The Central Bank of Iraq is planning to rebase the Iraqi dinar but hasn’t decided yet on the timing of the move, the bank said in a statement last week. Affirms its commitment to its strategic projects, particularly knocking three zeroes from the Iraqi dinar,” the statement said.
“Despite the technical and logistical preparations for the project we have yet to decide on suitable timing to implement the project,” it said. Choosing a suitable time wouldn’t be linked to economic aspects only, but rather to the security situation as well, it added.
“Most commercial Insurance Policies for Iraqi risks have monetary amounts in US dollars” comments Rob Edwards, Chief Operating Officer of AAIB Insurance Brokers. “And this goes for sums insured, indemnity limits, deductibles and premiums, so there will be little effect for the majority of policies.”
If the rebase decision is taken it means a current 25,000 Iraqi dinar banknote will become IQD25, and a dollar will equal only 1.17 dinars.
Mr. Edwards continued, “Some policies written outside Iraq and the Kurdish Region of Iraq are for more modest sums insured, in particular auto exposures and these typically use Iraqi Dinar (ID) limits. Underwriters and their reinsurers should keep a watching brief on this if they have policies with ID sums insured.”
Currency rebasing is usually monetarily neutral and is introduced to make commercial calculations easier and cheaper. Turkey, for example, knocked six zeroes off its lira currency in 2005. Russia did the same for its currency.
[Source: Zawya. Full article here http://www.zawya.com/Story.cfm/sidZW20100315000097/iq/?pass=1]