Dinar to be Redenominated

[tbdinarcad]

I was looking at currancy exchange rates and decided to see what came up on the Iraqi Dinar. here is what I found.

Universal Currency Converter™ ResultsMid-market rates refreshed minutely. More currencies...
Printed from the XE Universal Currency Converter at: www.xe.com/ucc Memo: .................................................. .................................................. .................................................. .................

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Currency Rates


Notice: IQD will be redenominated by the end of 2010. More on the Iraqi Dinar
Live rates at 2010.06.14 14:40:00 UTC
1.00 IQD = 0.000855798 USD
Iraq Dinars United States Dollars
1 IQD = 0.000855798 USD 1 USD = 1,168.50 IQD

Trade Currencies. Click here!!

Here is the link to the web site where I got the above info. http://www.xe.com/ucc/convert.cgi?Am...=51&image.y=12

Now to all all of you that are smarter than me. What does this mean?

[tbdinarcad]

Guess i should have read further before posting the above info. This is what is says on the link.

The Iraqi Dinar is the currency of Iraq. The currency code for Dinars is IQD, and the currency symbol is د.ع . Below, you'll find Iraqi Dinar rates, a currency converter, Iraqi Dinar News and more. You can also subscribe to our currency newsletters with daily rates and analysis, or take IQD rates on the go with our XE Mobile apps for your iPhone, BlackBerry, or even your regular phone.

The Central Bank of Iraq has announced their plans to redenominate the Iraqi Dinar to ease cash transactions. By the end of 2010, they intend to drop three zeros from the nominal value of bank notes. It should be noted that the actual value of the dinar will remain unchanged. That means that 1,000 IQD (pre-redenomination) and 1 dinar (post-redenomination) will both be worth the same amount in US Dollars. As stated by the Central Bank of Iraq, their mandate is to "ensure domestic price stability and foster a stable competitive market based financial system." For more information about the redenomination, read "Iraq plans to slice three zeros off currency notes."

[JPmonopoly]

Yes - has been there for some time, CBI has already retracted that statement on several occasions - many here won't touch XE,com as an info source with a fifty foot pole - long story.

Thanks for posting though.

the CBI has not retracted, they simply said the time is not right

XE got its information from a Reuters article so thats as good a source as any

[Templar62]

Just dropping by to see if anythng has changed !!!!!

And the more you become aware of the unknown self - if you become aware of it - the more you realize that it is inseparably connected with everything else that is.-Allan Watts-

[john1]

And the beat goes on!!!!!

[JayLee]

And the beat goes on!!!!!

The Whispers

[jimmydweber]

The question that I have with this find.......If a lop from the dinar occures and the value is not changed. A person living in Iraq would still have to pay 5000 dinars for bread etc. This would be wheel barrels of money to buy simple bags of groceries. It completely makes no sense.

[Chaka]

jimmy if the lop 3 notes off the dinar this is aka a 1000:1 exchange and your 25k note will buy the same items as the new 25. The value does change by the inverse of the amount of exchange. Example a million dinars are worth $ 855 because a single dinar is worth $ .000855. Times that number by your million which is your quantity and you get $ 850

In a 3 zero lop, your million dinar during a redenomination gets reduced by the factor of 1000(until the exchange period is over and then all 25k notes would be swapped for a new 25 with the same usd equivalent) leaving you 1000 dinars.. Simultaneously the exchange increases by the same factor of 1000 so you dont lose the USD equivalent of your holdings. A single dinar is now worth $ .855 or 85 1/2 cents still meaning your dinars are still worth $ 855

The price of bread will not remain at 5000 dinars- prices will adjust downward by the factor of 1000 as well. Bread will be 5 dinars.

If there is a time frame where the 25k and new 25 will be in circulation together, prices will remain 5000 (if paying with a 25k note ) or 5 (using the new 25)

This is very common in many of the countries who redenominate so there is not such a panic by citizens.

I have a pdf about Rednomination:explained i will post later but it illustrates these examples and more of the why countries redenominate, the timing of such, pros , cons and effects.
Whether one believes iraq will lop or note is irrelevant to understanding redenomination. Many of the opinions expressed here why redenomination wont happen are addressed in this pdf.

I think many of the disagreements on the forum are due to the unwillingness to understand redenomination.

[dhebert]

All fine and well, but what does my account do when it does. It's a shown amount not knowing if I put 25,000 or 5.00. Let's say my total is 100,000 in the account. It will change to 100?

[jimmydweber]

Thanks for clearing my head on this Chaka.

[Chaka]

All fine and well, but what does my account do when it does. It's a shown amount not knowing if I put 25,000 or 5.00. Let's say my total is 100,000 in the account. It will change to 100?

correct your current 100,000 dinars held in an iraqi bank account are worth $ 85.50 usd . 1000 for 1 exchange- your balance would be converted to 100 dinars still worth $ 85.50
As with past countries, a public announcement would be made as to when the bank accounts would be changed- whether it be the first day of new fiscal year , new calendar year or other date.

For those with online accounts, you be able to see the conversion from one day to the next.

Stocks get adjusted as well but the process is slighly different as each company has different amounts of outstanding shares. The bottom line here is your value in USD would remain the same though share price, share amounts or combination of both may occur(see Turkeys Istanbul Stock Exchange example).
The monetary illusion holds true for stocks. There are those who get excited holding millions of shares worth less than a cent.
The reality is the stock is essentially a pie.

Say North Bank has 100B shares trading at 2 dinars- their market cap would be 200B dinars x .000855= ~ $171 M pre-redenomination

Post re-denomination(3 zero) their market cap would remain $ 171M with the simplest solution being to reissue 200M new shares to existing shareholders x new exchange rate of $ .855= $ 171M.

The shareholder loses nothing -it doesnt matter whether they collectively have 200 B shares worth $ 171M or 200M shares worth $ 171M

Instead of buying 1M shares pre-lop @ 1 dinar/share x .000855 for $ 855 investment, they would buy 1000 shares @ 1 dinar x .855 for the same $ 855 post lop


A better analogy would be this-- when you get change for a dollar
Does it matter if everyone got 100 pennies worth 1 cent each or 10 dimes worth 10 cents each or 4 quarters worth 25 cents each ?
It shouldnt because they all are worth a dollar. Same with the USD value of our pie (USD market cap of stock)doesnt change no matter how many slices you cut it up into

Its a zero sum game - no profit or loss

[Chaka]

http://www.tcmb.gov.tr/yeni/iletisimgm/NTL_faq.htm

FAQ from Turkish redenomination in 2005

25. How did the transition to YTL affect bank accounts?

Bank accounts were converted into YTL as of January 1, 2005.


24 informational slides during Turkish redenomination

http://www.econ.umn.edu/~ceyhun/teac...re_turkish.pdf

[dhebert]

The higher denom bills were put out to gain the intrest of others, you, me and everyone else looking at this site. For them to wipe away the profiting zeros from the investors and keeping the same value takes away the idea of investments even if it is still no loss. It's a cop out if you ask me. They get everyone interested, speculation begins and years later they pull the rug out from under you.

[dhebert]

The more this goes on, the more you have to wonder how much government treats their voting people like pupets.

[Chaka]

The higher denom bills were put out to gain the intrest of others, you, me and everyone else looking at this site. For them to wipe away the profiting zeros from the investors and keeping the same value takes away the idea of investments even if it is still no loss. It's a cop out if you ask me. They get everyone interested, speculation begins and years later they pull the rug out from under you.

the central bank of iraq put out higher denomination notes because of nearly triple digit inflation and has never made a reference to any investor site or that any holder of their currency would profit. The hype came from dealer sites. The dealers , who have a financial interest , are the ones advertising the "what if" riches about the dinar.
I dont believe any of the dealer sites mentioned redenomination as a possibility either