Replies to post #20562 on Iraqi Dinar Discussion Board (IQD)

[Aerospace]

There are different types of pegs. There are Hard pegs (fixed), Dirty pegs, Floating pegs.
The dinar is not truly pegged… a peg would mean they would announce a rate, or a rate range, and it will remain at that rate or in the pre-set range.
The dinar technically is on a “managed float”. The CBI controls the value.
A true float the value is controlled by the free market.
The thing is… the CBI is managing it as a peg. The proof is the last 9 months. The $ has crumbled… but the dinar has maintained the same value against the $. The dinar has lost ground against other currencies. It’s acting as if it’s pegged.
The reason for this… Iraqs currency is backed by foreign currency reserves. Probably 99% of those reserves are dollars. That’s what they sell oil for, so that’s what they have. They could convert those dollars to Euros if they want, but they are not as of yet.
So as the value of the dollar sinks, the value of the reserves which back the dinar sink, so the dollar and dinar stay relatively the same.