Revalue in time

[Biker]

Iraq's Currency ~ In Depth Explanation about Iraq's Currency Redenomination and Exchangeability ...

bumped ~

Iraqi Currency Redenomination and Exchangeability

There have been a tremendous number of inquiries about the recent news that Iraq will be increasing the value of their currency and, at the same time, introduce new denominations into the Iraqi economy sometime in 2010 (currently planned).

Specifically, it has been reported that the Iraq Finance Minister issued a statement saying they have prepared a plan to increase the value of the dinar against the dollar and will introduce 25, 10, 5, 1, 1/2, ¼, and smaller (possibly 1/10 or 1/20) dinar banknotes and/or coins. He said that successful fiscal policies pursued in Iraq have contributed to increasing the value of theIraqi dinar against the dollar, noting that the U.S. Dollar dropped significantly in value during the current year. Of note, he also said in a press statement that the bank has been following with great interest the phenomenon of low demand for the U.S. Dollar in the local Iraqi currency exchange markets.

Mudhhir Muhammad Salih, a member of a Central Bank advisory panel, said by the end of 2010, new banknotes will be fully introduced while the current banknotes will be gradually removed from circulation. He did not specify when the new banknotes would be issued. Both (current and new) denominations will be legal tender in Iraq until the current banknotes are completely withdrawn over a period of time.

Economic analyst Hilal al-Tahhan was quoted as saying “the bank's move is overdue.” He said he expects the currency change to go smoothly because of the decision to allow both the current and new banknotes to coexist during an extended exchange period, leading to less turbulence in the economy.

What does all this mean? Overall, this news appears to be very positive and possibly points to some significant changes in the value of the Iraqi Dinar. It has long been the opinion of many Iraqi Dinar investors that the Iraqi Government must introduce new lower denominations into their economy before the value of their currency increases. If the value (buying power) of the dinar increases significantly or rapidly, the largerdenominations currently in circulation would be impractical for use during everyday transactions in the Iraqi economy.

If the Iraqi Dinar increased in value to 10 cents (.1 USD), the smallest banknote in Iraqi would have a value of $5 USD. There would no practical way to purchase everyday items inthe economy and no way to make change---the currency would be impractical and unusable. If a soda in Iraq has a value of 50 cents now, it will still have a value of 50 cents if the value of the dinar increases---there has to be a denomination in the Iraq economy to pay for it. The current problem is that Iraq doesn’t have any currency in circulation to pay for normal day-to-day products if the dinar rises significantly in value---Iraq must have smallerdenominations moving forward.

Also from the recent news, it appears as though all denominations (current and soon to be issued) will be in circulation at the same time and no immediate exchange will be necessary. Hopefully, theIraqi Dinar will be on the world exchange market soon to allow for even easier exchange in the near future. Expectations are that Iraq is moving as fast as they can to rebuild their economy and wealth, and join the international economic community.

There have also been rumors about the future exchangeable value of some current Iraqi banknote denominations, and limited time periods for exchange of current Iraqi banknotes. It has been falsely rumored that perhaps the 25,000 dinar banknote will be exchanged at a different exchange rate than current smaller Iraqi banknotes. Another false rumor suggests there will be a very short period (days or weeks) of exchange for the current Iraqi banknotes after a significant change of value and introduction of lower denominations .

Well, to address these rumors, let’s look at currency from a basic level: Countries issue their own currency. They issue their currency with a responsibility to honor it and redeem it. The currency must be accounted for. When a country issues currency (the US as an example), they borrow against the currency and issue debt to support it. The US recently printed a significant amount of currency in order to finance stimulus funding. In order to do this, the US government had to borrow the money with an obligation to pay it back.

One of the main functions of the US Treasury Department is to manage the U.S. national debt (the amount of money which the federal government owes to its creditors). China owns much of our debt as do US citizens and other countries---we must honor our issued currency and our debt. If a country doesn’t honor its debt, creditors (other countries and investors) lose faith in the defaulting country and a country will end up in financial ruins. Iraq, as a responsible member of the world economic community with a goal of getting their currency online with the rest of the world currencies, has issued currency with an obligation to honor it----all of it---not just certaindenominations.

Throughout modern history, I can't think of one instance where a country honored some denominations , but not others---it doesn't make sense---people and other countries would lose faith in that country's responsibility to respect their debt and honor their issued currency---who would trade with them, exchange with them, or conduct business with them? To limit the time period for currency exchange in order to force the de-valuation of currency in circulation in order to reduce debt doesn't happen and wouldn't be tolerated by the world financial community. Countries have to be accountable for all of their currency and they can't play games with exchange timelines to try and prevent people for exchanging. Remember, in addition to individual investors, large governments and banks outside of Iraq hold Iraqi currency. Money from all over the world has flowed into Iraq through the purchase ofIraqi Dinar . The Iraqi Government will honor that investment in their economy, or there will never be faith in their economy and they will never be accepted by the world financial community.

DinarBanker.com owns a tremendous amount of Iraqi Dinar---we buy (any denominations) and sell our dinar. We see the introduction of the new lower denominations as a very positive sign. Furthermore, we expect to continue to trade the Iraqi Dinar no matter what happens to the value of it in the future. With our extremely large capitalization, we are prepared for any value changes in theIraqi Dinar and do not expect any exchange restrictions in the future or short time limits for exchange.

And also there rate was to be 2.66, but have now done a study and will be higher due to oil priceing, the 2.66 was figured at oil at 25 to 45 per barrel. Found on the Global news network.

[jamaba]

Thanks Biker, a well articulated synopsis of Iraq's situation.

[TimS]

All makes sense and I personally agree...the dinar will increase in value significantly. The problem is ...it won't be for a while, moths maybe a year or more.

IMO....the country has no stable government and won't for quite some time. Their banking system is not up to speed and they are a long way from having the needed security in their country to make it dafe to get thier infrastructure rebuilt and outside contractors to work in country.

Don't hold your breath boys....it's not today and tomorrow isn't looking so hot either.

[tjmunson]

I agree........ it's only supposed to be like 42 degrees tomorrow.

[JuryPicker]

All makes sense and I personally agree...the dinar will increase in value significantly. The problem is ...it won't be for a while, moths maybe a year or more.

IMO....the country has no stable government and won't for quite some time. Their banking system is not up to speed and they are a long way from having the needed security in their country to make it dafe to get thier infrastructure rebuilt and outside contractors to work in country.

Don't hold your breath boys....it's not today and tomorrow isn't looking so hot either.

Dang dawg, man you really know what's going on. You talk like you're in the Iraqi Government? Well just call me when you see everything is done to your satisfaction and I'll go cash in. Or you can just get it from Shabbs for me. Thanks - 867-5309

[Off-the-grid]

Well written article. Too bad it was written by dinarbanker. It is little more than a sales brochure. I happen to agree with it completely, but it carries no weight because of the source, IMO.

Peace and Prosperity

[Dianne]

Thanks for the post!

[marknet73]

All makes sense and I personally agree...the dinar will increase in value significantly. The problem is ...it won't be for a while, moths maybe a year or more.

IMO....the country has no stable government and won't for quite some time. Their banking system is not up to speed and they are a long way from having the needed security in their country to make it dafe to get thier infrastructure rebuilt and outside contractors to work in country.

Don't hold your breath boys....it's not today and tomorrow isn't looking so hot either.

Exactly right bro. I'd love to see $3 tomorrow but they still have lots of work to do to get their infrastructure and banking system to the point to be able to support a huge increase in value. Patience is the name of the game with this investment and it's got nowhere to go but up. I'm cool with waiting a few months or a year for a nice payoff instead of getting caught up in all the hype and getting disappointed when it doesn't happen tomorrow.

[Goeers]

What's the DINARBANKER hook in there? Do I smell a pumper?

[LDR]

Please remember Iraqi will continue to be a country and things in time will get better. If you invested thinking this was going to be a quick buck you've mislead yourself. This is a long term investment. Some have had this for years. Please don't hock your house and think this is going to happen over night. It could happen this month or next year etc.... No one has any true Intel. Adam, Ali, myself, etc... It's like any other investing. Ali, and other dinar sellers make money selling and they want it to r/v just like we all do. They have purchased Iraqi Dinar also. Adam has some and makes money from this site and other ventures. It's OK. If it happens soon GREAT, if it doesn't you should understand life will go on. Just don't let it ruin your day job. Dreaming is free! Keep the FAITH!

[Markinsa]

Sorry folks, though this makes alot of sense, this article is old. It's been around since at least February 2010. See Attached link from Dinarrumor.com.

Iraqi Currency Redenomination and Exchangeability

[hammy]

I have spoken to people in our Government and they pretty much say the same thing TimS said. Security is a huge issue when it comes to an R.V. and they pretty much said, "Until it is stable, and for a while, you will NOT see it R.V". Both of the men I spoke with are invested, and most likely a lot more than most people here. They would love to see an R.V. as much as I or you would. Not going to happen on April 1st or the 7th, as a matter of fact if you here an R.V. rumor date I will almost guarantee that it wont happen on that day.

[nathan1606]

Some should do more research they just they just took the banking system electronic , plus the letter of intent , have faith , it will come .. Goooo R V

[Sparky69]

Dang dawg, man you really know what's going on. You talk like you're in the Iraqi Government? Well just call me when you see everything is done to your satisfaction and I'll go cash in. Or you can just get it from Shabbs for me. Thanks - 867-5309

Jenny??That you??!!!!!

Cheers,

Sparky