Central Bank of Iraq recently printed the new 50,000 Dinar banknote.
Printed in order to have a banknote of larger value in circulation, this 50,000 Dinar banknote has an exchange rate of $42.04 today.
The banknotes contain the image of the Euphrates waterwheel and palm trees and the image of a Kurdistan waterfall on the right side of the note face.
Written in Arabic, Kurdish and English, the new notes are 65mm in width, 156 mm in height and of a majorly light brown colour with darker border definition. Safety measures are covered by a clipped security thread of 4mm width runs through the middle, colour changes on tilting, “The Central Bank of India” written over it and the transparent window in place. It’s painted with protective paint to increase its lifespan.
The current economy of Iraq and the importance of the 50K Iraqi Dinar note.
Iraq holds the World’s fifth largest oil reserves. Naturally, the country’s economy is dominated by the oil sector. Unfortunately, low oil prices have adversely affected the Iraqi budget and the top international bond rating agency, Fitch went so far as to giving Iraq a B minus rating, however with a stable outlook. With considerable political risk and insecurity, Iraq’s fiscal position threatens to decline into a double digit fiscal deficit. This is due to lower oil prices, higher military spending, and costs associated with civil conflict. Meanwhile, the savings buffers which were built during the years in which the oil prices were higher have been greatly eroded.
So, currently, the deficits are being financed by debt and will continue to do so till 2017. At end 2015, the government debt is forecast by Fitch to be at 51% of GDP.
Given this situation, the Iraqi dinar is unable to realise a higher value. Annual inflation in Iraq is at around 2 percent at present.
This makes the printing of the 50K Iraqi dinar note a very important move on the part of the Central Bank of Iraq’s fiscal policies.
What next?
It is clear that Iraq’s goal is to ultimately be able to use their own currency of the Iraqi Dinar for transactions of a daily nature as opposed to the current widespread use of the United States Dollar. The Central Bank of Iraq has mentioned that a release of a 100,000 Dinar banknote is round the corner. Ofcourse, this could be any time in between 2016-2017.
How does this affect the re-valuation move for the Iraqi Dinar.
Prior to the printing of this 50k Iraqi Dinar, the Central Bank of Iraq revived a long postponed plan of re-denominating or re-valuating the Iraqi dinar by removing three zeroes off from the nominal value of its bank notes.
The printing of the 50k Iraqi Dinar bill is the first step towards it. This is quite plainly put the restructuring of the Dinar by issuing two large core bank notes - the 50,000 Dinar note, as just released and the 100,000 Dinar bank note expected in the next financial year.
This may lead to cancelling the smaller notes.
Larger Dinar notes simply make transactions easier when purchasing items in Dinar and not in USD. A transition by the Iraqi government from the USD to the country’s own currency of the Iraqi Dinar is bound to help the Iraqi Dinar rise in value.
It is interesting to note that that the Central Bank of Iraq and the Parliament Economic Committee is working towards an Iraq banknote that is comparable to the USD $100 bill.
This sort of planned restructuring of the currency supports large transactions and brings in a level of accountability and efficiency in public accounts.
Thus, the issuance of the new banknote does not mean that there is no revaluation.
On the contrary, the following are the future realities in the fiscal interaction in Iraq as the country works towards stabilising the value of its currency. At the outset, it is quite clear that the purchasing power of the old currency and the new currency will remain the same. After a period of time, old bank notes will be withdrawn.
Deleting the zeroes will lead to an increase of the value of the Iraqi dinar.
In addition to the above, the new Dinar notes such as the 50K Dinar Note has enhanced security features to combat counterfeiting of the notes.
The “delete the zeroes” project is well under its way and is scheduled to kick off in 2016.The International Monetary Fund (IMF) has been assisting and technically advising the Iraqi government on it.
Together, all the above measures will work towards appreciating the value of the Iraqi Dinar. It is most interesting to note that before introducing the 50K Iraqi Dinar bank note, the denomination of IQD 50 bank notes were removed from circulation by the Central Bank of Iraq.
Thus, the Central Bank of Iraq is advancing in a rather planned manner in combating dollarisation of the Iraqi economy.
Ideally, all things constant, a bright future awaits Iraq’s currency if the Central Bank of Iraq is able to keep a check on counterfeiting, withdrawing unusable notes from the economy and more.
What does this mean for the Iraqi Dinar?
So, as explained above, while the new 50,000 Iraqi Dinar banknote and the awaited 100,000 Iraqi Dinar banknote make it easier for businesses to operate in its currency, promotes the use of the Iraqi Dinar and has been made by most modern-age anti-counterfeiting measures in order to keep the currency as protected as possible, the re-valuation around the corner will have some swooping effects.
First and foremost, the 50,000 Iraqi Dinar will be a very important figure in the revaluation of the currency being the closest to the USD in comparison at the moment.
Secondly, Iraqis will now get more dollars for fewer Iraqi dinars as opposed to earlier when it was a common story of exchanging bags of Iraqi Dinar banknotes for the easier to use and higher valued USD.
Thirdly, eventually the export rates would go up and Import rates would come down, investor confidence will increase and simplification of statistics will happen in a big way. This means that the economy would gradually recover despite the debts at the moment.
All in all, the issuing of the 50,000 Iraqi Dinar banknote is a positive impact on the the Iraqi Dinar Revaluation and carries a strong message with it - that the Central Bank of Iraq clearly knows what it is doing and how to go about it in a planned, controlled and sharp manner.
And while initially, it may have seemed confusing as to why the Central Bank of Iraq decided to issue a 50,000 IQD Banknote when it seemed dedicated to deleting the zeroes from the previous denominations of IQD 25000, IQD 10000, IQD 500, IQD IQD 1000, IQD 500 and IQD 250, it is clear on deeper reflection that in order to reach a stage to delete the zeroes, it was essential to first restructure the IQD in keeping with current economic situation and trends.
Against the current economic backdrop and exchange rates, the 50,000 IQD banknote is a must for Iraq at the moment for more efficient trade internationally among other reasons as discussed in detail above.
The issuance of the new banknote does not mean there is no revaluation or deletion of zeroes. On the contrary, this brand new bill will in the course of revaluation will be the new 50 IQD.
For now, it is thus imperative to buy the 50,000 IQD for business purposes as well as a long term investment as the Central Bank of Iraq gears up to build a good value for the currency and replace the widespread use of the USD on Iraq’s shores.
Printed in order to have a banknote of larger value in circulation, this 50,000 Dinar banknote has an exchange rate of $42.04 today.
The banknotes contain the image of the Euphrates waterwheel and palm trees and the image of a Kurdistan waterfall on the right side of the note face.
Written in Arabic, Kurdish and English, the new notes are 65mm in width, 156 mm in height and of a majorly light brown colour with darker border definition. Safety measures are covered by a clipped security thread of 4mm width runs through the middle, colour changes on tilting, “The Central Bank of India” written over it and the transparent window in place. It’s painted with protective paint to increase its lifespan.
The current economy of Iraq and the importance of the 50K Iraqi Dinar note.
Iraq holds the World’s fifth largest oil reserves. Naturally, the country’s economy is dominated by the oil sector. Unfortunately, low oil prices have adversely affected the Iraqi budget and the top international bond rating agency, Fitch went so far as to giving Iraq a B minus rating, however with a stable outlook. With considerable political risk and insecurity, Iraq’s fiscal position threatens to decline into a double digit fiscal deficit. This is due to lower oil prices, higher military spending, and costs associated with civil conflict. Meanwhile, the savings buffers which were built during the years in which the oil prices were higher have been greatly eroded.
So, currently, the deficits are being financed by debt and will continue to do so till 2017. At end 2015, the government debt is forecast by Fitch to be at 51% of GDP.
Given this situation, the Iraqi dinar is unable to realise a higher value. Annual inflation in Iraq is at around 2 percent at present.
This makes the printing of the 50K Iraqi dinar note a very important move on the part of the Central Bank of Iraq’s fiscal policies.
What next?
It is clear that Iraq’s goal is to ultimately be able to use their own currency of the Iraqi Dinar for transactions of a daily nature as opposed to the current widespread use of the United States Dollar. The Central Bank of Iraq has mentioned that a release of a 100,000 Dinar banknote is round the corner. Ofcourse, this could be any time in between 2016-2017.
How does this affect the re-valuation move for the Iraqi Dinar.
Prior to the printing of this 50k Iraqi Dinar, the Central Bank of Iraq revived a long postponed plan of re-denominating or re-valuating the Iraqi dinar by removing three zeroes off from the nominal value of its bank notes.
The printing of the 50k Iraqi Dinar bill is the first step towards it. This is quite plainly put the restructuring of the Dinar by issuing two large core bank notes - the 50,000 Dinar note, as just released and the 100,000 Dinar bank note expected in the next financial year.
This may lead to cancelling the smaller notes.
Larger Dinar notes simply make transactions easier when purchasing items in Dinar and not in USD. A transition by the Iraqi government from the USD to the country’s own currency of the Iraqi Dinar is bound to help the Iraqi Dinar rise in value.
It is interesting to note that that the Central Bank of Iraq and the Parliament Economic Committee is working towards an Iraq banknote that is comparable to the USD $100 bill.
This sort of planned restructuring of the currency supports large transactions and brings in a level of accountability and efficiency in public accounts.
Thus, the issuance of the new banknote does not mean that there is no revaluation.
On the contrary, the following are the future realities in the fiscal interaction in Iraq as the country works towards stabilising the value of its currency. At the outset, it is quite clear that the purchasing power of the old currency and the new currency will remain the same. After a period of time, old bank notes will be withdrawn.
Deleting the zeroes will lead to an increase of the value of the Iraqi dinar.
In addition to the above, the new Dinar notes such as the 50K Dinar Note has enhanced security features to combat counterfeiting of the notes.
The “delete the zeroes” project is well under its way and is scheduled to kick off in 2016.The International Monetary Fund (IMF) has been assisting and technically advising the Iraqi government on it.
Together, all the above measures will work towards appreciating the value of the Iraqi Dinar. It is most interesting to note that before introducing the 50K Iraqi Dinar bank note, the denomination of IQD 50 bank notes were removed from circulation by the Central Bank of Iraq.
Thus, the Central Bank of Iraq is advancing in a rather planned manner in combating dollarisation of the Iraqi economy.
Ideally, all things constant, a bright future awaits Iraq’s currency if the Central Bank of Iraq is able to keep a check on counterfeiting, withdrawing unusable notes from the economy and more.
What does this mean for the Iraqi Dinar?
So, as explained above, while the new 50,000 Iraqi Dinar banknote and the awaited 100,000 Iraqi Dinar banknote make it easier for businesses to operate in its currency, promotes the use of the Iraqi Dinar and has been made by most modern-age anti-counterfeiting measures in order to keep the currency as protected as possible, the re-valuation around the corner will have some swooping effects.
First and foremost, the 50,000 Iraqi Dinar will be a very important figure in the revaluation of the currency being the closest to the USD in comparison at the moment.
Secondly, Iraqis will now get more dollars for fewer Iraqi dinars as opposed to earlier when it was a common story of exchanging bags of Iraqi Dinar banknotes for the easier to use and higher valued USD.
Thirdly, eventually the export rates would go up and Import rates would come down, investor confidence will increase and simplification of statistics will happen in a big way. This means that the economy would gradually recover despite the debts at the moment.
All in all, the issuing of the 50,000 Iraqi Dinar banknote is a positive impact on the the Iraqi Dinar Revaluation and carries a strong message with it - that the Central Bank of Iraq clearly knows what it is doing and how to go about it in a planned, controlled and sharp manner.
And while initially, it may have seemed confusing as to why the Central Bank of Iraq decided to issue a 50,000 IQD Banknote when it seemed dedicated to deleting the zeroes from the previous denominations of IQD 25000, IQD 10000, IQD 500, IQD IQD 1000, IQD 500 and IQD 250, it is clear on deeper reflection that in order to reach a stage to delete the zeroes, it was essential to first restructure the IQD in keeping with current economic situation and trends.
Against the current economic backdrop and exchange rates, the 50,000 IQD banknote is a must for Iraq at the moment for more efficient trade internationally among other reasons as discussed in detail above.
The issuance of the new banknote does not mean there is no revaluation or deletion of zeroes. On the contrary, this brand new bill will in the course of revaluation will be the new 50 IQD.
For now, it is thus imperative to buy the 50,000 IQD for business purposes as well as a long term investment as the Central Bank of Iraq gears up to build a good value for the currency and replace the widespread use of the USD on Iraq’s shores.
Copyright: BuyNewDinar.com
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