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The future of the Iraqi currency!!

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1 The future of the Iraqi currency!! on Wed Nov 28, 2018 6:37 pm

ikea


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http://burathanews.com/arabic/reports/341343

The future of the Iraqi currency!!

Diaa Mohsen
200 2018-11-28

Diaa Mohsen


Money, a source and document representing the state, is a symbol and expresses its political and religious system and its own philosophy.

In comparison to date writing, documentation across currencies can not be questioned or challenged as a concrete fact and document for a certain period of time.

Humanity has greatly benefited from the history of civilizations through the study of its currencies and their holdings

The discovery of currency is compared to the discovery of printing, as it facilitates the process of exchange between people and traders alike, and the currency is one of the main components of the market; without it, there can be no buying and selling

Before the entry of the British occupation forces in October 1914 was the currency traded among the people is the Ottoman lira, after which the British occupation authorities introduced the Indian rupee as the currency of circulation, and after independence was established the first council to issue the Iraqi currency in 1931, was linked to the Iraqi dinar in pounds sterling, The July 14, 1958 Revolution The dinar was pegged to the pound and pegged to the US dollar

The Central Bank of Iraq issued a new currency of paper and metal, bearing the slogan of the new Republic. New issues of paper currency were issued in 1971, 1973, and 1978.

The Iraqi dinar suffered a continuous deterioration in its value after the Iran-Iraq war began, dropping from $3.3 per dinar in 1980 to about $4 in 1988.

As a result of the invasion of Kuwait and the issuance of resolutions of the Security Council to impose a blockade on him, and the deterioration of the value of the Iraqi dinar, forced the Central Bank of Iraq to issue currencies that were not traded before, issued banknotes of 50 and 100 dinars, followed in 1995 issued a paper of 250 dinars,

The year 2000 issued a cash paper bearing the category of 10,000 dinars, and it is noted that all these categories were carrying the image of former President Saddam Hussein.

The citizen carried large packages to buy his simple needs, which do not exceed eating and drinking

After the fall of the former regime, specialists began to think about how to restore the spirit of the Iraqi dinar, and remove the heavy legacy of the Iraqi economy, they began to put the idea of removing three zeros from the current currency

The deletion of zero is defined as a process by which the nominal value of the currency is adjusted due to high inflation and devaluation. Countries such as Brazil, Argentina (South America), Yugoslavia and Poland (countries in the orbit of the Soviet Union) Ireland (for joining the European Monetary Unit), a process different from the devaluation process,

But can such action be implemented?

What are the pros and cons of the economic movement in Iraq?

Could it really help to reduce inflation rates?

Finally, what is the right timing for it?

This process is still controversial in the government and monetary circles, businessmen and specialists.

Some believe that doing such a process will lead to more corruption and tampering with public money, because of what is happening in the process of changing the currency, and it will create a state of chaos and confusion in contracts internally and externally, And that it will not change anything from the fact that the amount of the issued paper will remain the same

At a time when an optimistic team believes that this process will lead to the restoration of prestige of the Iraqi dinar, if accompanied by the improvement of the dinar exchange rate, and the process of calculations in various fields will be less complex and simply

We do not deny that the process of deleting zeros is a necessary and important step comes within the need for the country to the process of administrative reform of the currency contribute to reduce transaction costs and cash transactions in the economic process, and reduce the size of the country's monetary mass and help to facilitate calculations and reduce the amplification of numbers, if applied Properly and at the right times.

But there must be introductions to that process, including choosing the appropriate time in which the Iraqi economy in a state of stability, and then create the economic environment in a deliberate manner to implement the deletion, and this requires the procedures and financial and banking decisions taken by the financial authority in the country.


The process of replacing those "in the process" will cost the state budget of 172 billion dinars (150 million dollars), which is a large amount is significant, if we add the effort of the banking staff and the time that will be lost by the process of switching, and can not Forget the attempt of the weak souls who will try to profit from that process by all means and methods!

It is true that this process will not have an impact on the purchasing power of the citizen, since the exchange of currency will take place in another currency. There may be some shock in the market as a result of this switch, but it is a temporary shock.

It is not bad to see the experiences of many countries replaced the currency, such as Turkey, which continued its currency exchange for four years, the Turks remained trading the old currency with the new currency until they were all withdrawn from the market without the market confused

The most important negatives that will accompany the process of deletion of zeros is the cash illusion, as the deletion of three zeros from the Iraqi currency will sign the citizen under the illusion of cash, which is the most prominent negative that can affect the Iraqi citizen in the event of deletion of three zeroes of the current currency is a significant effect,

This will be the result of colliding with the value of the new currency after the deletion, leading him to believe that the value of its assets has decreased by dividing them on the three zeros.

The Iraqi citizen would like to see his currency strong, so the process of raising zeros will contribute to the revaluation of the currency, and reduce the proportion of demand for hard currency, which is characterized by force, and will lead to a balance between the value of domestic and foreign currency and will give them market power at home and abroad,

It is possible that the value of the Iraqi currency against the US dollar, for example, that the employee who receives 1200 thousand dinars at the exchange rate 1200, the purchasing power of $1000 dollars and if the strengthening of the dinar equivalent to 500 dinars to the dollar will be purchasing power $2400 instead of $1000

2 Re: The future of the Iraqi currency!! on Wed Nov 28, 2018 7:39 pm

tobyboy


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Timmy What are your thoughts on this article. There does not seem to be any indications of the way we think this will happen just an exchange or maybe double the price you paid for the dinar. So are we all wrong on our thinking of the wealth of the dinar.

3 Re: The future of the Iraqi currency!! on Wed Nov 28, 2018 10:20 pm

Shredd

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This is a good read and an opinion piece of course. As the writer speculates the pros and cons as well as the project to delete the zeros, we speculate as well. Even as the other countries were referenced, the situation in Iraq is definitely unique. Because of that, we listen to trusted resources like the CBI and the related ministries as they apply, to name a few, and try to learn as we go.

The themes of making sure this transition is as seamless as possible to the people, not too disruptive to the market, all while mitigating the opportunities for criminals is a huge task no doubt.

That all said, we can look back and see all of the progress Iraq has made and can confidently see they intend to further grow and mature from where they came from.

Your question about their example given at the end is again speculation of continued managed rates through the transition, however long that may be. The bottom line here is the dinar will eventually float free and be affected by the market like most other countries do.

The "how " and "when" are the big questions and we just can't foresee that. We just need to watch the news (a huge thanks to Timmy) and do our best to continue to be students of our investment.

Here's a fun parting thought that I've shared in the past...let's say the very first move in the rate goes up to a dime. Even though many of us may not choose to exchange our dinar for that, think of how quickly the dinar supply will dry up because of the new demand. That demand could certainly give you an opportunity.


_________________
"Do not wear yourself out to get rich" - Proverbs 23:4

4 Re: The future of the Iraqi currency!! on Wed Nov 28, 2018 11:13 pm

tobyboy


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Thank you Shredd your opinion is helpful to me as usual. I guess this is why it is a speculation. We just have to keep watching and reading hoping we are near the end of this journey of the Iraqi currency. Would be happy to see it start at 1 cent to 3 cents. Just let it start and we would be surprised how quickly it would move for the supply & demand. Nice to read your comments as I have said so many times in past. Again Thank you for responding I am sure some others had same concerns so this should help others as well. Toby

5 Re: The future of the Iraqi currency!! on Thu Nov 29, 2018 7:59 am

RCS1947


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Shredd, thanks for your input.....and thanks again to timmie for her unselfish giving of her time to keep us informed.

6 diner on Thu Nov 29, 2018 9:13 am

soon


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Thank you Shredd

7 Re: The future of the Iraqi currency!! on Thu Nov 29, 2018 10:33 am

tlm724

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Thank you so much Shredders !!! We so value your opinion. I am having internet issues due to heavy snow on the lines but will try to keep the forum updated. Thanks again all of you and thank you ikea for bringing in news for us !!!


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Lifes purpose is not to arrive at the grave in a well preserved body, but rather to slide in sideways shouting HOLY CHIT what a ride

8 Re: The future of the Iraqi currency!! on Thu Nov 29, 2018 3:08 pm

tobyboy


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Hey Timmy also Thank You for all you do for the site. Bond Lady would be so proud of you for all you for the site. That was a good response from Shredd on the above article. Any comments from your thoughts to this article. I know you have really good comments of the articles you bring in here. Hope you got settled in your new residence in Vermont.
Toby

9 Re: The future of the Iraqi currency!! on Sat Dec 01, 2018 11:44 am

tlm724

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tobyboy wrote:Hey Timmy also Thank You for all you do for the site. Bond Lady would be so proud of you for all you for the site. That was a good response from Shredd on the above article. Any comments from your thoughts to this article. I know you have really good comments of the articles you bring in here. Hope you got settled in your new residence in Vermont.
Toby

Thank you so much Toby, I appreciate your comments as well. I am reminded of a few things after reading Shredds comments. Most importantly that this is a long term investment. We as investors know the risks and so far the risk to us has been minimal . BondLady always said "she was in it to win it " and I am following the path she started. I believe 100% in this investment. Barring any catastrophic event we stand a very good chance in seeing a favorable return on our investment. It takes time to build a country up from the ruins but I am sure the wait will be worth it. I also remember BL saying throughout the years that Iraq shows us daily via the news /gov. sites what they are doing and if Iraq would follow a sound economic policy and see it through then the dinar would appreciate in value. With this new GOI I have hopes that Iraq see's their potential. Hang tight and believe !!!


_________________
Lifes purpose is not to arrive at the grave in a well preserved body, but rather to slide in sideways shouting HOLY CHIT what a ride

10 Re: The future of the Iraqi currency!! on Sat Dec 01, 2018 6:23 pm

tobyboy


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Timmy I too remember her comments that they tell us what they are doing.we just have to keep reading the articles that you so graciously bring in for reading. Did you get much snow up there? Hopefully once this is over and we making some decent money will have the opportunity to get together in person for nice chats of the past events of years past.
Toby

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