Iraqi Dinar: The Once and Future Currency of Iraq
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Iraqi Money
The official currency of Iraq is the dinar. It has been in circulation since 1931 although has gone through major changes since then. It is commonly known as the IQD.
History of the Iraqi Dinar
Before the Iraqi dinar was in use, Iraq used the Indian rupee.
From 1931 to 1959, the Iraqi dinar was used, as was pegged to the British pound. Then, in 1959, it was pegged to the US dollar so that one dinar equaled 2.8 dollars.
Iraqi Money
The official currency of Iraq is the dinar. It has been in circulation since 1931 although has gone through major changes since then. It is commonly known as the IQD.
History of the Iraqi Dinar
Before the Iraqi dinar was in use, Iraq used the Indian rupee.
From 1931 to 1959, the Iraqi dinar was used, as was pegged to the British pound. Then, in 1959, it was pegged to the US dollar so that one dinar equaled 2.8 dollars.
In 1971 and 1973, however, the US dollar was devaluated, and the dinar subsequently rose to a value of 1 to 3.3778. A 5% devaluation was then introduced, bringing the dinar down to $3.2169. This rate was held until the Gulf War began in 1991.
New notes were issued between 15 October 2003 and 15 January 2004 without Saddam Hussein’s image on them. These notes had up-to-date anti-counterfeit measures and features, unlike the previous series. The new bills come in denominations of 50, 250, 1000, 5000, 10,000 and 25,000.
Investing in the Iraqi Dinar
After the fall of Saddam Hussein many people felt that they could invest in the dinar and expect to make a lot of money after the country was stable again, expecting the currency to strengthen.
Presidential Order 13303 permits US citizens to invest in the dinar, or buy the dinar, and many did so. The thought was that Iraq’s potential in the oil and gas industries would produce profits. So far, these investors have not seen exactly what they expected, but that does not mean it will not happen.
Investing in the dinar is usually done by the million. It can cost anywhere from USD $680 to $1,200 for a million dinar. The variance can be due to profits included, insurance, shipping costs, or other fees.
If you are interested in investing in dinar it is wise to do extensive research beforehand, as well as verify that the party you are dealing with is scrupulous. Do not correspond with ‘banks’ that use Hotmail or Yahoo! email addresses.
There are dozens, or even hundreds, of sites promising profits from investment in the Iraqi dinar, but many consider it a high-risk activity.
Fast Facts
Below are some facts about the Iraqi dinar in relation to the nation’s growing economy:
- Inflation rate (2008): 6.8%
- Central bank discount rate: 2.8%
- Commercial bank prime lending rate: 19.74%
- 3Stock of money: $18.81 billion
- Reserves of foreign exchange and gold: $46.8 billion (end-Dec. 2008)
- Exchange rates to the US dollar: 1,176 (2008), 1,255 (2007), 1,466 (2006), 1,475 (2005), 1,890 (second half of 2003)
The Central Bank of Iraq
Like all central banks, the Central Bank of Iraq (CBI) has the task of maintaining financial stability by adjusting monetary policy to prevent excessive inflation or deflation, and to ensure the free-flow of lending via appropriate interest rates. The CBI also issues and manages the national currency, the Iraqi dinar.
The CBI has had success in preventing excessive inflation in the dinar against the USD via its monetary policy.
You can read more about the CBI’s monetary policy on their website, which is intermittenly available. Info about its reserve requirements, monetary policy instruments, and banking facility is available.
