Dinar News Iraq Planning Currency Redenomination

[XXX]

News / From Our Bureaus

Iraq Planning Currency Redenomination

Iraqi dinars are stacked at a teller's window in a Najaf bank.

February 06, 2010

BAGHDAD -- The Iraqi Central Bank is planning to redenominate the national currency in an effort to ease transactions and allow people to carry less paper money, RFE/RL's Radio Free Iraq (RFI) reports.

Mudhhir Muhammad Salih, a member of a Central Bank advisory panel, told RFI that a plan has been made to remove three zeros from the currency and phase out the current banknotes late this year.

Salih said by the end of 2010 the new banknotes will be fully introduced while the old banknotes will be gradually removed from circulation. He did not specify when the new notes would be issued.

Both will be legal tender in Iraq until the old notes are completely withdrawn.

Iraqi officials have had a long-running plan to redenominate the Iraqi dinar. In 2006, the Finance Ministry recommended to the Central Bank that it carry out such a plan.

Salih pointed out that banks are having a hard time accepting cash savings and deposits, but by dropping the zeros it will make it easier for both the banks to deal with their customers and for the general public to carry money. He said some 80 percent of Iraq's money supply is cash in circulation.

Salih added that in 1990 the value of banknotes in circulation was about 25 billion Iraqi dinars but is currently some 25 trillion dinars.

Economic analyst Hilal al-Tahhan told RFI that the bank's move is overdue. He said he expects the currency change to go smoothly because of the decision to allow both the old and new banknotes to coexist, leading to less turbulence in the economy.

The current exchange rate is 1,167 Iraqi dinars to the U.S. dollar.

http://www.rferl.org/content/Iraq_Planning_Currency_Redenomination/1950504.html

[THJ]

If they are making public the redemonination process the RV is very close. No LOP.

[Mr. Phonics]

News / From Our Bureaus

Iraq Planning Currency Redenomination

Iraqi dinars are stacked at a teller's window in a Najaf bank.

February 06, 2010

BAGHDAD -- The Iraqi Central Bank is planning to redenominate the national currency in an effort to ease transactions and allow people to carry less paper money, RFE/RL's Radio Free Iraq (RFI) reports.

Mudhhir Muhammad Salih, a member of a Central Bank advisory panel, told RFI that a plan has been made to remove three zeros from the currency and phase out the current banknotes late this year.

Salih said by the end of 2010 the new banknotes will be fully introduced while the old banknotes will be gradually removed from circulation. He did not specify when the new notes would be issued.

Both will be legal tender in Iraq until the old notes are completely withdrawn.

Iraqi officials have had a long-running plan to redenominate the Iraqi dinar. In 2006, the Finance Ministry recommended to the Central Bank that it carry out such a plan.

Salih pointed out that banks are having a hard time accepting cash savings and deposits, but by dropping the zeros it will make it easier for both the banks to deal with their customers and for the general public to carry money. He said some 80 percent of Iraq's money supply is cash in circulation.

Salih added that in 1990 the value of banknotes in circulation was about 25 billion Iraqi dinars but is currently some 25 trillion dinars.

Economic analyst Hilal al-Tahhan told RFI that the bank's move is overdue. He said he expects the currency change to go smoothly because of the decision to allow both the old and new banknotes to coexist, leading to less turbulence in the economy.

The current exchange rate is 1,167 Iraqi dinars to the U.S. dollar.

http://www.rferl.org/content/Iraq_Planning_Currency_Redenomination/1950504.html

That should put a nail in the coffin of talk of a lop.

[Torey0112]

this smells of a lop..sniff sniff.......stinks!!!

[wckdinar]

Either way, maybe this ride will be over soon...

[dhhigginbotham]

Thanks for the info xxx.

[hiltonhead05]

Maybe I read it wrong but it sounds like they are just taking the zeros of the front/face value of the money and not the exchange rate... Also it said the both style of currency would still be good.. Last paragraph before quotes

[jackdavis1364]

I view this as a very positive step. Why would they announce the redenomination at this particular moment? It is to get their people mentally ready for the lower denominations. We have heard on several ocassions that the vaults are full of lower denominations. What did we think they were going to do with those? We knew all along that they would be issued when the rv happens. This practically announces the rv as I see it.

This is no different from what the US did many years ago. I'm older but I have seen a $500.00 and I think I saw a $1,000.00 US bill. Have any of you seen either of these? There may be a few around but they are in collector's hands. The largest bill printed by the US now is the $100.00 bill. It is for the same reason stated above, to keep down counterfieting.

Now suppose they issue the smaller denominations and don't rv (we know they are but just suppose). What does an Iraqi buy a package of gum with now? I haven't done the math but with the value of the Dinar now being worth practically zero, it probably would take 2,000 Dinars. Without the revaluation and the issuance of the smaller denominations, what is the Iraqi going to buy the gum with? 2,000 one dollar denominations? You and I know that would never work. Iraqis may not chew gum but you know what I mean.

My opinion? This is the first slick way of making the rv announcement. It is upon us!

[Kimjornync]

News / From Our Bureaus

Iraq Planning Currency Redenomination

Iraqi dinars are stacked at a teller's window in a Najaf bank.

February 06, 2010

BAGHDAD -- The Iraqi Central Bank is planning to redenominate the national currency in an effort to ease transactions and allow people to carry less paper money, RFE/RL's Radio Free Iraq (RFI) reports.

Mudhhir Muhammad Salih, a member of a Central Bank advisory panel, told RFI that a plan has been made to remove three zeros from the currency and phase out the current banknotes late this year.

Salih said by the end of 2010 the new banknotes will be fully introduced while the old banknotes will be gradually removed from circulation. He did not specify when the new notes would be issued.

Both will be legal tender in Iraq until the old notes are completely withdrawn.

Iraqi officials have had a long-running plan to redenominate the Iraqi dinar. In 2006, the Finance Ministry recommended to the Central Bank that it carry out such a plan.

Salih pointed out that banks are having a hard time accepting cash savings and deposits, but by dropping the zeros it will make it easier for both the banks to deal with their customers and for the general public to carry money. He said some 80 percent of Iraq's money supply is cash in circulation.

Salih added that in 1990 the value of banknotes in circulation was about 25 billion Iraqi dinars but is currently some 25 trillion dinars.

Economic analyst Hilal al-Tahhan told RFI that the bank's move is overdue. He said he expects the currency change to go smoothly because of the decision to allow both the old and new banknotes to coexist, leading to less turbulence in the economy.

The current exchange rate is 1,167 Iraqi dinars to the U.S. dollar.

http://www.rferl.org/content/Iraq_Pl...n/1950504.html

[LC460]

I think this is a very positive action they are taking before the RV. There will probably be 45 to 60 days to turn in all the larger dinar notes to make way for the smaller notes. I think the RV is very close.

[clarigre]

I know as I have always said ... "Each head is a world" but after reading this story several times what I understand is the following:

Banks in Iraq are having problems with the movement menej and high-denomination coins and Iraq and is warning the CONVERSION currency.

Returning to the subject in the news nowhere speaks of eliminating the value of money nor talk of removing 3 zeros at par value. What might be after reading the entire story they want to ELIMINATE FLOW OF TICKETS ARE "3 ZEROS" I mean ... 1,000 - 5,000 - 10.000 to 25.000 Dinar.

THEY SAY FOR THIS AND BE PREPARED AND TRUST THAT END FLOW OF TICKETS AT THE END OF THIS YEAR.

I mean ... DO SOMETHING TO YA SOON and ended in December!

Like I said .... THAT'S WHAT I UNDERSTAND your reading!

[tootygal]

I hope that this is good news for us who are holding the Dinar........

[lacoquiPR]

Esto demuestra que nuestra inversion pronto echara sus frutos!!!!

[warrengz]

HELLO!? This is a "pre cursor" for the RV. Great news they would publicize this to their people. They are trying to keep everyone on their feet when they pull the trigger, sending out news all of the sudden pertaining to their currency exclusively which they have not done too much of. And yep, PUT THE L-O-P to rest. The smokescreens are clouding up the eyes of the world and will continue to get thicker, then.....THE RV ANNOUNCEMENT!!! Get ready folks, inch-ing closer!

[sonny1]

This is great news, let me explain, if they come out with lower denoms and do not change the exchange rate a 20 dinar note is worth 2 cents, and it would take 50 of those to make 1 dollar. This is not the way to make things easier, it would only complicate things. Goods cost the same, just because the people in iraq are broke does not mean they get goods cheaper if that were the case everyone in etheopia would be full. Here is what logicaly will go down. First they will have to up there exchange rate, second they will release the lower denoms, and give us a firm timeframe to cash our notes in, third once they get these large bills back in there hands they will either vault them, or destroy them. I cant beieve they let this out, it shows me that we are so very close. They will have to lop at some point, its called smaller denoms!!!

[mrref]

Remember they will remove the zeros from left to right, with that it would be .87 which would mean a RV, IMO.

[Fi3ry_Ph03n1x]

I haven't done the math but with the value of the Dinar now being worth practically zero, it probably would take 2,000 Dinars. Without the revaluation and the issuance of the smaller denominations, what is the Iraqi going to buy the gum with? 2,000 one dollar denominations? You and I know that would never work. Iraqis may not chew gum but you know what I mean.

My opinion? This is the first slick way of making the rv announcement. It is upon us!

What makes anyone think that the larger denominations will coorelate in value to the new smaller denominations? A current $25,000 note might be worth a $25 new note. It is a different note that is not currently in circulation, right? So why would its implementation mean that it has to have the same comparative value to the ridiculously large denominations that are circulating right now?

[jackdavis1364]

What makes anyone think that the larger denominations will coorelate in value to the new smaller denominations? A current $25,000 note might be worth a $25 new note. It is a different note that is not currently in circulation, right? So why would its implementation mean that it has to have the same comparative value to the ridiculously large denominations that are circulating right now?

When the US delete the use of the $500.00 and larger bills, did anyone when taking their $500.00 bill not get 5 $100.00 bills, 10 $50.00 bills, etc?

They go full value. That is exactly what they will be doing here. They will exchange the larger denominations for smaller denominations. No loss of money.

[keylargo]

If I am correct, that if you drop 2 zeroes off a $25,000 dinar not it is now $250.00. If they RV the note to $1.00 that note is now $250.00 a far cry from $25,000 at $1.00 par. Correct me if I am wrong

Keylargo

[Bruce]

This just means that the present currency with3 zeros dropped will have the same value as the new currency. So if a revaluation is done after the lop to $1.00 US, then we break even.

[grand pubah]

The article states that should this happen that both new and old bills will be good through the end of the year.

[eageleye]

Esto demuestra que nuestra inversion pronto echara sus frutos!!!!

Acho que sim.

[mikemd115]

I am trying to avoid seeing things only in light of what is best for me. But consider this, half of how currency works is psycological. We have faith in the dollar. What Iraq's need is faith in the dinar. When you have to buy a loaf of bread for 25,000 dinar there is no faith. So set up a value system with the big players before an RV. Example say to China you hold dinar now worth little but we all agree it revalues to say the value of the Euro and together we all agree to support that value for a year. That allows you to forgive debt now (done), have significant buying power at least for that year but most likely longer. Over that year of stable value the denominations are allowed to rearrange. That means when I go to cash in my large denominations I now have faith in the dinar, ie I bet it will go higher, I take some back in the form of dollars or euros and dinars of appropriate denominations. After stability period the people of Iraq can now buy a loaf of bread for 4 dinars, they have not themselves rushed to buy up dollars because one it isn't the legal currency where they live but they now also have faith in the dinar. At that point the value is let to float in the world currency market, all the high denominations have been retired. And then we either win or loose again depending on what world markets look liked in a year. This is all IMO based on following this for a couple of years. I am not an economist.

[therentman]

This is great news, let me explain, if they come out with lower denoms and do not change the exchange rate a 20 dinar note is worth 2 cents, and it would take 50 of those to make 1 dollar. This is not the way to make things easier, it would only complicate things. Goods cost the same, just because the people in iraq are broke does not mean they get goods cheaper if that were the case everyone in etheopia would be full. Here is what logicaly will go down. First they will have to up there exchange rate, second they will release the lower denoms, and give us a firm timeframe to cash our notes in, third once they get these large bills back in there hands they will either vault them, or destroy them. I cant beieve they let this out, it shows me that we are so very close. They will have to lop at some point, its called smaller denoms!!!

5) Really, Redenomination doesn't make the Ghanaian currency stronger?

Ans: NOPE! The strength of a currency is determined by the market factors, ie demand and supply for the currency. Since the purchasing power of the currency remains unchanged after redenomination, we should not expect demand for GHC to change. Similarly, redenomination doesn't give the monetary authorities any justification to change the supply of money.

Redenomination of currency is nothing but a recalibration and a change of name of the currency. This by no means imply the appreciation or depreciation of the currency.It's important that we don't mistake redenomination with appreciation of a currency. We would have an appreciation if we instead have 1 Cedi (AND NOT 1 GHC) = 1 dollar. The cedi and GHC, like identical twins, are separate currencies!!!

http://ghanaconscious.ghanathink.org/node/437

Even though this talks specifically about the currency in Ghana, the principles still apply, especially since Iraq is not in hyperinflation. The purchasing power remains unchanged. JMO

Edited February 6, 2010 by therentman
Highlight

[Kent]

It's fascinating isn't it how people read the exact same words and some see a lop and others see good news for an RV.