Iraqi Dinar – Rebasing Facts

There’s been a lot of speculation about rebasing or “lopping” off the three zeros of the Iraqi dinar lately and there is a lot of misleading information out there about what this would mean and I’d like to give you only the facts.

No one knows if and when Iraq will rebase the Dinar

Yes, the Central Bank have talked about dropping three zeroes from the Dinar, however, no definitive actions have been made to proceed. If the Central Bank does decide to rebase the Dinar, no one knows exactly when it will occur. Any rumors about the timing are all speculative.

Rebasing the Dinar is expected to be monetarily neutral and Dinar banknotes will hold its value against the dollar

Your physical note, whether it’s 25,000 IQD, 10,000 IQD, etc. is expected to hold its value against the dollar. Dropping the three zeroes would mean that those high denomination Dinars will stop being printed and an old 25,000 IQD banknote (the physical note) will be treated like the new 25 IQD banknote. There will be a window of time to swap notes. Just as an example, let’s say that right now $1 buys you 1,000 IQD. Say tomorrow, the Central Bank drops three zeroes from the Dinar. You can now trade in your old 1,000 IQD banknote for a new 1 IQD banknote – they are treated as equal. So now, if rebasing, as expected is monetarily neutral, $1 buys you a new 1 IQD banknote (which is the same thing as an old 1,000 IQD note).

This does not hurt Iraqi dinar investors! Keep in mind that lopping off zeros is a decision that the Iraqi government and Central Bank will make. For dinar investors to make a profit off the dinar, the dinar must increase in value against the dollar, which is based on, among other things, the stability of the Iraqi government and the robustness of the economy. Lopping off zeros may change what the notes look like, but it doesn’t change how any investor will make money off the dinar: strengthening Iraq as a country and not just some arbitrary decision by the Iraqi government. If a country could dramatically change the value of their currency by rebasing — every country would do it! We care about reestablishing the strength of the Iraqi economy as a whole, which is the only way dinar investors are going to make a profit.

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