Iraq Reveals New IQD Dollar Rate and Denomination Goal

It’s not a revaluation. It’s a classic Re-denomination of the currency.

Now we can see both pieces to Iraq’s endless discussion on “raising the dollar rate”.

There has been much discussion about removing the three zeros from the IQD notes, yet there’s has never been a confirmation about the resulting exchange rate vs. the US Dollar that would accompany the 3-zero re-denomination.

Now we have it.

In a recent article (also linked below), we can now see that Iraq is planning a straight out re-denomination of the currency leaving the exchange rate (the value of the IQD vs. the Dollar) unchanged.

As quoted in the article, we now see what Iraq is planning for the exchange rate that accompanies the 3-Zero re-denomination.

The Iraqi government is currently weighing the question of changing the currency so that the official cost of a US dollar will be 1.32 Iraqi dinars instead of 1,320 dinars. Implementing such a decision is likely to significantly increase Al Sudani’s popularity.

Clearly, we can calculate that changing the exchange rate from 1,320 dinar per dollar to 1.32 dinar per dollar is a simple re-denomination. It is not a revaluation of the IQD’s purchasing power against the US Dollar.

Also see: Why Iraq hasn’t Independently Revalued the IQD Higher (Part 2)

I’m not really sure that this is what we want to see as foreign holders of IQD.

My view is that Iraq is not going to do their re-denomination anytime soon. They simply have too many reforms to make, security issues to address, and massive political deadlocks to overcome.

Also see: How to Accurately Think About Our RV/GCR Exchange Rates

Maybe this will buy time for Iraq to join BRICS and gold-back their currency for a massive purchasing power change of the IQD to the US Dollar.

It’s also worth noting that many in Dinar-Land are claiming that Iraq is revaluing the IQD to $1.32 per IQD. All I can do is shake my head at the complete lack of either not actually reading what they are talking about, or they don’t understand the simplest of economic and/or monetary concepts.

Ps. There is no such thing as a Reinstatement (the so called “RI’) of a national currency. There are only re-denominations, re-valuations (more accurately re-pegging) and introducing a new currency Series of notes.

Kuwait issued a new series of their notes back in 1991. They never Re-Valued (RV’d).

Also see: The Truth About the Kuwaiti Currency “RV” in 1991