Iraq’s Dinar, Social and Economic – Investors Group

[WayneC777]

Iraqi dinar - From Wikipedia, the free encyclopedia
The dinar (pronounced: di-'när) (Arabic: ?????, Kurdish: ?????) (sign: ?.?; code: IQD) is the currency of Iraq. It is issued by the Central Bank of Iraq and is subdivided into 1,000 fils (???), although inflation has rendered the fils obsolete.

The dinar was introduced into circulation in 1923, replacing the Indian rupee, which had been the official currency since the British occupation of the country in World War I, at a rate of 1 dinar = 13? rupees. The dinar was pegged at par with the British pound until 1959 when, without changing its value, the peg was switched to the United States dollar at the rate of 1 dinar = 2.8 dollars. By not following the devaluations of the U.S. currency in 1971 and 1973, the dinar rose to a value of US$3.3778, before a 5 percent devaluation reduced the value of the dinar to US$3.2169, a rate which remained until the Gulf War, although in late 1989, the black market rate was reported at five to six times higher (3 dinars for US$1) than the official rate.[2]

After the Gulf War in 1991, and due to the economic blockade, the previously used Swiss printing technology was no longer available. A new, inferior quality notes issue was produced. The previous issue became known as the Swiss dinar and continued to circulate in the Kurdish region of Iraq. Due to excessive government printing of the new notes issue, the dinar devalued quickly, and in late 1995, US$1 was valued at 3,000 dinars.

Following the deposition of Saddam Hussein in the 2003 invasion of Iraq, the Iraqi Governing Council and the Office for Reconstruction and Humanitarian Assistance began printing more Saddam dinar notes as a stopgap measure to maintain the money supply until new currency could be introduced.

Between October 15, 2003 and January 15, 2004, the Coalition Provisional Authority issued new Iraqi dinar coins and notes, with the notes printed by De La Rue using modern anti-forgery techniques, to "create a single unified currency that is used throughout all of Iraq and will also make money more convenient to use in people’s everyday lives."[3] Old banknotes were exchanged for new at a one-to-one rate, except for the Swiss dinars, which were exchanged at a rate of 150 new dinars for one Swiss dinar.

These new banknotes led to a new industry of selling the new Iraqi dinar to oversea investors who hoped to profit from Iraq's new currency when the economy improved. The provisional government of Iraq has made this legal, but the banknotes are exchanged at different rates by companies wanting to make profit. Due to the success of this program, though, Iraqi dinar has been widely counterfited.

Although the value of the dinar appreciated following the introduction of the new banknotes from 4,000 dinars per U.S. dollar, at the time of their introduction, to a high of 980 dinars per dollar, it is now held at a "program" exchange rate, as specified by the International Monetary Fund,[citation needed] of 1170 dinars per US dollar at the Central Bank of Iraq. However, there is not yet a set international exchange rate and so international banks do not yet exchange Iraqi dinar. The exchange rate available on the streets of Iraq is around 1200 dinars per US dollar.

For a wider history surrounding currency in the region, see The History of British Currency in the Middle East.

Speculation
On May 3, 2007, the IMF released a statement in relation to the international compact with Iraq, which has turned the tide in regards to speculation on the Iraq dinar. The contents of the article discuss changes made in Iraq on the economic front of how the Iraq government had eliminated fuel subsidies. The article also stated that the Central Bank of Iraq had raised interest rates in an attempt to allow a gradual appreciation of the dinar in an attempt to fight dollarization of the Iraq economy. Although there are claims of widespread optimism of some language used later in the press release among some dinar speculators, there have been no publicly released statements or analysis by any news sources or governments.[4]

Coins
Coins were introduced in 1931 and 1932 in denominations of 1, 2, 4, 10, 20, 50 and 200 fils, with the 200 fils known as a rial. The 20, 50 and 200 fils were minted in silver. In 1953, silver 100 fils coins were introduced.

Following the establishment of the Iraqi Republic, a new series of coins was introduced in denominations of 1, 5, 10, 25, 50 and 100 fils, with the 25, 50 and 100 fils in silver until 1969. In 1970, 250 fils pieces were introduced, followed by 500 fils and 1 dinar coins in 1982. Coin production ceased after 1990.

In 2004, new 25, 50, and 100 dinars coins were introduced. However, these coins proved to be unpopular & were withdrawn from circulation.
http://en.wikipedia.org/wiki/Iraqi_dinar