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Using kitchen shears to remove the stems from the chilies, and cut the chilies in half from stem to blossom end. Cover the chilies with boiling water and let them soak for one hour.
Using tongs or a slotted spoon, remove the chilies from the water and place them in a medium saucepan with the remaining ingredients. Reserve the chili water in the mixing bowl.
Bring the mixture in the saucepan to a simmer over medium-low heat. Reduce heat to low and lightly simmer for about 90 minutes, stirring occasionally. Remove from heat.
Pour the mixture into a blender, and puree until smooth, adding reserve chili water as needed.
The sauce will thicken considerably as it cools. Add more chili water to achieve the desired consistency.