We’ve heard a few rumblings in the community lately of the following theory, we’re not sure who came up with it first, so we’re not really sure who should get proper credit, but we wanted to share this following theory (and article below)….
It is a GOOD thing if they halt the “RE-DENOMINATION” of the IQD Dinar (that is a.k.a. a “LOP”). We think they are halting the “Re-denomination” because they are going to instead “REVALUE” the Iraqi IQD!!!
Understand, a “LOP” or “Re-denomination” is NOT good… Remember the economic disaster that befell Turkey’s economy when they did a “LOP” of their currency!
The theory is that Maliki, Talabani, Allawi and Shabibi have been fighting about this…. Clearly from the news in the last 24 – 48 hours indicates that Shabbs is winning – which is extremely GREAT for us!!! So, hopefully soon we will now get the Revaluation…. and NOT THE LOP!!!
Now a statement on the website of the cabinet secretary said the cabinet had decided to halt all procedures relating to the redenomination of the dinar ”until further notice”.
”The economic committee discussed this issue and so did cabinet … There is a possibility that it could cause some problems in the economic situation. Besides that, this operation is so big that cabinet sees circumstances are not right to control this,” cabinet secretary Ali al-Alaq told Reuters.
Iraq is slowly getting back on its feet after years of war and sanctions. Oil accounts for 95 per cent of government revenues and the country’s banking system is still highly underdeveloped.
The central bank has kept the dinar fixed at 1,170 dinars to the US dollar in its daily auction but it recently moved to revalue the dinar slightly to 1,166 dinars after demand for the US currency soared.
The central bank said it also had to tighten regulations over who can participate in the auctions as Iraqi traders sought to snap up US dollars for resale in neighbouring Syria and Iran, both under Western economic sanctions.
Sales of US dollars in currency auctions held by Iraq’s central bank rose as high as US$400 million on some days in December from a previous average of US$150 million, according to central bank data.
”We have more than 30 trillion dinars in circulation. To withdraw this amount from the market and then to examine them and to dispose of them is a huge process. Even the technical and the monetary capabilities to control a process like this, we consider as insufficient and it is not seen as a priority currently,” Alaq said.
The central bank says Iraq’s large foreign reserves, which have risen to a record US$60 billion on the back of high oil prices, will shield it from any damage to its financial system on the national level.