SWFloridaGuy] Redenomination Vs. Revaluation. I take the latest article from the Finance Committee as a great sign. They are saying the new currency "will increase by three zeros, indicating that they had an extensive study concluded that the lifting of the zeroes will strengthen the value of the Iraqi currency." Some people speculate the plan may be a redenomination, followed by an RV, where we would make a profit of around 3x what we paid.
I disagree with this. Our money will be worth face value for a year. The "000" notes will be legal tender but they will not be equivalent to those notes without the "000s," which is why there has to be an effort to remove them from circulation in country, prior to raising the value. The large notes will retain their value and there will be 2 choices, trade in for lower denoms we can hold indefinitely or exchange for another currency, in our case USD.
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[SWFloridaGuy] The dinar is not considered a promisary note, we will be able to exchange them outside of Iraq and the CBI must be honor them at face value. Article 32 Paragraph also states that the CBI must honor them in accordance with the law. "Article 32 Issuance of currency. 1. The CBI shall have the exclusive right to issue banknotes and coins for circulation in Iraq. Banknotes issued under this Article shall be a first charge on the assets of the CBI.
The CBI shall make appropriate arrangements for the issue of its banknotes and coins as required for circulation in Iraq. Banknotes and coins issued by the CBI and intended for circulation are not promissory notes , bills of exchange ,or any other type of commercial document under the applicable commercial law, and the CBI is obliged to honor them only as provided for in this law." We've seen articles that point to a redenomination and that is exactly what we should expect to see.
[SWFloridaGuy] Shabibi himself said in DC, when it comes to the possibility of a revaluation of the IQD, it depends upon inflation, stability and is something they must hide from the public, for obvious reasons. More than just hide from us though, with the attention this has received it's imperative to the process to actively suppress anything that supports a revaluation and their goal is (and should be) to throw us off the scent. They do need to educate the public of the upcoming changes though and the only way I can see doing this is by saying they will introduce a new currency with the zeros removed and reference countries in the past who have gone through a RD.
[SWFloridaGuy] It would be implausibly foolish to reference Kuwait and tip their hand to the world. Shabibi is by no means a foolish man. Iraq does not have hyperinflation and they are one of the wealthiest countries in the world. This plan has been in the works for quite some time and no one wins unless they revalue.
It's my opinion that we're going to see the zeros removed and the exchange rate raise somewhere on par with the USD, like the SIGR report suggested. Over time this may raise to become the strongest currency in the middle east (which includes more factors than just the highest exchange rate) but initially 1:1 is a huge jump and if it revalues the way we want it to, presents many challenges in and of itself.
These are just my opinions, which seem to be evolving over the years and I absolutely could be wrong. I don't pretend to have this figured out and am not an expert by any means. I enjoy hearing both sides of the redenomination vs. revaluation debate and can appreciate aspects of both arguments.
[SWFloridaGuy] I'm just hoping for the best like everyone else.