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Thread: Article on How Kuwait RV'd

  1. #1
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    Default Article on How Kuwait RV'd

    OK, this article seems to imply that there was a massive overnight RV. How much more the IQD should be able to. I'd be interested to know how Kuwait's M2 and KFIs compare to Iraq. Also what reserves and backing did they have to justify such a revalue?

    AFTER THE WAR; No Electricity but Kuwait Reopens Its Banks
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    By DONATELLA LORCH, SPECIAL TO THE NEW YORK TIMES
    Published: March 25, 1991
    It still has no water and little electricity or food, but Kuwait revived its banking system today, introducing a new currency.

    Banks reopened for the first time since Iraqi occupation forces shut them down in December. Thousands of people lined up to exchange their old Kuwaiti dinars for crisp new ones and to withdraw a limited amount of money.

    Without electricity, the banks services were slow, limited to money exchange and withdrawal. There was no telex, no electronic money transfer and no telephones. The computers were unusable, so all transactions had to be entered by hand.

    "It's like going back 20 years," said Mohammed al-Yahya, the manager of the Commercial Bank of Kuwait, the nation's second-largest bank. Seized Dinars Canceled

    The Central Bank is canceling the value of Kuwaiti dinars that were seized from the Central Bank and put into circulation by the Iraqis. The invalid serial numbers were posted today in front of all banks in the city.

    All other old dinars can be exchanged for new ones on a one-to-one rate until May 7, when the old dinars become invalid. The new official exchange rate is 3.47 American dollars for one new Kuwaiti dinar.

    Although it is severly handicapped without electricity, the Commercial Bank, like many other major banks, was able to open for business because its records had been saved from the Iraqis. Mr. Yahya hid the bank's balance sheets in his home and sent its computer records to London via Syria with an Indian employee, who packed the tapes into the back of a trailer.

    The banks also face serious personnel shortages. Only 11 of the Commercial Bank's 35 branches opened today, with 137 out of 1,300 workers.

    Before the Iraqi invasion, only 17 percent of the bank's staff was Kuwaiti. Many of the foreign workers -- Jordanians, Palestinians and Indians -- fled and now cannot re-enter the country.

    For those exchanging money today, there was little they could buy in Kuwait. Many of those in line said they planned to use their money for vacations or for shopping trips to Saudi Arabia to buy generators and food.

    "I need to get away from this pressure," said Abdul Mohammed Hussein, a computer engineer in his early 40's who said he was withdrawing 1,500 new dinars to take a vacation in the United Arab Emirates. "Everywhere you go you find lines. At the supermarket, you find lines. To get petrol for the car, you find lines."

    Abdul Hamed al-Atar, a 50-year-old retired Interior Ministry official, said this was the first time he had set foot in a bank since September, and he seemed relieved. "Kuwaits always keep a lot of cash with them," he said as he was handed crisp new piles of money that he stuffed into a small bag. "It's a comfort to have money in my hands."

    http://query.nytimes.com/gst/fullpag...50C0A967958260
    Isaiah 60:1-11

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    Wouldn't you just love to wake up one morning and see a similar news headline about Iraq!!!!!

  3. #3
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    Quote Originally Posted by if i was a rich man View Post
    Wouldn't you just love to wake up one morning and see a similar news headline about Iraq!!!!!
    That's what I'm on here waiting to see!!! It's amazing how this article doesn't seem to make it out to be a big deal. It must have flew under the radar, intentionally I'm sure. Those in the know made out big
    Isaiah 60:1-11

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    There was no RV. Check out the official exchange rate before this. It was pretty much the same.

    http://www.oanda.com/convert/fxhistory

    The Kuwaiti RV is a myth. It never really happened. Some people did make money from it, but it was nothing to do with the exchange rate changing.

    Some Kuwaitis sold their dinar for way below the exchange rate as they thought their money would be worthless after the central bank was robbed. It wasn't and never was. No RV took place, just some lucky buyers and some foolish Kuwaitis.
    "Those who understand compound interest are destined to collect it. Those who don't are doomed to pay it."
    Any multi millionaires/billionaires that are prepared to make a donation toward my mortgage deposit, I will be more than happy to help you invest in the ISX.

  5. #5
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    The street value went down to .10 but not the banks!

  6. #6
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    Quote Originally Posted by impala View Post
    The street value went down to .10 but not the banks!

    Still, they only gave them about 1 month to turn in old currency before it became worthless. Would leave most speculators high and dry not on this forum.

  7. #7
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    It's a crime that dealers are misleading speculators on this topic. Really, have they no conscious? Obviously not.
    Isaiah 60:1-11

  8. #8
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    You had to have contacts in Kuwait before you could have gotten lucky enough to speculate at the street rate of .10, and many foreign contractors did just that, but the window was narrow, but many did make out big time, I made out little time as I was working in Qatar at the time, my associates were in Kuwait, so we did OK, some better than others, but it was real, and it had nothing to do with revalue, it was restoring to previous level, something that could still could be answer in Iraq, not revalue, but restoring to previous levels, even if not world tested, sure makes it interesting.

  9. #9
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    the kuwaiti dinar was actually on a tear earlier this year

  10. #10
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    I do remember that a member on this forum made about 500k on the Mexican peso.
    Could that member tell us how it happend?

  11. #11
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    Quote Originally Posted by Isaiah60 View Post
    OK, this article seems to imply that there was a massive overnight RV. How much more the IQD should be able to. I'd be interested to know how Kuwait's M2 and KFIs compare to Iraq. Also what reserves and backing did they have to justify such a revalue?

    AFTER THE WAR; No Electricity but Kuwait Reopens Its Banks
    E-MAIL
    PRINT
    REPRINTS
    SAVE
    SHARE
    By DONATELLA LORCH, SPECIAL TO THE NEW YORK TIMES
    Published: March 25, 1991
    It still has no water and little electricity or food, but Kuwait revived its banking system today, introducing a new currency.

    Banks reopened for the first time since Iraqi occupation forces shut them down in December. Thousands of people lined up to exchange their old Kuwaiti dinars for crisp new ones and to withdraw a limited amount of money.

    Without electricity, the banks services were slow, limited to money exchange and withdrawal. There was no telex, no electronic money transfer and no telephones. The computers were unusable, so all transactions had to be entered by hand.

    "It's like going back 20 years," said Mohammed al-Yahya, the manager of the Commercial Bank of Kuwait, the nation's second-largest bank. Seized Dinars Canceled

    The Central Bank is canceling the value of Kuwaiti dinars that were seized from the Central Bank and put into circulation by the Iraqis. The invalid serial numbers were posted today in front of all banks in the city.

    All other old dinars can be exchanged for new ones on a one-to-one rate until May 7, when the old dinars become invalid. The new official exchange rate is 3.47 American dollars for one new Kuwaiti dinar.

    Although it is severly handicapped without electricity, the Commercial Bank, like many other major banks, was able to open for business because its records had been saved from the Iraqis. Mr. Yahya hid the bank's balance sheets in his home and sent its computer records to London via Syria with an Indian employee, who packed the tapes into the back of a trailer.

    The banks also face serious personnel shortages. Only 11 of the Commercial Bank's 35 branches opened today, with 137 out of 1,300 workers.

    Before the Iraqi invasion, only 17 percent of the bank's staff was Kuwaiti. Many of the foreign workers -- Jordanians, Palestinians and Indians -- fled and now cannot re-enter the country.

    For those exchanging money today, there was little they could buy in Kuwait. Many of those in line said they planned to use their money for vacations or for shopping trips to Saudi Arabia to buy generators and food.

    "I need to get away from this pressure," said Abdul Mohammed Hussein, a computer engineer in his early 40's who said he was withdrawing 1,500 new dinars to take a vacation in the United Arab Emirates. "Everywhere you go you find lines. At the supermarket, you find lines. To get petrol for the car, you find lines."

    Abdul Hamed al-Atar, a 50-year-old retired Interior Ministry official, said this was the first time he had set foot in a bank since September, and he seemed relieved. "Kuwaits always keep a lot of cash with them," he said as he was handed crisp new piles of money that he stuffed into a small bag. "It's a comfort to have money in my hands."

    http://query.nytimes.com/gst/fullpag...50C0A967958260

    Anyone know Kuwait's exchange rate before the large RV after the war?

  12. #12
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    there was no rv in kuwait.

    i was 13, during the iraqi invasion and i stayed here for the whole thing, and after hearing stories of this supposed overnight rv i did some checking around with some older locals who were also around at the time, and they confirm that there was no rv what so ever.

    the pre-invasion US$ exchange rate was simply reinstated officially for the new kuwaiti dinar,.... for which you could exchange with old kuwaiti dinar. the dinar up until recently used to be pegged to the us$, so they were simply restoring that.

    now that is not to say that some people didnt make a killing. i personally dont know of any as most of us that were in country simply did a 1-1 exchange. the vast majority of people returning, both kuwaiti and expat also did basic 1-1 exchanges.

    the only way you would have made a killing is as Free-Dinar states,... if you ran into some kuwaiti/expat who either needed cash in a hurry outside kuwait and you bought a bucket load for next to nothing, or you ran into some kuwaiti who really thought their country was gone for good.

    so yes, if you had a bunch and then walked into kuwait for an exchange, yes you would have made a killing.

    but this is where any similarity with the iraqi dinar and our little investment here begins and ends.

    during the invasion, there was no kuwaiti central bank that was auctioning KD, like the CBI is doing. there was no economy beyond the black market.

    while kd was put into circulation you couldnt get anything for it as everyone was after the iraqi dinar or they wanted us$'s.

    when the country was restored, the currency was restored. yes the exchange rate was changed from the street value to the official pegged value. but you cannot call that an rv in the slightest.

    there is simply no similarity between what happened to the kd and what may happen with the id, and it surprises me that people are still using this tiny event to make a couple bucks commission from people who simply are not prepared for the realities of this investment.

    iraq is a whole other kettle of fish, and so far there have been no other precedents. so the kuwait story is just that, a nice little story, but thats about it.

  13. #13
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    Quote Originally Posted by Isaiah60 View Post
    OK, this article seems to imply that there was a massive overnight RV. How much more the IQD should be able to. I'd be interested to know how Kuwait's M2 and KFIs compare to Iraq. Also what reserves and backing did they have to justify such a revalue?
    The central Bank of Kuwait website only goes back to 2003 that I can see.

    2003 M2 was 10 Billion dinar
    http://www.cbk.gov.kw/cbkweb/servlet...00809&tbl=RM02

    foreign assets 2 billion dinar

    Kuwait never inflated their money supply, BIG DIFFERENCE!

  14. #14
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    The Kuwait thing was very different
    I was quick, no time for massive amounts of Dinar to flow into the Economy, Trillions were not printed, all currency that was taken from Kuwait (stolen by Iraqis) were not honored.
    ******************************
    Iraq has 30 trillion dinars in circulation

  15. #15
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    Default Yes, it is sad Isaiah,

    Quote Originally Posted by Isaiah60 View Post
    It's a crime that dealers are misleading speculators on this topic. Really, have they no conscious? Obviously not.
    but this (Iraq) is very much a buyer beware opportunity.

    This is why it is imperative to educate yourself prior to laying down your cash.

    Far too many here have let emotion rather than reason dictate their buying decisions.

    This is why so many harp (as the cash only side describe it) about reducing your risk by diversification.

    It is not, as so many of the extremely paranoid currency speculators here state, an effort to get everyone to place all of their holdings into Warka or the ISX...it is about covering (protecting) your funds by applying them to profit from as many possible outcomes as practical...use risk management to increase your chance of profit.

    How sad will you feel if your currency speculation does not pan out because you failed to manage risk?

    How happy will you be if you profit because you looked at all avenues of investing in Iraq, and covered your bases accordingly?

    Seems a rather simple choice...

  16. #16

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    Quote Originally Posted by bunker View Post
    iraq is a whole other kettle of fish, and so far there have been no other precedents. so the kuwait story is just that, a nice little story, but thats about it.
    I thought Afghanistan had a RV after the war there? What was the value of their currency before, immediately after the war started, and now?

  17. #17
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    Quote Originally Posted by BNZI View Post
    There was no RV. Check out the official exchange rate before this. It was pretty much the same.

    http://www.oanda.com/convert/fxhistory

    The Kuwaiti RV is a myth. It never really happened. Some people did make money from it, but it was nothing to do with the exchange rate changing.

    Some Kuwaitis sold their dinar for way below the exchange rate as they thought their money would be worthless after the central bank was robbed. It wasn't and never was. No RV took place, just some lucky buyers and some foolish Kuwaitis.
    Actually in 1991 the Kuwait currency was restored, before 91, if I remember correctly, the Iraqi Dinar was their main currency for a period of time so they were stuck with Iraqs value, then the Kuwait dinar was restored and the official rate became $3.40 range.

  18. #18
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    What about the currency reform of 1948 when the reichmark changed to deutsche mark? just a general statement.

  19. #19

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    I did a little research and Afghanistan did do a over the weekend RV of their currency.

    On June 20, 2003 Afghanistan (AFA) was worth 4725 or .0002116 to a US Dollar.

    On June 23, 2003 Afghanistan (AFA) was worth 42.92 or .0233 to a US Dollar


    They dropped two zeros off the exchange rate on June 23, 2003 for a massive RV.

    The Afghanistan (AFA) is worth 46.73 or .0214 to a US Dollar today.

    As a comparison the Iraq Dinar is worth 1175 or .0008520 today.
    Last edited by upsiddwn; 11-11-2008 at 03:08 PM.

  20. #20
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    Quote Originally Posted by upsiddwn View Post
    I did a little research and Afghanistan did do a over the weekend RV of their currency.

    On June 20, 2003 Afghanistan (AFA) was worth 4725 or .0002116 to a US Dollar.

    On June 23, 2003 Afghanistan (AFA) was worth 42.92 or .0233 to a US Dollar


    They dropped two zeros off the exchange rate on June 23, 2003 for a massive RV.

    The Afghanistan (AFA) is worth 46.73 or .0214 to a US Dollar today.

    As a comparison the Iraq Dinar is worth 1175 or .008520 today.
    They performed a LOP

    In September 2002, Afghanistan replaced its currency. "Old Afghani" notes were exchanged in for "New Afghani" notes, at a ratio of 100-to-1. This move was intended to give credibility to a currency which was so devalued that it had become nearly worthless. Use of U.S. dollars or neighboring countries' currencies is still common for many transactions in Afghanistan.
    http://www.eia.doe.gov/cabs/Afghanistan/Background.html
    "Those who understand compound interest are destined to collect it. Those who don't are doomed to pay it."
    Any multi millionaires/billionaires that are prepared to make a donation toward my mortgage deposit, I will be more than happy to help you invest in the ISX.

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