Thank you Fuse!
TNT: Fuze: How Iraq’s and Kuwait’s Revaluations are more Simular than not. AN UPDATE with Inflation rates.
Critics of an Iraq and Kuwait currency reinstatement comparison, have long pointed to the immutable fact that Kuwait was a State of the Art modern part monarchy and part democratic country before it was ravaged by war, and Iraq was the opposite before and after its wars; so you can’t compare the two.
However, that argument is not altogether conclusive proof that Iraq can’t revalue anytime soon, due to its current political circumstance.
Keep in mind although Iraq was a dictatorship and was in great need of reforms before it started invading its neighbors in particular Kuwait, Iraq still had one of the highest valued currencies in the world and was exchangeable here in the US!
Furthermore, check out these much published but little considered facts regarding the circumstances in Kuwait when Kuwait central bank reinstated and revalued its currency.
We all know about Kuwait’s limited utilities like little running water and very few lights in the country when on March 25th, 1991 the NY Times reported Kuwait had revalued its currency by candlelight back to the highest in the world. However, most of us have not researched the other political, societal, and economical circumstances surrounding Kuwait’s revaluation.
- Did you know the Kuwaiti Crown Prince 2nd in Charge of the Government along with the Government’s 22 cabinet ministers did not arrive back in Kuwait until March 5th a mere 20 days before they Revalued their Currency?
- Did you know the Emir Sheikh Jabah the number 1 ruler did not return to Kuwait after 8 months of sheltering in Saudi Arabia until March 15th, 1991 a mere 10 days before the revaluation of their currency?
- Did you know that a vast amount of the Government workers and administrators of the Kuwaiti Government agencies before the invasion were from Pakistan, Jordan, and other countries in the middle east and they NEVER Returned after the liberation of Kuwait. Talking about instability!
- Did you know that a large number of the surviving population, were protesting in March 1991 for a FULL DEMOCRACY? They felt abandoned by the ruling family and its Government for 8 months after they had been subjugated by the invading Iraqis to unmentionable horrors?
Did you know that 700 Kuwaiti Oil wells were still burning after being set on fire by the retreating Iraqi army and the last oil well was not extinguished until November 6, 1991!
So they not only revalued their currency by candlelight they did it under a dark sky filled with toxic fumes and a devastated economy!
Speaking of Kuwait’s economy, Kuwait’s inflation rate in 1990 rose ironically to 6.49% as a direct consequence of the invasion. Iraq’s inflation has risen to 6.89% today as a consequence of the currency rate reduction in 2020 and the War in Ukraine.
The point is Kuwait’s inflation rate in 1991 when they revalued almost exactly what Iraq’s inflation rate is today! Even a first-year economic major knows that increasing purchasing power and decreasing the money supply is a control mechanism for inflation.
The point I’m making is they revalued their currency in very unfavorable conditions socially, politically, environmentally, and economically. They needed to rebuild their country and understood the basic premise “you reestablish your currency FIRST, then rebuild your country”.
I hope this helps with some of the doubts expressed by some.
By the way, all of these facts are available online if one is truly interested.
Enjoy and stay positive.
From Recaps Archives:
NY TIMES (Kuwait RV): Published: March 25, 1991
It still has no water and little electricity or food, but Kuwait revived its banking system today, introducing a new currency……Banks reopened for the first time since Iraqi occupation forces shut them down in December. Thousands of people lined up to exchange their old Kuwaiti dinars for crisp new ones and to withdraw a limited amount of money…..
The Central Bank is canceling the value of Kuwaiti dinars that were seized from the Central Bank and put into circulation by the Iraqis. The invalid serial numbers were posted today in front of all banks in the city….All other old dinars can be exchanged for new ones on a one-to-one rate until May 7, when the old dinars become invalid.
The new official exchange rate is 3.47 American dollars for one new Kuwaiti dinar.
From March 18, 1975 to January 4, 2003 the dinar was pegged to a weighted currency basket. From January 5, 2003 until May 20, 2007, the pegging was switched to 1 U.S. dollar = 0.29963 dinar with margins of ±3.5%. The central rate translates to approximately 1 dinar = 3.33745 dollars. From June 16, 2007, the Kuwaiti dinar was re-pegged to a basket of currencies, and is now worth about US$3.609 (€2.686). It is the world’s highest-valued currency unit