Removing Zeros from the Iraqi Currency: Talk Returns and Possibility of Implementation

Removing zeros from a currency is a procedure undertaken by some countries in order to revalue the national currency and simplify financial transactions. This is done by removing a specific number of zeros from the nominal value of the currency, making it appear less inflationary and more stable.

For example, if the currency is the “dinar” and its value is equal to 1,000 dinars, after removing three zeros, its value will become one new dinar.

One of the possible reasons for deleting zeros is to combat inflation. When a currency suffers from high inflation, the nominal values ​​can become very high and impractical to be offered in large quantities in daily transactions. Deleting zeros can contribute to enhancing confidence in the national currency, facilitating accounting operations and financial transactions; this may contribute to improving the country’s image before investors and the international community.

Potential challenges of deleting zeros include printing new currency, modifying accounting systems, and training on how to use the new currency. It may initially cause some confusion among residents and consumers, and if the deletion process is not implemented well, it may lead to economic disruptions. As a result, deleting zeros is not a solution to all economic problems, but rather a procedure that requires good planning and careful implementation to ensure that the desired goals are achieved, according to experts.

Examples of countries that have taken this action include Turkey in 2005 when it removed six zeros from its currency, Brazil on several occasions in the 1980s and 1990s, Zimbabwe, which removed twelve zeros from its currency in 2009, and Venezuela, which removed five zeros in 2018. The number of cases in the world in which currency zeros were removed is estimated at 70 cases witnessed by the world since 1960.

In a renewed statement by the Governor of the Central Bank of Iraq, Ali Al-Alaq, he said that “the project to remove zeros from the currency is still ongoing,” meaning removing three zeros from the Iraqi dinar. For example, the value of a 1,000-dinar banknote will be replaced with a one-dinar note from the new currency, five thousand with five dinars, ten thousand with ten dinars, and so on.

According to experts, the actual value of the money people own does not change after deleting the zeros, but this step contributes to simplifying the buying and selling processes for individuals and companies, and makes the financial amounts simpler and more understandable. Instead of dealing with huge numbers such as a trillion or a million (1,000,000 Iraqi dinars), they can be converted to just one thousand 1,000 dinars after deleting three zeros.

Removing zeros helps in issuing small currencies such as coins, enables the re-pricing of small goods at lower prices, facilitates their circulation and their survival in the markets, and gives a positive psychological boost to the population with the fact that the Iraqi dinar can now buy more goods and services.

Therefore, countries aim to remove zeros to restore confidence in the local currency among the population and investors, to increase demand for it, and for the local currency to become more competitive with foreign currencies and to be replaced by other currencies less.

The policy of deleting zeros is often linked to broader economic reforms, such as raising interest rates on bank deposits, to encourage people to save in banks and benefit from high interest rates on their bank deposits, in an attempt to withdraw liquidity from the market, reduce consumption and lower prices.

This also entails exploiting this liquidity to expand productive projects, attract local and foreign investments within the country and create many job opportunities so that the local economy can ultimately recover.

But on the other hand, deleting zeros may cost Iraq money to print new banknotes. For example, after deleting 3 zeros from the Iraqi dinar, when we talk about a 200-dinar banknote, it is actually equivalent to 200,000 dinars. As a result, it may be necessary to print 4 more 50-dinar banknotes instead of the 50,000-dinar banknote.

However, according to the available results, this may not have a clear impact on improving the local economy if it is not part of a package of economic reforms that help reduce the amount of money circulating among people and stimulate the economy, especially since Iraq’s economy is an oil economy that needs to stimulate other productive sectors to drive the local economy.

Could removing zeros from the Iraqi dinar be a real start to stimulating the Iraqi economy, after it became clear that all plans were unable to rescue the dinar from its declining value?

In a statement by the financial advisor to the Iraqi government, Mazhar Muhammad Salih, he said that “the phenomenon of multiplying zeros in the monetary unit or adding zeros usually comes as a result of economies being exposed to rampant waves of inflation or sharp increases in the price level that continue for years due to wars, blockades and conflicts that lead to financing the deficit of government budgets through the issuance of money,” noting that the continuous rise in prices without stopping leads to the erosion of the value of the monetary unit, which necessitates the issuance of larger denominations of money due to the lack of value of smaller denominations of money and the disappearance of their ability to cover high-value transactions and exchanges in the market, according to his description.

Former member of the Parliamentary Finance Committee, Ahmed Hama Rashid, believes that “Iraq is not prepared for the project of deleting zeros,” and explains, “We always hear the Central Bank’s statements about implementing a project, only to then back down from implementation for undisclosed reasons.”

Regarding the implementation of the project to remove zeros from the Iraqi currency, banking consultant Abdul Rahman Al-Shaikhli recalls that the printing of the Iraqi dinar in the nineties of the last century was done by poor printing presses and that “the first factor that stood in the way of the project was the discrepancy between the official exchange rate (now 1332 dinars per dollar) and the parallel market exchange rate (now rising above 1500 dinars) and it constituted an obstacle to the implementation of the project.”

He points out that “the project will be successful if an exchange rate of one thousand dinars for every one dollar is reached. At that time, deleting the three zeros will achieve its economic feasibility, as the exchange rate will be transformed into one dinar for every one dollar, and this is what the late former governor of the Central Bank, Sinan Al-Shabibi, aspired to,” he said.

Al-Shaikhli added that the other factor that affected the project to remove zeros from the Iraqi currency was the call made by the government of former Prime Minister Nouri al-Maliki for the years 2006-2014, to legislate the infrastructure law, which was opposed by a number of political blocs in parliament at the time, as it leads to an increase in investments in Iraq through deferred payment, which limits the value of the monetary project, he said.

Shafaq.com

Parliament Speakership file likely to be closed next week

The leader of the Hasm Alliance, Dhari Al-Dulaimi, expected, on Wednesday, to resolve the crisis of electing a new Speaker of the House of Representatives next week, stressing that the election session will witness competition between Al-Issawi and Al-Mashhadani.

Al-Dulaimi said in a statement to / Al-Maalouma / agency, that “the determination of the forces of the Coordination Framework for Sunni political forces of the twentieth of this current month as the final date to resolve the crisis of the position of Speaker of Parliament is serious,” indicating that “the Sunni forces competing for the position have not reached an agreement on a specific figure and that the competition will remain between the two representatives, Mahmoud Al-Mashhadani and Salem Al-Issawi.”

He added that “the date set by the Coordination Framework will certainly be binding on everyone, including the Speaker of Parliament,” expecting “to hold a session to elect a new Speaker of the House of Representatives during one of the parliament sessions next week.”
The framework had set the twentieth of this current month as the final date and last opportunity for the Sunni component to choose a candidate for the position during its last regular meeting.

Almaalomah.me

Former MP reveals “the hidden”…these are the restrictions of the US Federal

Reserve Former member of the Parliamentary Finance Committee, Abdul Hadi Al-Saadawi, revealed on Wednesday the restrictions imposed by the US Federal Reserve on the Central Bank of Iraq.

Al-Saadawi said in an interview with / Al-Maalouma /, “The US Federal Reserve is imposing restrictions on the Central Bank of Iraq in response to the demand to withdraw US forces from the country.”

He added that “America is adopting a specific approach in Iraq, which is to give more space for foreign banks to operate at the expense of Iraqi banks.”
He pointed to “the need to review the activities of foreign banks in the country and seek to address corruption in local banks and expose fictitious exchange windows that operate in money laundering.”

It is noteworthy that the dollar exchange rates in the Iraqi markets have witnessed a state of instability in the past few days in terms of rising and then falling again.

Almaalomah.me

State of Law: Washington’s concern for Iraq’s security is a lie

Member of the State of Law Coalition Ahmed Al-Sudani described, on Wednesday, the keenness of the American combat forces on Iraq’s security as a lie.

Al-Sudani said in a statement to /Al-Maalouma/ Agency, that “we reject any long-term presence of American forces in Iraq,” indicating that “the presence of these combat forces violates the parliament’s decision to expel them.”

He added that “foreign forces cannot continue to be present inside Iraq, especially since the previous parliament had its say and voted to expel them,” explaining that “there is a popular and political rejection of the presence of any foreign forces on Iraqi territory, most notably the American military presence.”

He added that “Washington’s talk about its keenness on Iraq’s security is a big lie and its efforts were aimed at keeping the country weak and within the range of crises, most of which are of its own making,” noting that “the expulsion of American forces is an important option that cannot be reversed.”

Most Iraqi political forces issued their support for the prime minister regarding the steps to expel American forces from Iraq after a series of attacks against Iraqi security forces.

Almaalomah.me

The Coordination Framework reminds the Sunnis of the number 180 and warns them of the deadline

The Coordination Framework, which brings together the Shiite political forces, confirmed on Wednesday its ability to pass the candidate for the presidency of the parliament – according to the majority it has in the House of Representatives – in the event that the Sunni political forces do not agree among themselves.

The representative of the framework, Ali Al-Bandawi, told Shafaq News Agency, “The deadline of the Coordination Framework for Sunni political forces is approaching its end, and the House of Representatives has been without a speaker for nearly nine months until now. The Coordination Framework can pass any candidate for the presidency of the parliament according to the majority it has in the House of Representatives, but currently it does not want to pass any candidate who is not agreed upon within the Sunni political house.”

Al-Bandawi added, “The Coordination Framework informed the Sunni political forces of the necessity of choosing a figure in order to vote on him, and gave a deadline until the beginning of the legislative session (July 20). If the disagreement between the Sunni political forces continues, the Framework will proceed with holding a session to elect the Speaker of Parliament, as the Framework forces are determined to resolve this issue soon, without any postponement.”

The Coordination Framework set July 20 as the date to decide on the appointment of a new speaker of the Iraqi parliament, stressing that after this date, the matter will be left to the members of the House of Representatives to choose for themselves who they see as suitable for this position .

Since the Federal Supreme Court (the highest judicial authority in Iraq) decided in November 2023 to terminate the membership of former Parliament Speaker Mohammed al-Halbousi, the political parties and forces have not been able to name a new Parliament Speaker due to the differences between them.

Shafaq.com

Asaib Ahl al-Haq on targeting Ain al-Assad: The truce is over and we will not fear the Americans

The Asa’ib Ahl al-Haq movement, led by Qais Khazali, commented on Wednesday on the return of targeting American forces in Iraq, after the bombing of Ain al-Assad base yesterday, Tuesday, with two drones.

The leader of the movement, Ali Al-Fatlawi, told Shafaq News Agency, “The Iraqi resistance factions gave a period of four months to stop their operations against the Americans in Iraq, in order to give the green light to the Iraqi government to negotiate with the American administration to withdraw its occupying forces, but the occupation is stalling and delaying its exit according to the Iraqi governmental, parliamentary and popular demands, so every action has a reaction, in addition to the continued American support for the Zionist entity in its war against Gaza.”

Al-Fatlawi added, “The military operations against the American presence have returned, and this means the resumption of attacks against this occupation. Therefore, any response from the Americans to the operations of the Iraqi resistance factions means that there will be an escalation in operations against American targets and interests in Iraq, and there is no fear of any American response.”

A security source told Shafaq News Agency yesterday, Tuesday, that “two drones targeted the vicinity of Ain al-Assad base in Anbar Governorate, western Iraq,” without providing further details or whether there were human casualties or material losses.

In early February, attacks by armed groups on US forces in Syria and Iraq stopped after a drone attack killed three US soldiers in Jordan, and in response the US carried out airstrikes on sites in Iraq and Syria.

Shafaq.com

Iraqi Dinar / US Dollar auction results for today 7-016-2024

Results of the foreign currency selling window for Tuesday 07/16/2024

Advertisement No. (5162)

The amount:

Total amounts of transfers abroad (transfers, credits)
255,546,834

Total cash withdrawals
12,550,000

Total total sales
268,096,834

Note that: The selling price of documentary credits and international settlements for electronic cards is ( 1310 ) dinars per dollar.

The selling price for transfer amounts abroad is ( 1310 ) dinars per dollar.
The cash selling price is ( 1305 ) dinars per dollar.

cbi.iq/currency_auction

Third round of negotiations for Iraq’s accession to the World Trade Organization

Minister of Trade Athir Dawood Salman arrived today, Tuesday, in the city of Geneva, Switzerland, at the head of the Iraqi team negotiating Iraq’s accession to the World Trade Organization to attend the third meeting of the working group on Iraq’s accession, 16 years after the second meeting was held.

The statement of the Ministry’s media office, a copy of which was received by {Euphrates News}, indicated that “Iraq is proceeding, through the national committee concerned with its accession to the World Organization, which is headed by the Minister of Trade, to complete its procedures to accomplish the required files and support reforms and legislation to be in line with the market system and enhance the country’s economic capabilities to complete the requirements of the next stage of the accession process.”

The statement noted that “the preparatory meetings of the Iraqi negotiating team are continuing at the headquarters of the World Trade Organization in Geneva, in preparation for the third meeting of the working group on Iraq’s accession, which will be held this week.”

Alforatnews.iq

Through the dollar and the yuan… the US Treasury continues to impose its guardianship over the Iraqi economy

The Parliamentary Finance Committee had previously threatened to demand that the Central Bank address the issue of the exchange rate and the fluidity of foreign trade by using the currency basket diversification system, so that the Central Bank and Iraqi traders have more options.

A currency basket system is a monetary system used by the central banks of countries to determine the exchange rate of their local currencies. The system is based on a group of currencies chosen by the central bank of each country. The basket consists of a group of the most powerful banknotes that influence the global economy.

In an “unsuccessful” move, as described by economic experts, the Central Bank of Iraq stopped dealing in the Chinese yuan after the US Federal Reserve accused Iraq of “inflating remittances.” While economic experts warned of the effects of this decision on the local market and its causing of a rise in the exchange rate of the US dollar and an increase in inflation rates, which has negative repercussions on the economic situation of the Iraqi family, they presented 3 solutions to the Central Bank of Iraq to continue the flow of remittances to China.

In the latest Iraqi government move to stop dealing in the Chinese yuan, informed sources revealed to Shafaq News Agency, yesterday, Saturday, that the Governor of the Central Bank of Iraq, Ali Al-Alaq, is making an unannounced visit to the United States of America to discuss with officials in Washington the decision of the US Federal Reserve to stop Baghdad from dealing in the Chinese yuan.

The Central Bank of Iraq had previously strengthened its assets denominated in yuan through the Singapore Development Bank to finance Iraqi trade and imports with China by about 12 billion dollars annually. However, the policy of the US Federal Reserve is still putting a stick in the wheel of the liberation of the Iraqi dinar and achieving gains at the expense of the dollar exchange rate. Therefore, when the US Federal Reserve saw the use of the Chinese yuan in foreign transfers, it quickly issued a decision to stop transfers under the pretext of suspicions in some transfers in Chinese yuan.

Member of the Parliamentary Finance Committee, MP Moeen Al-Kadhimi, described the US Federal Reserve’s decision to stop transfers in Chinese yuan as “arbitrary” against the Iraqi economy.

Al-Kadhimi said in a statement to Al-Maalouma Agency, “The decision to stop transfers in the Chinese yuan was issued by the US Federal Reserve, claiming that there were suspicions about some transfers in the Chinese yuan.”

He pointed out that “the Central Bank of Iraq has contracted with an international company to evaluate and monitor transfers, and this company is a source of acceptance and trust for the US Federal Reserve.”

He pointed out that “after a short period, the Central Bank of Iraq will resume transferring remittances in Chinese yuan to Iraqi traders in general,” indicating that “these measures of the US Federal Reserve are considered arbitrary against Iraq and its national economy.”

For his part, commenting on this decision, economic expert, Diaa Al-Mohsen, confirmed that “the suspension of dealing in the Chinese yuan by the Central Bank of Iraq is an unsuccessful step if we take into consideration that trade dealings with China exceed 65 billion dollars.”

Al-Mohsen said in a statement to Al-Maalouma Agency, “This decision will have a negative impact on the local market, and the demand for the dollar will increase, which means an increase in the exchange rate of the US dollar in the local market, which will increase inflation rates, which will have negative effects on the economic situation of the Iraqi family.”

The Central Bank of Iraq stopped dealing in the Chinese yuan after the US Federal Reserve accused Iraq of “inflating remittances.”

During the current period, America has worked to destroy the Iraqi currency by imposing sanctions on private banks and preventing the dollar under many pretexts, which in one way or another led to a severe financial crisis in local markets.

It is noteworthy that the Central Bank of Iraq also moved to strengthen its assets in the UAE dirham and negotiated to increase its assets denominated in euros to finance trade with the European Union. Iraq also began opening bank accounts in Indian rupees for a number of Iraqi banks.

Almaalomah.me

Parliamentary Economy: Warns of Continued Uncontrollable Dollar Exchange

Deputy Chairman of the Parliamentary Economic Committee, Yasser Al-Husseini, warned today, Tuesday, of the continued chaos in the dollar price on the black market, while stressing that the primary beneficiary of the dollar’s ​​rise is a group of banks and companies affiliated with political parties.

Al-Hussaini said in an interview with Al-Maalouma Agency, “There is a gap between the official dollar price and the black market,” indicating that “if the dollar exchange rate continues to rise without real measures, the price will exceed 150 thousand.”

He added that “the rise continues due to the ill-considered decisions of the government and the Central Bank,” stressing “the need for urgent and rapid intervention by the government to control and stabilize the exchange rate and monitor the effects witnessed by the markets.”

Stressing that the stability of the exchange rate contributes directly to the stability of the prices of goods and commodities, which are constantly affected by movements.

Almaalomah.me