Central Bank of Iraq stresses that the new currency will not affect the financial value of money

[GT5Junkie]

The phrase "deleting the zeros" = LOP. There's no ifs, ands, or buts about it. In a different article they refer to what Turkey and Brazil did as deleting the zeros. I know the gurus and pumpers have tried to distort this phrase to mean something else, but the truth is out there. Delete the zeros = LOP. Period.

[Padrev]

can somebody correct me if i am wrong assuming this is a lop? i hope not but if the money retains the same value then that means a 25000 iqd will buy a loaf of bread and the new 25 iqd will also buy the same loaf of bread. if that happens, we lose. we cash in our iqd for an even value minus the exchange fees. once again, i hate to see that happen but it sure reads that way.

Let me TRY to correct you.. and see where it gets us.

RDing or ('lopping' as everyone calls it now) is nothing like RVing. When the gov't redenominates their currency, the value doesn't change. In your example, a 25k loaf of bread will still cost 25k but it will have to be paid for with lower denom notes. Let's say the bread is 3000 (to make it easier). Before, you might pay with a 5000 note and get 2000 in change. NOW there will be NO 5k note... you have to pay the 3000 with 6x 500IQD notes. The VALUE of the bread didn't change, it still cost 3000.

Why is this good news for us?

In order to make it so that our friend Joe Iraqi doesn't have to carry around HUGE piles of money to buy bread, milk and humus (do they eat humus in Iraq?) it IS LOGICAL to REVALUE the currency so bread doesn't COST 3000IQD. Maybe the bread will cost, 3!! (I have no idea, by the way.. but you can tell all your friends I said that if you want.)

There's really no need to be afraid of a 'lop'. If you have $100 and the US gov stops making $100 notes, you just have to use 10x 10's or 2x 50's to spend $100. Redenomination does NOT change the value of a currency, but in Iraq's case SHOULD lead to a revaluation for the sake of the people and the volume of cash in the economy.

If you have a million IQD and they lop the zeroes, you still have a million, but you need to hold that cash in different denominations.

I hope that helps for everyone who is worried about the lop, it's an unfounded fear. Our investment is fine and we will make our money when Iraq is ready to be a 'world' player again.

By the way, the Chinese Yuan has appreciated 27% since 2005. Slow growth is good too, it doesn't have to happen overnight. http://www.forexblog.org/category/chinese-yuan-rmb

Game on and go RV!

[GT5Junkie]

You are mistaken Padrev.

I suggest you take a look at these two links which should explain where you are incorrect.

http://en.wikipedia.org/wiki/Denomination_(currency)

http://www.isda.org/speeches/pdf/TurkishRedom121004.pdf

If you have a million IQD and they "LOP" three zeros, you now have 1,000 IQD. Both worth the same amount in USD or goods.

[estewart]

You are mistaken Padrev.

I suggest you take a look at these two links which should explain where you are incorrect.

http://en.wikipedia....tion_(currency)

http://www.isda.org/...Redom121004.pdf

If you have a million IQD and they "LOP" three zeros, you now have 1,000 IQD. Both worth the same amount in USD or goods.

I support that. And a NEW 25 Dinar or OLD 25K Dinar would be able to buy many loaves of bread. They could buy a pair of men's pants.

[dinarck]

Shabibi could raise the exchange rate from .00085 to .001 to fight inflation as he has recently hinted. How convenient a time for him to do it. Just before a RD. That would bring the new currency in on par with the USD and deal with the dollarization issue. Just my opinion but it does seem to add up.

[ArmyDog133rd]

Thanks Trooper, Enjoyed the Post!

[starlight]

Central Bank of Iraq stresses that the new currency will not affect the financial value of money

http://translate.goo...8%26prmd%3Divns

Don't read too much into this. Of course the new currency will not affect the financial value of the money. The currency is only being redenominated. Redenomination does not raise value.

Revaluation raises the value.

[Padrev]

You are mistaken Padrev.

I suggest you take a look at these two links which should explain where you are incorrect.

http://en.wikipedia.org/wiki/Denomination_(currency)

http://www.isda.org/speeches/pdf/TurkishRedom121004.pdf

If you have a million IQD and they "LOP" three zeros, you now have 1,000 IQD. Both worth the same amount in USD or goods.

Well.. there goes my guru status. Wait... if I'm wrong.. doesn't that MAKE me a guru?

Thanks for the two articles. I'll keep looking at other cases to try and get a better understanding of it.