Trixie Dinar: Thanks, Kimberley Information on the issuance of a new Iraqi currency. Soon
25/May/2014 Baghdad/safe golden
The Central Bank seeks to delete the three zeros of the Iraqi currency since 2003. Which raises many concerns on the street level and the business and financial community and economists seem divided between supporters of the project saw an opportunity to reduce the rates of inflation and unemployment and forewarned of economic shocks might prevail in the Iraqi market by implementing this project.
The project has been postponed after the Central Bank introduced its amendments, most of the time because of fears based on the most unruly security situation and open market to foreign goods and counterfeit currency circulating on the market in addition to rampant corruption in the country.
The Iraqi news agency quoted a member of the Finance Committee in Parliament, Abdul Hussein Al-yasiri in fourth from last September as saying that 2014 will delete the zeros of the Iraqi currency, in coordination with the Central Bank. Al-yasseri said that this project will reduce the size of the national currency in circulation of four billion Iraqi dinars to 1 billion.
, Said the Chairman of the Finance Committee in the House of Haidar Al-Abbadi, it is possible to delete zeros from the current currency, but it has been postponed until after the parliamentary elections, adding that studies are now to establish safeguards to reduce fraud, and make sure that trading in the current currency.
The process of deleting zeros was postponed more than once, until called on Parliament's Economic Committee, reported channel "East" on the 7th of July, the Central Bank, to speed up the process of deletion of zeros of the Iraqi currency in a press conference that the deletion of zeros will increase the value of the Iraqi dinar will be reflected positively on the issue of reducing unemployment and poverty in the country.
But the financial advisor in the "North Bank" beneficial Elias said that the deletion of zeros are only administrative, process equation of cash must remain as they are, that the purchasing power of the new currency must be equal to the old currency.
Elias said that trading in both currencies for up to three years old to withdraw gradually from the market. Elias predicted that highlights the problems if not resolved operations of the creditor and the debtor or if the any payments and withdrawals. But it would not affect inflation rates or poverty.
, Vice Chairman of the Finance Committee in the Iraqi Parliament Ahmed Faizullah the wholesome Elias, noting that the deletion of zeros will not alter the purchasing power of the Iraqi dinar because it is linked to the volume of industrial production and import.
What saved the Iraqi dinar is owning the Central Bank cash reserve of hard currency might formed engaging cover to the dinar. Called Faizullah to not implement the project at this time because it could confuse the market and citizens alike.
Amid those views the Commissioner for "Breeze" stock trading for enas Mohammed that the stock market will be affected by the change and delete the zeros.
The stock is still selling dinar, currently equal to a thousand shares, while will become one new dinar after the deletion of zeros equals 000, which could confuse the stock market basically confused movement due to the security situation in the country.
Schiz: my favourite word, soon! lol They are crapping themselves about economic shocks when they go live, hence all the gold buying and such and hence the main reason they won't free float, they want a stable dinar, not one bouncing all over the place causing economic shocks ;) :)
Nice this guy thinks they will co-exist for 3 yrs, gradually moving the larger denoms from circulation in that time -- Thanks Trixie and Kimberly :)
Man this article will make *** day, it said the word gradual, must mean a free float huh?
Kimberly: There are 5 different people and opinions in this article. How it shakes out, we will have to see....But, I'm glad that they are talking about it again... And it seems to be pretty current information, with the events going on in Iraq.
Hi-five: So, who do we believe - - Parliament's Economic Committee that says the currency reform WILL increase the value of the dinar, or the financial advisor in the "North Bank" who says the currency reform is just an administrative procedure, and the purchasing power of the new dinar will remain the same as the old.
Why would they worry about security or fraud if this procedure was going to be a wash? I'm rooting for the Economic Committee!!
Cornbread: When they talk about gradual they are talking about gradual back to 3+ not 1166, the Sigir report says that the delete of three zeros will be slightly less then $1. To me that sounds like a event and not a free float
Aloha Alex: Also, if it's North Bank's version, that would mean Iraqi TV has been lying to the people consistently for a long time. Not cool.
Kimberly: JMO hi-five,. but, you have to look at who is talking and what their interests are. And since I have always thought (delete, raise, and lift) the zeros are talking about 3 different issues... It makes since that these individuals are also talking about different events...
a. removing the large 3 zero notes off the streets
b. removing the 'leading zeros ' off the rate.
c. remove the zeros off the end, when they reprint the currency.
So, the Economic guy, he cares about the value and how it effects the country....But he could care less about accounting..
North Bank, cares all about the accounting (the ease of it, without the ending zeros, on the notes themselves)... he has no say in the value of the dinar.... So, figure out whos talking, and what his interests are, and it's easier to understand his perspective....
And above all, remember not all of these guys, have a complete understanding either...... Remember, when Najiba Najib, kept saying 'we can't delete the zeros, we can't delete the zeros' until Shabibi took her in and explained it to her....now she is one of the biggest supporters of the project....jmo
Tlar: High-five, Figuratively the statement is corerect for both. The currency will go up in value but value of the dinar will remain the same plus this is an administrative move. How?
The value of the currency still in circulation will increase based on what they do to the exchange rate. But all items cost will also increase meaning as the dinar value goes up, it is not going to buy any more goods than it was before.
Both the cost of those goods and your paycheck will also be adjusted. Lets say for example you are buying a clock radio. If the nominal rate is adjusted by down by 1000 that clock radio will cost one dinar instead of 1000.
By the same token if you salary is 76000 dinars it also will be adjusted to 76 dinars.
So the relationship between cost and earning power has not changed. It is strictly an administrative change. That is why the only beneficiaries will be those who are in possession of the currency when this happens.
A 1000 dinars in physical cash will still be a 1000 dinars. Only the value of the dinar will have changed.
The example they use on the stock market is a good one. If somebody has 500,000 shares of stock the day before D-day, he will only have 500 shares the day of and that will be very confusing to many of the account holders.
But the value of each shares will have adjust up to 1000 times its original value and that will also be the cost of a new share. There will be no loss or gain in value of the account,.
Only the number of shares will have changed. Again the new cost of a share will have changed but so will your salary. The relationship between cost and income though will have remained the same both before and after the change.
So the physical currency holders will be the only recipients of an increase in net worth just as you and I are. Possession of physical currenxy being the key word. as a result of everything else will be adjusted almost immediately to the new rate both expenses, income and cost of items along with contract, debts, loans and anything not listed in this post. Everything will be adjusted.
I would like to add something here. The ISX is planning to go live on a NASDAQ platform before the end of June with Erbil to follow in July. The ISX is expecting a surge of investment money to come rolling in.
NASDQ has rules. In the US those rules have within them a minimum value per share. If the value of a share does not meet the minimum requirements it can't be listed live on the exchange but can default to what is called a pink sheet. A pink sheet is commonly used for penny stocks.
At present all stocks on the ISX will not meet the criteria that is required to list a stock on the NASDAQ here in the US. It is only if they delete the zeros that Iraq's stock can be listed if they are using the criteria as we do on the NASDAQ.
Otherwise every stock today in Iraq will end up on the pink sheet because all are penny stocks at this time. I n other words if they use the US rules all the present Iraqi stocks cannot even be listed on the NASDAQ trading platform.
If there is one of you who is a stock broker or investment banker on this site you will able to confirm this or dispel it and I would appreciate it if you would add to this train of thought. tlar
Ralph: Erbil Stock Exchange Taps NASDAQ OMX's X-Stream Trading Technology
NEW YORK and ERBIL, Iraq, Nov. 13, 2013 (GLOBE NEWSWIRE) -- The NASDAQ OMX Group (Nasdaq:NDAQ) and the Erbil Stock Exchange (ESX) have signed an agreement to power the ESX with NASDAQ OMX's X-stream trading technology to increase market participant involvement, in the region and internationally. X-stream will provide ESX with a solution to trade equities and debt instruments, and position ESX to move into other asset classes as its market expands.
"This is a historical moment that not only illustrates our strategic relationship with NASDAQ OMX, but also, by the creation of a modern stock exchange, will support a market-oriented economy and promote investment in the Kurdistan region," said Abdullah Ahmed Abdul Raheem, Chairman, ESX.
Please read full article here:
Tlar: They are going international sometime before the end of June IMO. Another good sign. tlar
Schiz: You are right about it floating at some point Kimberly, all currencies float. They just don't free float from ridiculously undervalued rates.
I can't think right now of a totally ridiculous comparison to put how crazy it really is for them to free float from 1166. It's kinda economical and financial suicide.
It's like facebook knowing they are going to be worth trillions soon so they drop the price of all their shares to a penny a piece and sell them off to whoever wants to buy them. Basically giving away billions of dollars. Not a very intelligent move right? well iraq free floating from 1166 is kind of doing the same thing.
Not gunna rant but yeh, Iraq will float, but not before they have found their truer value in the market, I predict a managed float for a bit and then they will go to a free float after a period of settlement and adjustment.
The main ECB guy Draghi was going nuts a couple of weeks ago because of how high the euro was trading, he said it was causing massive inflation and causing major economic problems within europe.
He said if it continued to trade that high drastic action would be taken in June. The price of the Euro dropped quickly as soon as the words left his lips and has been falling since. You know what though. It was only trading a cent or two above what he wanted.
Can you imagine how much damage could be done by a currency moving, quite rapidly from a 1166 value to an economy?
Central banks don't like to much movement in the currency, Iraq will go to a free float at some point but it will have upper and lower trading bands to prevent volatility.
There are just so many reasons why a free float from 1166 is not going to happen, that would just be such a crazy move for a central bank to do. Pretty much suiciding your own economy.
How many times have we seen the cbi say they want stability, its just crazy for them to say that over and over and then place their currency into an unstable environment and let it go and see what happens, first thing that would happen would be an economic shock and we know how the cbi loves them, they are petrified of that, as well as about a million iraqi economists.
Ok i have gone on one a bit, I just can't wrap my head around them free floating from 1166, it's just so so crazy! I'll end it by saying but who knows man, this is Iraq lol. Nice discalimer :P Soz for rant