Analysing a coin series to predict currency redenomination

[<k>]

A normal coin series consists of subunits and sometimes also units. To explain: the currency of my country, the UK, is the pound. The pound is the prime unit of currency, and it is divided into subunits of 100 pence. The unit is the pound, and the subunit is the penny. When the UK adopted a decimal currency in 1971, the highest denomination of coin was the 50 pence. Nowadays, we have a circulating 2 pound coin - or 200 pence, if you prefer to see it that way. Over time, of course, inflation makes it more efficient to use high value coins than banknotes.

If inflation is relatively high, then over a period of years your subunits will become worthless. Your remaining coins will then be denominated in units, and the denominations become higher and higher as inflation progresses. For instance, in 1977 Angola adopted the kwanza, which was subdivided into 100 lwei. The lowest denomination of coin at the time however was the 50 lwei coin. In 1990 the New Kwanza was adopted, and the lowest denomination was now 50 kwanzas. Inflation had killed the lwei. However, in 1999 Angola redenominated the currency and introduced the second kwanza, which was now subdivided into 100 centimos instead of lwei. The lowest denomination of coin in 1999 was 10 centimos.

[<k>]

Usually in a coin series you see relatively low denominations in terms of numbers. You would expect a face value 1, 2, 5, 10, 20 or 25, and 50 in terms of denominations. Sometimes an expected  denomination will be missing, or an unusual denomination is used - 3, 12½ or 15. At some point, in countries with high inflation, the denominations become higher. Paraguay currently has a one thousand guaranies coin, for instance.

[<k>]

Tanzania, 500 shilingi.


This leads me to the question, which are the highest denominations of coin in circulation, and in which countries? At what point do countries usually redenominate their currencies? When they have a 200 unit coin? A 500 unit coin? A 1000 unit coin? Currently Tanzania has a 500 shilingi coin.

[<k>]

For many years Turkey had such high inflation that it issued coins in denominations of thousands of lira. A thousand lira was denominated as 'BIN LIRA' on the Turkish coins. By 2002 the highest denomination of coin was 250 'bin lira': 250 000 lira.

[FosseWay]

To answer the question "at what point do countries redenominate?" - a significant part of this is "when the economy has settled down enough for it to be worthwhile", or perhaps more pragmatically, "when enough politicians have kidded themselves into believing that it's settled down enough to be worthwhile".

I think this is why we don't routinely see circulation coins with denominations in the millions. A currency where a million units equates to the buying power of a typical coin denomination is either in the middle of an episode of hyperinflation, or has just gone through one. If it's still going on, the government will have other things on its plate than redenominating the currency or issuing coins at all - that's why in all the extreme cases of hyperinflation I can think of, it's banknotes that bear witness to the number of zeroes, not coins. This is true of Germany in 1923, Hungary in 1946, Yugoslavia in the 1990s and Zimbabwe in the 2000s. If the hyperinflation is over, then the government redenominates quickly - as again in the abovementioned countries - and if it issues coins at all, does so in the new, confidence-inducing low denominations.

Turkey is a bit of an exception. I don't think it ever suffered what we would term hyperinflation, just a prolonged period of fairly serious normal inflation. Perhaps there were political reasons for not redenominating earlier.

[<k>]

Thank you for a very logical answer. It makes perfect sense.

My other question is which countries have high denominations of coins these days, in the sense of 200 or 500 units or higher? I am not knowledgeable enough on such matters, but I think our forum member Pabitra might be able to answer that.

[quaziright]

Iran and Vietnam come to mind with coin denominations of 5000 rial/dong. Pakistan issued a 550 rupee coin which can be had at face value over there. Japan and Korea have 500 Yen/Won coins

[<k>]

Thank you for those. 550 rupees - an unusual denomination.

[quaziright]

Thank you for those. 550 rupees - an unusual denomination.

It is a commemorative coin. However I only see it for $16 on eBay. But it was certainly issued for face value

[Pabitra]

I am not knowledgeable enough on such matters, but I think our forum member Pabitra might be able to answer that.

Yes, this is my area of work.
500 unit coins are rather common but they certainly do not always indicate need for remonetisation. As a master of fact, as pointed out by Quaziright, Japan and South Korea, despite being low inflation economies, have 500 unit coins due to historic reasons.
Apart from Paraguay already referred above, Colombia and Indonesia have 1000 unit coins.

[Pabitra]

Then we have 5000 unit coins in Iran and Vietnam.
Incidentally, during my 1 week stay in Vietnam in Dec 2018, I never found even a single coin in circulation.
My planned visit to Iran in May 2020 was cancelled due to lockdown but Iran has already announced remonetisation.

[Pabitra]

For many years Turkey had such high inflation that it issued coins in denominations of thousands of lira. A thousand lira was denominated as 'BIN LIRA' on the Turkish coins. By 2002 the highest denomination of coin was 250 'bin lira': 250 000 lira.

In countries, which have their own mint, high inflation results in either shifting of coin note boundary repeatedly upwards or rapid remonetisation.
In case of Turkey, it was shift of boundary.
250 bin Lira was succeeded by date wise minting of million lira bae metal coins, before remonetisation

[Pabitra]

Unlike Zimbabwe, as indicated by Fosseway, the hyperinflation resulted in closure of Harare mint and nation depended solely on issue of ever higher denomination of paper money, Turkey kept the inflation under control and the coin note boundary jumped rather slowly. The issue of base metal lira coins, in step or multiple of 10 times the previous high was
10 Lira -1981
100 Lira -1984
1000 Lira -1986
10 Bin Lira ( 10 Thousand Lira ) - 1994
100 Bin Lira - 1999
1000 Bin or Million Lira -2002
Remonetisation -2005

[Pabitra]

On the other hand, Brazil adopted regular remonetisation policy

1967 - Novo Cruzeiro = 1000 Cruzeiro
1986 - Cruzado = 1000 Novo Cruzeiro
1989 - Novo Cruzado = 1000 Cruzado
1990 - Cruzeiro = Novo Cruzado
1993 - Cruzeiro Real = 1000 Cruzeiro
1994 - Real = 2750 Cruzeiro Real

If one computes the actual inflation rate, Brazil had a higher rate of inflation than Turkey.

Countries avoid remonetisation because of associated printing and computational problems and present trend is for the population to adopt to US Dollar. My one week stay in Cambodia in December 2017, I did not come across any coin and all shopkeepers and auto rickshaw drivers quoted all prices and fares in US Dollars.

[Pabitra]

Pakistan issued a 550 rupee coin which can be had at face value over there.

This is a base metal coin which was to be 50 Rupees denomination but changed to 550 Rupees, to take commercial advantage of expected high demand due to Kartarpur Corridor.
See

https://en.m.wikipedia.org/wiki/Kartarpur_Corridor

And religious motive associated with the event

https://www.sikh24.com/2019/04/20/550th-birthday-celebrations-pakistan-all-set-to-launch-special-commemorative-coin-and-postal-ticket

Such denominations are normal in collector coins in India where the denomination matches the anniversary being commemorated. A 550 Rupees coin was also issued by India.

Other odd denominations have been 60, 75, 125, 350 etc

Mints do produce odd denomination collector coins in Europe too,  like 2,5 Euro in Portugal, 3 Euro etc