Thread: Monetary policy to delete the zeros of the Iraqi currency

Originally Posted by orrkallen

Hi Friends!
That was an old article that was refreshed several days ago. The longer you hang around this saga the more you will become skeptical of anything that sounds like a "looping" or, "lop" of the IQD. Ain't gonna happen.. It has been disputed by Shabibi himself. (S runs the CBI- he is the Top Dog when it comes to the IQD.)

Thanks for this. When I read the article my heart sank. God Help and bless us all. Nidya

This is now the first article I have seen in an Iraqi Paper - Al-Iraq

Minister of Finance: raise zeros from the Iraqi currency will be supported against the dollar

Finance Minister Bayan Jabr said the lifting of the zeroes of the Iraqi currency will support the currency against the dollar.

The Zubaidi, in comments broadcast by reporter That the proposal submitted by the Ministry of Finance to the Central Bank of Iraq has not been affected increase or decrease but it is just delete the zeroes vocation not only the case in many countries, Noting that the Iraqi dinar would be offset dollar or slightly more than after the application of this proposal.

According to an official source at the ministry The proposal to raise three zeroes from the currency will be in accordance with the right monetary policy is not gradual, as happened in Turkey and this policy will raise the monetary value of the Iraqi currency and will of the Iraqi dinar Strength of cash against all currencies.

http://al-iraqnews.net/new/local/54531.html

Iraq plans currency redenomination

Iraq expects to redenominate its dinar currency by knocking three zeros off the nominal value of bank notes to facilitate currency transactions, reported Reuters, citing a central bank official.

Emerging from years of war and sanctions, Iraq is trying to revamp its economy and boost oil production with a raft of crude deals that may vault it to one of the world's top oil producers.

"The goal is to improve the payment and receiving system in the country and consequently to reform cash management," Mudher Kasim, a senior advisor at the central bank, told Reuters.

Kasim said that the central bank expected to start rolling out new notes by the end of the year or the beginning of 2011.

An Iraqi cabinet committee ordered the change in 2007, but the central bank did not think it appropriate until recently, Kasim said. The dinar's value will remain unchanged, he said.

Speaking to Radio Free Iraq (RFI) Mudhhir Muhammad Salih, a member of a Central Bank advisory panel, 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.

Salih said some 80% 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.

http://www.bi-me.com/main.php?id=442...c=33&cg=4&mset

Note - From Mr I of Warka Bank :-

"The CBI has not provided official written notification to the banking sector
and banks regarding this matter thus it is considered null and void by the
Iraqi banking sector and this is the general law noting that we contacted
the CBI regarding this matter where they did not provide anything official
to comment on simply stating that this matter is under study and has been so
for the past few years nothing more nothing less.

The value the currency, shares, property...etc will be set in accordance
with the value of IQD applied and affected by the CBI in accordance with the
law where the value of the IQD is set in accordance with the value they set
and this standard general practice.

If a revalue takes the entire IQD will be revalued in accordance with the
rate the CBI sets.

From our prospective we can not comment and will not comment any further
unless the CBI officially announces that the removing of the 3 zeros or
revaluation will actually take place by providing the banking sector written
documentation where this would be the standard general verification and
confirmation currently practiced."

Is it the invariable "smokescreen"?

Originally Posted by Seaview

Note - From Mr I of Warka Bank :-

"The CBI has not provided official written notification to the banking sector
and banks regarding this matter thus it is considered null and void by the
Iraqi banking sector and this is the general law noting that we contacted
the CBI regarding this matter where they did not provide anything official
to comment on simply stating that this matter is under study and has been so
for the past few years nothing more nothing less.

The value the currency, shares, property...etc will be set in accordance
with the value of IQD applied and affected by the CBI in accordance with the
law where the value of the IQD is set in accordance with the value they set
and this standard general practice.

If a revalue takes the entire IQD will be revalued in accordance with the
rate the CBI sets.

From our prospective we can not comment and will not comment any further
unless the CBI officially announces that the removing of the 3 zeros or
revaluation will actually take place by providing the banking sector written
documentation where this would be the standard general verification and
confirmation currently practiced."

Mr. I,

With all the currency redenomination news articles that have come out in the last week (almost daily), do we really think they won't?

Originally Posted by Seaview

Iraq plans currency redenomination

Iraq expects to redenominate its dinar currency by knocking three zeros off the nominal value of bank notes to facilitate currency transactions, reported Reuters, citing a central bank official.

Emerging from years of war and sanctions, Iraq is trying to revamp its economy and boost oil production with a raft of crude deals that may vault it to one of the world's top oil producers.

"The goal is to improve the payment and receiving system in the country and consequently to reform cash management," Mudher Kasim, a senior advisor at the central bank, told Reuters.

Kasim said that the central bank expected to start rolling out new notes by the end of the year or the beginning of 2011.

An Iraqi cabinet committee ordered the change in 2007, but the central bank did not think it appropriate until recently, Kasim said. The dinar's value will remain unchanged, he said.

Speaking to Radio Free Iraq (RFI) Mudhhir Muhammad Salih, a member of a Central Bank advisory panel, 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.

Salih said some 80% 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.

http://www.bi-me.com/main.php?id=442...c=33&cg=4&mset

Thanks for this. I already asked Ali of Dinar Trade and Safe Dinar, if they change the currency, will we loose our investment in the dinars. I have purchased from them both and wasn,t sure. I am awaiting their reply. I you know what they say. Your post has made me feel a little better Seaview. Nidya

Advisor Central Bank (Iba): monetary policy of the Bank over the past years will continue the successful

2010-02-14

Sign adviser CBI continued success of the monetary policy of the Bank during the past years. Stressing that the Bank's core function is the formulation of fiscal policy of the country.

Appearance, "said Dr. Mohammed Saleh told the independent press (Iba) today, Sunday, has been the Bank's important role in the process of reducing the effects of inflation through fiscal policy is working to curb the rising prices that may confuse the family income affects the situation of price stability in the country, where the Central Works at the moment to maintain the value of prices and seeks to pursue a policy of declining increases.

"Everyone knows that the previous situation was serious, requiring a new economic approach of the Bank and will lead to success, where inflation was far Mdyate in 2007 when it reached nearly 50 percent, which forced us to adopt a policy to limit the escalation of that alarming percentage.

He noted that conditions favor paid to the opening of the currency auction, which has contributed to the reduction of high rates of inflation and the increased value of the dinar against the dollar during that period.

Saleh also highlighted that the central bank seeks to be no price increases commensurate with the size of a normal intake of family and the nature of the salaries of employees in the public sector.

The parliamentarians called earlier to reserve the use of cash for the bank in the event of a shortfall in the state budget, which was born the reactions of opposition by the bank.

http://www.ipairaq.com/index.php?nam...onomy&id=21242

Hi Friends!
I've been away for a couple weeks or so. I was disappointed to find nobody came to the rescue to clear up the lop issue and the confusing articles lately. I have only limited time so I will keep this unusually brief- for me, anyway. I will cut to the chase.
For what it is worth- My Opinion is in total agreement with those saying that the action to be taken will be to gradually, but without lolly-gagging around, remove from common circulation the1K, 5K, 10K and 25K dinar notes. Why? Because they are going to Revalue the dinar to a higher rate. Some articles stated they didn't want the folks carrying a large amount of cash- VALUE. For the sake of illustration, if a 10K note buys a bag of groceries today, if they RV at 1 IQD = 1 USD, that same note would then buy what $10,000 USD buys now. This is the excuse being used for the removal of the large notes- the 3... 000's.
Alright then, what are they supposed to do to buy/sell if the value of the dinar is increased and it becomes impractical to use the larger notes? They will issue the "new" notes- the notes that were printed at the same time by the same Co. that printed the larger notes. Look in the archives to see the number of notes CBI said were printed. Presumably they are the 1, 5, 10 and 25 dinar notes, plus there are a couple of fills (their coins) to go along too.
Well, there will be a transition phase where the "new" (in time) lower denoms coexist with the larger denoms, as the larger denoms get exchanged for the lower ones, effectively "removing the 3...000's" from circulation by the CBI. It won't happen overnight, they expect it to take a few months.
These articles may be confusing but they are fantastic news for us!
When do I think this will happen and what rate do I expect?
OOOOPS! I gotta go now, my ELLIFIKNOW needs attention- pronto!
Hope this helps some.
Blessings On YOU!
AL

Karbala economists express their opinions about deleting the zeroes from the Iraqi currency

Many economists at Karbala University critisized the strategy of the Iraqi Central Bank to lift the zeroes from the Iraqi currency considering that the time is not suitable for that, while others reduced the importance of the process and the possibility of reducing the inflation that the economy is suffering from.

The value of the Iraqi currency is not by the number of zeros on it, but its real value is the cover that it provides to the State",The Head of Banking and Finance department at the Management and Economics faculty at Karbala university, Dr. Akram Yasseri told (AKnews)." The value of the Iraqi currency is not by the number of zeroes to add or delete but by the coverage it provides to the state." He also added that: " There are many points which must be available to the Iraqi Central Bank before initiating the process, including

First: The government must introduce new currency and to keep the old currency available in the local market to allow the citizens to deal with any of the currencies.

Second:The Iraqi banks must deal with the two currencies and at the same value and at same time.

The academic economist at Karbala University Dr. Alaa Farhan confirmed that "the decisions were hasty and not deeply reconsidered for the financial situation of Iraq."

Dr. Farhan asked about the difference that can result from replacing the new currency with the American currency (dollar), "adding that " this process has negative effects on the psyche of the Iraqi citizens and their economic situation especially the poor class. As regarding the personal debts, and whether the creditors will accept to recieve any amount that will, of course, be a small one in comparison to what they had already paid to thedebtors, this will for sure create problems between the dealers on loan terms.

Dr. Abbas Daami finds that changing the Iraqi currency is both positive and negative at the same time. He told (AKnews) that: "changing the Iraqi currency and deleting the zeroes from it has a positive effect that could serve the state depending on that a lot of people are still aspiring to the return of the old currency, which was called the (Swiss currency), which they are considering as better for them, since the phase that the currency was in, was a good stage in the life of the Iraqis.

Daami added that: "Thinking about bringing back that currency and issuing the accompanying small change (iron coins) is a valid and good one, but it includes many difficulties, such as the Iraqi economy is still suffering from the inflation that accompanied printing trillions of it which is not based on the Treasury and the hard currency available in it, but on the sole supplier which is oil, that can barely cover the requirements of reconstructions and the huge salaries of the ministries as well as external debts whicht are a heavy burden on the Iraqi economy."

He continued by saying that: "the Iraqi government must improve the industries that support the oil and depend on them as additional resources and end the foreign debts left by the previous regime's policies and then it will be able to change the currency, and gradually ,not through a quick decision that will increase the sufferings of the citizen in adapting such currency, as happened after the fall of the regime and changing the form of the currency that was used during that regime."

It should be noted that the Iraqi Central Bank Consultant Dr. Mazhar Mohammed Saleh has said earlier to some of the media that this year will see the launch of the new Iraqi currency, free of zeros and the CBI completed fifty percent of its preparations on which it was working since 2005.

http://www.aknews.com/en/aknews/2/117069/