQ DINAR ( IQD ) BEFORE and AFTER saddam invaded Kuwait? Anyone expert here or former Kuwait Dinar investors can answer also my question.

[sandyf]

In Fall of 1990, Iraq invades and replaces the Kuwaiti dinar with the Iraqi dinar as the official currency. The Kuwaiti government was essentially in exile. However, because of the way currencies were managed in the early 1990’s the official rate for the KWD never changed. The UN condemned the invasion and no one of any consequence recognized the right of Iraq to replace the government and currency of Kuwait.

In Winter of 1991, people claim to have been able to buy KWD on the black market during this period but the official exchange rate was still the same. The old Kuwaiti government was restored following the withdrawal of Iraqi troops.

In September of 1991, the KWD was redenominated with new bills in 1991. 1 to 1 (no ratio).

Bottom line, Kuwait never revalued their currency. The central bank did not change the rate. Saddam outlawed the Kuwaiti dinar and it fell in value. He told people to trade in their Kuwaiti dinar for Iraqi dinar before Oct. 6, 1990. When the U.S. stepped in, the value did again rise. This was not due to the bank changing the rate but rather the black market, similar to what Saddam did with the dinar in the late 80s. The Kuwait Central Bank never adjusted the rate below 3 dollars. They were occupied by Iraq and business was halted. Seven months later when Kuwait was back on their feet, they redenominated with the previous exchange rate. Actually, this was neither a RI or RD, by the true definition. This was a unique circumstance due to the invasion.

None of this means Iraq can't or won't revalue the IQD. It just show that Kuwait is probably not a good comparison and that it was a very different set of circumstances, both economically and politically.

Spot on apart from one point. Kuwait did not redenominate, they introduced a new issue of the same currency.

When a currency redenominates it is given a new ISO code, the code for the KWD has never changed. You can tell that by looking at it. The initial code will always be first two letters for the country and the third letter for the currency, eg KuWait Dinar. In the event of a redenomination the third letter will be allocated.

Turkey went from TRL to TRY and in January Zambia will go from ZMK to ZMW.

The fact that there is no new code for Iraq would indicate there is no plan to redenominate any time soon.

[sandyf]

The RVs of Germany and Kuwait are the foundations of why the Iraqi Dinar will RV. These were the arguments and reasons that people were told that the Iraqi Dinar would also RV.

A few gurus have also called the Kuwaiti RV as false.

These days, the Iraqi Dinar RV will happen because "Iraq is different or special". "An RV of this type has never happened before". But it will. Somehow, it will.

There was no RV in Germany or Kuwait.

Over the years there has been opportunity to make large profits on currency, but none through revaluation. Profits are realised as in any other business, buy cheap and sell high.

I personally have made over 3000 percent profit on an Arab currency, and it was not Kuwait.

[sandyf]

There was no RV in Germany or Kuwait.

Over the years there has been opportunity to make large profits on currency, but none through revaluation. Profits are realised as in any other business, buy cheap and sell high.

I personally have made over 3000 percent profit on an Arab currency, and it was not Kuwait.

Sorry, that should have been 3000 times not 3000 percent.

[ALBUNDY]

Sandyf: wow you have made over 3000 times. Are you a currency trader, specialize in a middle east currency? Good for you.