New Dinars for Old

At the end of last month, a spokesman for the Central Bank of Iraq (CBI) told reporters that a plan to redenominate the Iraqi dinar will be presented to the Council of Ministers in the near future. (See here and here.) The Council is then expected to submit the relevant legislation to Parliament for a vote. If the lawmakers approve the project, all existing banknotes will be replaced with new currency at the rate of 1,000 old dinar for one new over some unspecified period of time.

Given Parliament’s current backlog, this change can hardly be imminent. Still, you might think they could get around to voting on the CBI’s proposal some time before the end of this year. In that case, the redenomination could presumably be completed by the end of 2012.

The process will necessarily involve both the exchange of new banknotes for old and the restatement of contractual obligations in terms of the new currency. Among other things, three zeros will have to be eliminated from the share capital of the ISX listed companies as well as from the number of shares each has outstanding. (This will keep the par value at one dinar.)

I’m told this should be a relatively straightforward change for the depository center to make. Trading should not have to be suspended for more than a few days and it may be possible to proceed in phases of a few names at a time so that the entire market does not have to shut down during the transition period.

Similarly, it seems reasonable to expect the CBI to exchange new dinars for US dollars at one thousandth the rate for old dinars. In other words, if the original rate were IQD 1170 = US$ 1, post-redenomination this would become IQD 1.170 = US$ 1.

All of this seems reasonably straightforward for anyone holding assets such as currency or shares inside the country. For those holding dinar cash outside Iraq, however, things may not be so simple. How and on what terms their old dinars will be convertible into the new currency remains an open question.

18 Responses to New Dinars for Old

  1. Amastar 5th July 2011 at 12:53 #

    The parliament was scheduled to vote on the dropping of the three zeros.

    I have received very good information that from several sources that the parliament has in fact voted and passed that into law along with a few other laws.

  2. Amastar 5th July 2011 at 12:57 #

    Im sorry, the comment above was made by the owner of a dinar investment website. Those were not my own words. I hit submit before giving credit. I appoligize.

  3. Rafie 5th July 2011 at 17:26 #

    For those holding cash outside iraq should contact their supplyer to exchange for old dinar to a new dinar..ship back to them by fed ex..and they will give a new dinar note

  4. Stew 5th July 2011 at 18:09 #

    How much do you think they will charge for that service Rafie?

  5. Yem.. 6th July 2011 at 06:27 #

    I would like to add to rafie notes....
    We have to ship back the IQD to USA For exchange with new notes???
    How sure we are our IQD will come back....he he he...
    At that point of time anything is possible....better exchange here from reliable money changer....
    GO RV,,,GO RV,,,,Very very soon....

  6. Andy 6th July 2011 at 08:17 #

    Too many conflicting reports on this whole situation. No rush, wait and see what happens.

  7. Stew 6th July 2011 at 08:46 #

    There are NO conflicting reports Andy. Every CBI statement for the last 4 or 5 years on this subject has stated they will remove, delete, raise, subtract 3 zeros from their currency. They all mean the same axact thing... redenomination.
    The only conflict is from dinar dealers and pumpers who continue to blatantly lie about the meaning of the articles.

  8. Rafie 6th July 2011 at 09:30 #

    I don't know what will happen on future,but i just make a precaution & preparation about to change the old dinar to a new dinar..i already make a deal with my supplier, if i get a problem to ever its seem very good if have a money changer accept to exchange for a mew dinar

  9. Andy 7th July 2011 at 07:44 #

    Mark, in your humble opinion, based on Iraq's improved output of crude and the price of 105.00 per barrel, what do you think the dinar value will be in 1 or 2 years?

    Just curious.

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  11. DeWeaver 7th July 2011 at 10:24 #

    Andy: I don't expect a big change. Increased oil production will increase the supply of US$ but US$ demand will increase as well because Iraq will have to import all manner of things to reconstruct. See this post for some historical precedents.

  12. Abby 9th July 2011 at 16:02 #

    Hi I was just wondering for those outside of iraq who do have dinars where would it be possible to exchange them for american dollars now that this law is put into effect?

  13. Abby 9th July 2011 at 16:06 #

    I also heard the value is IQD 1.170 = US$ 1 is this true?

  14. DeWeaver 9th July 2011 at 17:39 #

    Abby: This change has not happened yet. The Parliament has yet to vote on it.

  15. DMJ0619 10th July 2011 at 20:26 #

    Why the heck are they doing this , this only causes problems for all the people bought the new dinar which was changed already back in 2004 . The old one had pictures of Saddam Hussein on it and the ones now in circulation do not have Saddam Hussein on them. They were also issued by LaRue and they have a metal strip in them to prevent fraud and counterfeit.

    Why are they doing this ???
    It causes a lot of problems

  16. mak 26th December 2011 at 20:16 #

    Many people dont understand the logic in Iraq sitution.

    Say for example you bought $1usd= 1000 Iraq dinnar

    They remove zeros so you have same amount of money
    $1= 1 IQD

    When this happens online website dealers after 10 years when another war happens will be jumping with another scam saying 10 years ago people made millions buying dinnar and show as example.

    If Iraq makes its value 1usd to 1IQD, guess what will happen. All Iraqs will be millionares. Today a refrigerator sells at 250k IQD. He will then have 250k USD. He can buy a house in USA. WOW'

    Guys I have been to Iraq and have seen the country. If you really want to make money, wait till RV happens and new currency (If it comes out dropping zero). Once its done buy it. And then over the 4-5 years you will get good returns.

  17. admin 20th November 2012 at 12:58 #

    What happend to old 20 dinar that TRADER or Iraqi people has ?

  18. kumar 11th May 2013 at 16:48 #

    Hi.. I want exchange the old Iraq Currency into Dollars but the issue is that I am not in Iraq as in Outside Iraq country... Please reply asap


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