This Is How Iraq Will Achieve a $3.00 IQD Revaluation

Awake-In-3D  December 6, 2024

Iraq’s blueprint for a $3.00 IQD revaluation combines re-denomination, gold reserves, and sweeping reforms.

Iraq is setting the stage for a transformative economic shift with a $3.00 IQD revaluation—a move rooted in strategic planning and decisive action. By combining a re-denomination of its currency, leveraging vast gold reserves, and implementing sweeping reforms, Iraq is crafting a blueprint that could reshape its economic future. This article walks you through the steps Iraq is taking, so you can clearly see how this bold strategy is turning a monumental vision into an achievable reality.

The Current Iraqi Dinar Landscape

Iraq’s M0 money supply, which measures the total amount of physical currency in circulation, stands at 150,828 billion IQD as of September 2024. To express this figure in trillions, it becomes 150.828 trillion IQD, as one trillion equals 1,000 billion.

Image Source: https://tradingeconomics.com/iraq/money-supply-m0

Additionally, Iraq holds 152.6 metric tons of gold, which equates to approximately 4.9 million troy ounces or 152.6 million grams. At a price of $2,630 per troy ounce, these reserves are valued at around $12.9 billion USD, providing a strong foundation for monetary reform toward a $3.00 IQD.

How a $3.00 IQD Exchange Rate Works

Iraq’s plan to achieve a $3.00 IQD exchange rate relies on two major steps: re-denomination of the currency and backing the new currency with gold reserves. Here’s how these steps would work:

Step 1: Re-denomination

A currency re-denomination means adjusting the value of a currency by removing extra zeros from its face value. For Iraq, this involves removing three zeros from the current IQD notes.

For example:

• Today, 1,000 IQD is equal to about $0.76 USD (since 1 IQD is worth roughly $0.00076).

• After re-denomination, 1,000 IQD would become 1 new IQD, and that 1 new IQD is targeted to be worth $3.00 USD.

This step simplifies the currency, making it easier for people to use and understand. Instead of needing large numbers (like 1,000 IQD) for small transactions, the new IQD would have a higher value with fewer digits.

Step 2: Backing the New $3.00 IQD with Gold

To support the new value of $3.00 per IQD, Iraq plans to back its currency with its gold reserves. This means each unit of the new IQD would represent a portion of Iraq’s gold. Backing currency with gold provides stability because gold is a tangible, universally valued asset.

Here’s the math behind this:

1. Iraq’s total money supply after re-denomination would be 150.828 billion new IQD.

2. To set a value of $3.00 per IQD, the total currency value must equal $452.5 billion USD (calculated as 150.828 billion IQD × $3.00).

3. Gold is currently valued at $84.58 per gram, so Iraq needs to allocate about 0.0355 grams of gold for every 1 new IQD.

In total, Iraq would need 5.36 metric tons of gold to fully back its new currency at the $3.00 rate. Since Iraq’s reserves are much larger at 152.6 metric tons, the country has more than enough gold to implement this plan.

Why Gold-Backing Matters

By tying the value of the new IQD to gold, Iraq ensures its currency remains stable and valuable. Unlike paper money (fiat currency), which governments can print at will and risk inflation, a gold-backed currency cannot exceed the value of the gold reserves supporting it. This approach boosts confidence in the currency for both Iraqis and international investors.

How a $3.00 IQD Impacts Exports

While a $3.00 IQD delivers many benefits, including increased purchasing power for Iraqi citizens and enhanced international confidence in the currency, it also affects the competitiveness of Iraqi exports.

When a country’s currency strengthens, its goods and services become more expensive for people in other countries. For example, if Iraq exports agricultural products, industrial goods, or locally manufactured items, buyers in other nations need to spend more of their own currency to purchase those items. This higher cost creates challenges in competing with cheaper alternatives from other nations.

For Iraq’s non-oil sectors—such as agriculture, construction materials, and manufacturing—a $3.00 IQD challenges their ability to compete with lower-priced goods from other nations. This slows the development of these industries, which Iraq is keen to grow as part of its economic diversification efforts.

However, Iraq’s primary export—oil—remains unaffected. Oil is priced in USD globally, so its cost doesn’t change regardless of IQD fluctuations. This ensures Iraq’s oil revenue, which makes up the bulk of its economy, remains stable, providing a financial buffer as the country adjusts to a stronger IQD.

A Gold-Backed Currency and Economic Stability

One of the major advantages of a gold-backed currency is its built-in resistance to inflation. Unlike fiat currencies, which can be printed without limit and risk losing value over time, a gold-backed $3.00 IQD derives its value from a tangible asset—gold. This connection to a physical resource ensures monetary stability, as the supply of currency is tied directly to the amount of gold in reserves.

Historically, nations operating on a gold standard experience long periods of price stability, making such a system appealing for Iraq as it restores confidence in its currency.

Economic and Governance Considerations

To sustain the trust of its citizens and international markets, Iraq must address domestic challenges, such as corruption, inefficiency, and political instability. Transparent communication about the redenomination process and its goals is critical in fostering public support and maintaining economic stability.

Iraq has made strides in key areas to support these objectives:

1. Anti-Corruption Measures
   The Iraqi government has intensified efforts to combat corruption, which has long plagued its institutions. The Integrity Commission has launched investigations into high-profile cases, targeting embezzlement and mismanagement of public funds. Recent legislation aims to enhance accountability by streamlining processes for auditing government projects and increasing penalties for financial chaos. These measures are vital for establishing public trust and ensuring that resources are directed toward economic reform.

2. Banking Sector Modernization
   Iraq is actively modernizing its banking system to facilitate a stable transition to a stronger IQD. Initiatives include introducing advanced digital banking platforms, improving transparency in financial transactions, and collaborating with international financial institutions for technical assistance. The Central Bank of Iraq (CBI) has also implemented stricter regulations to prevent money laundering and enhance the banking sector’s credibility on the global stage.

3. Political Stability Efforts
   Acknowledging the importance of political stability, Iraq’s leaders have focused on fostering unity among its diverse population. Efforts include resolving disputes over revenue sharing between the federal government and the Kurdistan Regional Government (KRG) and strengthening security measures in conflict-prone areas. These steps aim to create a more stable environment conducive to long-term economic growth.

4. Diversification of the Economy
   To reduce reliance on oil revenues, Iraq is implementing policies to promote non-oil sectors such as agriculture, manufacturing, and tourism. Programs to provide incentives for small and medium-sized enterprises (SMEs) and attract foreign investors are helping to broaden the economic base. These initiatives are aligned with Iraq’s vision for sustainable development and economic resilience in the face of global market fluctuations.

5. Public Awareness Campaigns
   The government has launched public awareness campaigns to educate citizens about the redenomination process and the benefits of a gold-backed $3.00 IQD. These efforts include town hall meetings, media outreach, and collaboration with community leaders to address concerns and misconceptions. By keeping the public informed, Iraq aims to build confidence and minimize resistance to these sweeping monetary changes.

Through these combined efforts, Iraq is positioning itself to implement a strong and sustainable $3.00 IQD exchange rate. Overcoming these challenges is essential to securing the trust of both its citizens and the international community, paving the way for long-term economic stability and growth.

Benefits of a $3.00 IQD

• Global Confidence: A gold-backed $3.00 IQD strengthens Iraq’s position in international financial markets and attracts foreign investment.

• Increased Purchasing Power: Iraqi citizens benefit from greater purchasing power, making imports more affordable and improving standards of living.

• Economic Stability: By tying the IQD to gold, Iraq creates a stable currency, reducing the risk of inflation and promoting long-term trust.

The Bottom Line: A Feasible and Transformative Reform

With gold prices at $2,630 per troy ounce, Iraq’s reserves of 152.6 metric tons are more than sufficient to back a redenominated IQD at $3.00 IQD, requiring only 5.36 metric tons of gold. While this reform is technically feasible and promises significant benefits, Iraq must carefully manage its non-oil export sectors to mitigate the potential downsides of a stronger currency.

If implemented successfully, a $3.00 IQD marks a turning point for Iraq, restoring its currency’s historical strength and securing its place as an economic leader in the region.

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