Home
Delete the zeros and evaluate the dinar
Economical 11/18/2024
Ali Daadoush
We explained, in a newspaper column a while ago, the concept of deleting zeros, and
today we are talking about the concept of currency revaluation, which means a calculated upward adjustment of the official exchange rate of a country relative to the chosen baseline, as
the baseline can include (wage rates, the price of gold, or specific foreign currency), and
revaluation is the opposite of devaluation of a currency.
In the fixed exchange system (the system followed by Iraq), only a decision from the state (the central bank) can change the official value of the currency, and
developing economies are likely to use the fixed exchange system in order to limit speculation and provide a stable monetary system in the country.
In a flexible exchange system, revaluation occurs on a regular basis, as evidenced by noticeable fluctuations in the foreign exchange market and associated exchange rates.
For example, the United States continued to apply a fixed exchange rate until 1973, when President Richard Nixon decided to withdraw the United States from the gold standard and switch to a flexible exchange rate system.
As for China, although it has an advanced economy, Its currency remained stable until 1994, before the Chinese government re-evaluated its currency in 2005, which was linked to the US dollar. After this re-evaluation, it was linked to a basket of currencies. Universality.
The decision to revalue the local currency affects the economy in general, as
it affects both the currency being examined and the valuation of assets held by foreign companies in this particular currency.
Given that revaluation has the ability to change the exchange rate between two countries and their currencies, the values may have to be adjusted. The carrying amount of assets owned abroad to reflect the effect of a change in the exchange rate.
For example, let us assume that a foreign government sets (10 units) of its currency as equivalent to one dollar in US currency.
To revalue its currency, the government may change the price to (5 units) per dollar.
This results in its currency becoming twice as expensive when evaluated in US dollars compared to what it was. It was previously.
If the above currency revaluation occurs, any assets held by a US company in the foreign economy must be revalued.
If the value of an asset held in a foreign currency was previously valued at $100,000 based on the old exchange rate, the revaluation would require a change of $200. One thousand US dollars.
This change reflects the new value of the foreign asset in the local currency by adjusting the revaluation of the currency in question.
Another example is what the Iraqi government did in 2023 when it raised the value of the Iraqi dinar from 1,450 dinars/dollar to 1,300 dinars/dollar.
https://alsabaah.iq/106053-.html
Economical 11/18/2024
Ali Daadoush
We explained, in a newspaper column a while ago, the concept of deleting zeros, and
today we are talking about the concept of currency revaluation, which means a calculated upward adjustment of the official exchange rate of a country relative to the chosen baseline, as
the baseline can include (wage rates, the price of gold, or specific foreign currency), and
revaluation is the opposite of devaluation of a currency.
In the fixed exchange system (the system followed by Iraq), only a decision from the state (the central bank) can change the official value of the currency, and
developing economies are likely to use the fixed exchange system in order to limit speculation and provide a stable monetary system in the country.
In a flexible exchange system, revaluation occurs on a regular basis, as evidenced by noticeable fluctuations in the foreign exchange market and associated exchange rates.
For example, the United States continued to apply a fixed exchange rate until 1973, when President Richard Nixon decided to withdraw the United States from the gold standard and switch to a flexible exchange rate system.
As for China, although it has an advanced economy, Its currency remained stable until 1994, before the Chinese government re-evaluated its currency in 2005, which was linked to the US dollar. After this re-evaluation, it was linked to a basket of currencies. Universality.
The decision to revalue the local currency affects the economy in general, as
it affects both the currency being examined and the valuation of assets held by foreign companies in this particular currency.
Given that revaluation has the ability to change the exchange rate between two countries and their currencies, the values may have to be adjusted. The carrying amount of assets owned abroad to reflect the effect of a change in the exchange rate.
For example, let us assume that a foreign government sets (10 units) of its currency as equivalent to one dollar in US currency.
To revalue its currency, the government may change the price to (5 units) per dollar.
This results in its currency becoming twice as expensive when evaluated in US dollars compared to what it was. It was previously.
If the above currency revaluation occurs, any assets held by a US company in the foreign economy must be revalued.
If the value of an asset held in a foreign currency was previously valued at $100,000 based on the old exchange rate, the revaluation would require a change of $200. One thousand US dollars.
This change reflects the new value of the foreign asset in the local currency by adjusting the revaluation of the currency in question.
Another example is what the Iraqi government did in 2023 when it raised the value of the Iraqi dinar from 1,450 dinars/dollar to 1,300 dinars/dollar.
https://alsabaah.iq/106053-.html
