Dinar News Iraq central bank takes steps to

[shannybelle27]

What I thought was enlightening about this article was it mentioned it would take 2 years...well guess what we are in that 2nd year! This is OUR year!

BAGHDAD: The Central Bank of Iraq has taken steps to rebase the Iraqi dinar and issue new banknotes, a senior official at the bank has said.

“We have reached a conclusion that we should take off three zeroes from the current Iraqi dinar banknotes,” Mudher Qasim, the bank’s senior advisor, told Dow Jones Newswires in an exclusive interview.

“The process is progressing and we have taken some steps,” Qasim said. “We will issue a decision in due time.”

Qasim didn’t give a timeframe when that decision would be taken, but said printing new banknotes and fully replacing old notes would take two years from the time the decision is taken.

Iraqi Finance Minister Bayan Jabor said his ministry had suggested to the central bank to take off three zeroes from the current Iraqi dinar banknotes. “The Central Bank governor (Sinan Al-Shabibi) has informed me that the bank is in the process of taking that decision,” Jabor told the state-run Al-Iraqia Satellite Channel this week.

“The Central Bank of Iraq supports what the finance minister was saying,” Qasim said.

If the rebase decision is taken, it means a current 25,000 Iraqi dinar banknote will become 25 dinars, for example. When three zeroes are knocked off the Iraqi dinar, a dollar will equal only 1.20 dinars.

Currency rebasings are usually monetarily neutral and are introduced to make commercial calculations and cash dealing easier and cheaper. Turkey knocked six zeroes off its lira currency January 1, 2005, for example. Russia did the same for its currency.

“In a country like Iraq where cash consists 80% of money dealing, we need smaller bank notes,” Qasim said, adding that current Iraqi banknotes were difficult to store and need strict security measures when moving money from one place to another.

There are now some 20tn Iraqi dinar banknotes in use in the market, which is a very big amount and if Iraq knocked 3 zeroes it would become 20bn dinars which is a reasonable amount, he said.

Qasim also said one of the reasons for rebasing the Iraqi dinar is because the bank has managed to reduce the country’s high rates of inflation. The inflation rate fell to 14.7% in May this year from a record high of 60% in late 2006.

In July 2004, the now dissolved US civilian authority in Iraq decided to print the current Iraqi banknotes replacing those used to bear the picture of the former Iraqi leader Saddam Hussein. Iraqis then had three months to swap their old dinars with the new ones.

“This time we aren’t in hurry, if it takes two years to swap the new currency with the old one, then let it so,” Qasim said.

The current banknotes were printed by Britain’s De La Rue, the world’s biggest commercial printer of bank notes.

Jabor said in November last year that the central bank would rebase the dinar in early 2008. – Dow Jones Newswires

source:

http://www.gulf-times.com/site/topics/article.asp?cu_no=2&item_no=237500&version=1&template_id=48&parent_id=28

[muydinar]

They aren't going to lop 3 zeros. It would be a disaster! I wouldn't buy into that theory too deeply!

[Canadian]

Agree muydinar, don't think it will happen. Just another rumour.

[shannybelle27]

ya i re-read that and tried to erase this post! ahh...does anyone know how to do that?

[Alf]

It will happen. Common sense. However, I see it happening over time. No need to panic.

[Charles45]

They aren't going to lop 3 zeros. It would be a disaster! I wouldn't buy into that theory too deeply!

Is this just your opinion and hope, or, is there more to it?? What makes us so confident that

they won't LOP 3 zero's?? (just a question that begs solid answers). Although I do hope you're right, there does seem to be something to this. Obviously, Iraq needs smaller denom's to make everyday purchases when the exchange rate changes, so, are we sure they would not make new

notes and drop three zero's from the value?? If so,. what makes us so sure??

20Tn in circulation?? Turn it into 20Bn?? Sounds like they've been thinking about it since 2008.??

[twestbrook]

When three zeroes are knocked off the Iraqi dinar, a dollar will equal only 1.20 dinars.

Maybe I haven't had enough coffee, but if I divide 1,000,000 dinars (which I have) by 1.2 dinars to see what my inventory equals in dollars, I come up with $833 K. Without bashing me please, could someone explain where my ihinking is wrong? I wouldn't be unhappy with an investment return like that.

[karen]

well if they do lop 3 zeros and RI that would be about 300% gain on our investment. not what ppl are hoping for, but it will be what is. i just wish for it to happen either way asap so i can move on.

[Iraq&Roll]

When three zeroes are knocked off the Iraqi dinar, a dollar will equal only 1.20 dinars.

Maybe I haven't had enough coffee, but if I divide 1,000,000 dinars (which I have) by 1.2 dinars to see what my inventory equals in dollars, I come up with $833 K.

$833k is not correct. Let's assume your mil is made up of fourty 25,000 dinar notes. You would lop 3 zeros off the 25k notes leaving you with notes worth 25 dinar to exchange. So....40x25x1.2=$1,200.....

[C_BOLT]

If you follow the link for the article and check in the upper right hand corner of the page - you will see the following information:

Latest Update: Sunday24/8/2008August, 2008, 08:22 AM Doha Time

So - is this old news from 2008? I know is viewing several Middle East sites, many of the articles are dated and you have to be careful of the time-frame of the article you are reading.

[MakeYourDay]

Old News Indeed!

[Kent]

They aren't going to lop 3 zeros. It would be a disaster! I wouldn't buy into that theory too deeply!

muydinar, you and Canadian, Please read this as a sincere (perhaps long) question. My understanding is when a lop or redenomination occurs, there is no change in value, just a change in the currency used. How can that be a disaster? It is the same as changing from green to blue. It is like a reverse stock split that happens all the time with penny stocks. The face of the certificate changes hoping that a more credible price will make the company more marketable. Likewise, a tradable currency. It also makes trading within the country easier because people can carry less cash.

True Lops are common after a period of high inflation. Many will dismiss the concept for Iraq stating (accurately) that Iraq's inflation is very controlled. Well, best I can tell, a lop often occurs after a period of high inflation when the currency has little value and most optimally after a period of stabilization. See Page 8 "hypothosis 2" of this paper on the UNC, Chapel Hill web site for a study of redenominations http://www.unc.edu/~lmosley/APSA%202005.pdf . Iraq fits that senario perfectly.

The most compelling logic for a redenomination is that there is no way Iraq can afford a true $1 RV (much less $3). If you look at the money supply of countries, it usually ranges between .5 to 1.5 GDP (usually closer to 1). The M2 for Iraq on the CBI web site is shy of 43 trillion dinar ( http://www.cbi.iq/xl&wr/key%20financial.xls ). IMF says that the forcast for GDP this year in Iraq is about $95 Billion US ( page 19 of http://www.imf.org/external/pubs/ft/...08/cr08383.pdf ). Converting Dinar on a $1 RV means Iraq would be converting their money supply to 43 trillion dollars! The M3 (a larger figure) of the entire world is only 60 trillion. Is it really plausable to think that governments are going to advance Iraq enough money to float that value? If you woke up tomorrow and declared that your dime was worth $100 would anyone buy it from you? That is exactly what would happen if they woke up tomorrow and declared a $1 RV. People say the Iraq GDP will increase drastically with oil production (and it will). They will say the oil reserves mean Iraq has great value (and it does). So, go ahead and double or tripple their GDP from IMF forecasts and double that again for how much money other governments will advance to get a piece of their oil. All that might get you to 1 trillion money supply (and there is no joking way...) not 43 trillion.

Another thing investors will say is look at the $1.50-3.90 value of the other gulf region currencies. My response is yes, do look at them! ...with their M2 relative to their respective GDP's. You can't ignore money supply and value can't be declared out of thin air and be supported by the world community. They all fall within some relm of their GDP and no one exceeds 200%.

Frankly, a lop makes sense to me and no one ever really addresses it head on. I bought Adam's book after sending the suggestion that he address that question, but he really skirts the subject and only nips at the corners. I would love to see someone answer this question in a convincing way on this string. Like you, the investor in me wants to believe in a big RV. I am afraid the facts don't support it. IMO the facts support a 2 or 3 zero lop and then a float or revalue to increase the value. Personally, if I tripple my money spent on Dinar and it happens relatively soon it was a good return on investment. If it does more it is a windfall.

Please, please someone show me different!!!! I would really like to be convinced otherwise.

(by the way, credit for lots of this info should go to Sherlock who no longer appears to be a member and whose posts and strings seem to have been removed - one string was a really good discussion on this. I wish he was still on the site.)

[Dfrog]

If you follow the link for the article and check in the upper right hand corner of the page - you will see the following information:

Latest Update: Sunday24/8/2008August, 2008, 08:22 AM Doha Time

So - is this old news from 2008? I know is viewing several Middle East sites, many of the articles are dated and you have to be careful of the time-frame of the article you are reading.

If you read the post from the start it says specifically that it is a 2 year old article. Also said it would take 2 years to impliment.

[Kent]

If you read the post from the start it says specifically that it is a 2 year old article. Also said it would take 2 years to impliment.

All who are convinced of a RV, however also believe that printing of lower denomination currency would have to occur before an RV... Why do we think the preparation for a redenomination (lop) would be much different? All of the discussion and rumors about banks setting up for an exchange, preparing for a common gulf currency, etc - if you think about it... it all applies whether the method of change in currency is from a lop or from an RV. I keep looking for someone to tell me why it is going to be an RV contrary to financial logic. Help if you can.

[mariejose]

something to remember-----------ERM

[Kent]

something to remember-----------ERM

Mariejose, discussion of an ERM type arrangement simply indicates that the currency needs to change before it would be on par to be combined with the other gulf nations (and the rate mechanism is a method to control the relative value of different currencies before combining). I agree the Iraq Dinar must change before it could be a part of such an arrangement. I don't think it necessarily means that the method of change has to be an RV. I think that whole subject speaks to how likely something is to occur. Most are simply speculating that what necessarily will occur is an RV rather than a redenomination. Again, I hope someone can clarify my thinking and tell why.

[shannybelle27]

If you follow the link for the article and check in the upper right hand corner of the page - you will see the following information:

Latest Update: Sunday24/8/2008August, 2008, 08:22 AM Doha Time

So - is this old news from 2008? I know is viewing several Middle East sites, many of the articles are dated and you have to be careful of the time-frame of the article you are reading.

ya it is dated for 2008 but i thought it was interesting how it said it would take 2 years for the new currency and we are in that 2nd year. This article could be irrelevant but I thought it was interesting. I guess what it comes down to is it will happen at the right time which i believe is soon.

[Kent]

ya it is dated for 2008 but i thought it was interesting how it said it would take 2 years for the new currency and we are in that 2nd year. This article could be irrelevant but I thought it was interesting. I guess what it comes down to is it will happen at the right time which i believe is soon.

I think the old article is still relevant because I've never seen an article that clearly stated an intent to revalue rather than lop. I have seen things that say they want the value to increase, but not a declared revalue. ...but if anyone has one please post it.

[rt59]

Even though this article is over 2 yrs old, I think it makes more sense to me than alot of the quote theories that seem to reside around a huge revalution. This article tells me two big things, (1) that the money supply has increased by over 2X since this was written two years ago (20 Tr to over 43 Tr) dinar and (2) assuming that is true, how could they RV at even a $1. It would be a disaster if they did that, plain and simple! No way that is going to happen if these numbers are correct..$43 Tr money supply over night, come on! A Lop makes since and then RV at $3 to $4 (or RV at .003 with no lop), so they are at about $130 to $170 billion for a base GDP. Gives them room to grow from the current $95 billion GDP. We all get a 3X to 4X return on our investment not the 1000X that I think is a pipe dream based on the real money supply as stated in Kent's post and what has been thrown around in this site. The Dinar is still a good investment and I do believe that it will be a good return for our money, just not 1000X. It is obvious that they need to do something soon, the money supply is growing way to fast. It can't be sustained at this rate. I know everyone wants to get rich quick, but reality and some logic needs to play into the equation too. This is just my opion and I may be wrong, but the calculations just don't make any sense for a big RV.. let the fit hit the shan.

P.S. also heard somewhere recently that they were in the process of printing lower denomination currency.. may have been a post on here. Any one remember it?

[shannybelle27]

Even though this article is over 2 yrs old, I think it makes more sense to me than alot of the quote theories that seem to reside around a huge revalution. This article tells me two big things, (1) that the money supply has increased by over 2X since this was written two years ago (20 Tr to over 43 Tr) dinar and (2) assuming that is true, how could they RV at even a $1. It would be a disaster if they did that, plain and simple! No way that is going to happen if these numbers are correct..$43 Tr money supply over night, come on! A Lop makes since and then RV at $3 to $4 (or RV at .003 with no lop), so they are at about $130 to $170 billion for a base GDP. Gives them room to grow from the current $95 billion GDP. We all get a 3X to 4X return on our investment not the 1000X that I think is a pipe dream based on the real money supply as stated in Kent's post and what has been thrown around in this site. The Dinar is still a good investment and I do believe that it will be a good return for our money, just not 1000X. It is obvious that they need to do something soon, the money supply is growing way to fast. It can't be sustained at this rate. I know everyone wants to get rich quick, but reality and some logic needs to play into the equation too. This is just my opion and I may be wrong, but the calculations just don't make any sense for a big RV.. let the fit hit the shan.

P.S. also heard somewhere recently that they were in the process of printing lower denomination currency.. may have been a post on here. Any one remember it?

I agree with you on this I think we will get a good return for our investment but I think it may have to build up. Say it comes out at $0.25 (just example) and we cash a little out then and as a few months goes by the value increases again and we are able to cash out a little more and so on. Does that make sense? It was just a thought I had. Either way we would be able to cash in even though it may take some time to build. I'd be happy with that!

[rt59]

shannybelle that would put their GDP at about $3.5 Tr..can't see it happening IMO

[shannybelle27]

shannybelle that would put their GDP at about $3.5 Tr..can't see it happening IMO

ya true...just was a thought :-)

[Kent]

rt, I obviously agree in concept, but will mention that a lot of different numbers are thrown around for money supply for different reasons. The article could have been referring to M0 which is money/cash in circulation not including reserves, etc. For a quick description of the relative differences look at http://dollardaze.org/blog/?post_id=00565 . If you look at the chart in the link, the CBI August '08 figure when the article was written was 31 trillion dinar M2. They don't give a figure for M0. Also, it makes sense that the money supply would have increased with the growth in GDP and core inflation was pretty good (a by-product of increasing the money supply). To me that is a testimony of the success of the controlls of the IMF and all the other stabilizing influences. There is a lot in that chart I don't know the significance of, but some really good news there too.

[aurdemus]

i have a question, if it does lop, does this only apply to cash? say i have 1mill in a warka account, will it still be a million, or does 3 zeroes still get lopped off my account?

[sly]

so should we trade our 25000 notes for smaller ones? so if I have 1,000,000 in smaller notes, they couldn't knock off 3 0's ?