Okay, we’ve seen the ads and people have come to some of us talking about how the large denomination Iraqi currency (e.g. a 25,000 Dinar note, valued as of this time at about 1/10th of a penny per Dinar), can become worth equal value of a dollar or more than $3 dollars per Dinar!
A rational person has to say, “Come on, get real!” There’s never been such a revaluation in history, not even close! So why do certain “dreamers” buy or own these 5, 10, and 25,000 Dinar notes? It is because of desperation in their current situation? I mean if you had four 25k notes and it revalued 100,000% you’d have $100,000!!
Sure thing… if it went to a dime you’d have $10,000 for those same 4 notes. That’s still an unprecedented 100 fold increase in value! One has to ask themselves why any government would allow something like this to take place?
Let’s look at some brief history… While Saddam Hussein was the dictator and before, their Dinar carried a value of around $3 each, after the 1990 Iraq invasion of Kuwait then President Bush approved our invasion of Iraq in 1991, the Dinar had only an in country value as sanctions were placed on their country. In 2003 Bush Jr and Tony Blair sent troops in believing Saddam was harboring al qaeda and weapons of mass destruction (Saddam had previously used chemical weapons on his own people in the Kurdistan region). The value of the Dinar was sanctioned (artificially devalued by the IMF) to 3,000 Dinars to 1 US Dollar, this way the Iraq regime could not afford to purchase weapons in the international market to use against our allied forces.
Saddam was captured in 2003 and executed in 2006. During our occupation, securing Iraq, forming an interim government, setting up their own police force, the Dinar gained value as the people of Iraq once again began trading and oil production remained. The value today is just over 1,000 Dinars to 1 US Dollar.
This is already quite an increase over the last 10 years. It is believed that in 2003 a new family of currency was printed of 14 denominations. 7 denominations are publicly used today although very few remain in the middle east. The lower denominations are not on the streets as the current value makes them worthless (so why have them?). Most common were the 25,000 Dinar notes as their value today is about $22 US Dollars, however, finding these notes in Iraq now is very scarce, even their banks no longer trade them! They are on a US Dollar standard almost exclusively.
Interestingly, these large Dinar notes are among the worlds most sophisticated and counterfeit proof currency! They almost cost as much to make as their current value!
It is known that many countries, mostly the US, hold trillions of Dinars in reserves from the time they were printed. It is also known that at some point the IMF will allow the Dinar’s artificial devaluation to be lifted, here’s where the speculation begins!
Many who study the whole Iraq situation (economics, news, middle east, etc), have become quite knowledgeable and have read statements alluding the impending revaluation. The governor of the Central Bank of Iraq (CBI) has stated that he would bring the Dinar back to it’s former glory (which was $3 range) and other statements by their ministers of finance have stated the Dinar will be “on par with the Dollar”.
We lost over 4,700 US soldiers there, many times that wounded, many now disabled Americans, allied troops also. All this, surely to free Iraq from dictatorship and wars, but also to allow them to become a democracy and trade in the international community. As of this time their interim Prime Minister Nuri al-Maliki we set is doing all he can to become a new dictator, this is not going to happen, we have many troops still in Iraq (not widely publicized), and at the expense of troops, will never be allowed!
In fact, it is believed by most competent who study this situation that no revaluation will be allowed to occur until they achieve a stable government which only takes the setting of the top positions by the Prime Minister. He will not set these positions as this cuts his power and he cannot then be a dictator. This is a current and ongoing political situation.
Back to the value of the Dinar, since there many things precluding a revaluation, like setting the government, updating banking infrastructure, and many laws enacted, this may take still more time. However, many things take place in closed meetings that the public is not made aware of.
Can the Dinar support a $3 Dinar to $1 Dollar value they once had? Well, they obviously once did before. It’s neighbor Kuwait is well over $3 Kuwaiti Dinar per 1 Dollar at this time, and they are about 1/25th the size of Iraq which also has the major resources! Latest news about the actual wealth of Iraq has increased dramatically. Vast oil deposits previously unknown have recently been discovered. Also, huge amounts of gold, and perhaps the largest natural gas deposits on earth, since just the last few years. The assets frozen since we invaded Iraq are nearly a trillion US Dollars when combined with the CBI reserves.
Note: these massive funds in global banks becomes unprotected (countries owed money by Iraq can claim and tie up these funds until solved in court) May 22, 2013 if Iraq fails to comply with becoming a member of the WTO and out of their Chapter 7 UN sanctions. This also means they must have their own tradeable (non artificially rated currency), they currently use USD.
For the last few years the CBI has been pulling trillions (large denominations) of these large denomination Dinar notes off the streets of Iraq and the middle east.
Iraq has tremendous wealth. This currency was allowed (President Bush Jr signed a law for this) to be bought by US citizens for the last 10 years, US banks also sold Dinars up to just a couple years ago, a few still do, there are still many legal US companies that currently sell Dinars. So this information creates some thoughts and questions…
Why make such expensive high security notes with Dinars worth 1/10th of a cent? Why allow US citizens to buy a worthless currency? The Dinar was artificially devalued, therefore will revalue at some rate. They must replace the USD now used in Iraq, the people will not turn in their USD for Dinars unless the Dinar value rises at least slightly above the USD. The country has immense wealth. There is a whole family of denominations, only half in circulation. Most large denomination notes have been recovered and destroyed except for those held by countries in reserves and those bought by citizens.
So, for those who own any of these notes… it seems possible that they could remove the artificial rate placed upon them over 10 years ago, and replaced with the finest made paper currency on earth. There are a lot of speculators, maybe hundreds of thousands in the US. If they return the currency anywhere near it’s previous value, these Dinar holders would stand to make a lot of money. There are many factual reasons these notes could revert back to their former value, however, it is speculation. To own say four 25,000 Dinar notes is just over $100. Good luck to those who own them! Till next time, God Bless,
Update: Since this was written, it’s now late 2015, there has been a new PM to win an election over a year ago and he has made many positive changes as Iraq seems to be heading quickly towards stability with the UN, World Bank, and IMF applying pressure to become a normal stable democracy to lift sanctions on their artificially devalued currency. This is certainly best for the people of Iraq as dictatorships only benefit the ruling party/sect while most suffer. A great resource is dinarupdates.com as they have many researchers who study online newsfeeds daily regarding their govt and central bank.