The Dinar (Arabic pronunciation: [di:'n?:r]) (Arabic: ?????, [(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.
History
The Dinar was introduced into circulation in 1932, by 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 = 11 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.
After the Gulf War in 1991, due to UN sanctions, the previously used Swiss printing method was no longer available. New, inferior quality notes issue were produced. The previous issue became known as the Swiss dinar and continued to circulate in the Kurdish region of Iraq. Due to sanctions placed on Iraq by the United States and the international community along with excessive government printing, the new dinar notes devalued quickly. By 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". 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.
Since Iraq has few exports other than oil, which is sold in dollars, there is little demand for Dinars and they remain in "exotic" status. However the new currency has sparked a multi-million dollar industry in selling dinars to speculators. These so-called "money service" companies will sell Dinar to speculators at an inflated price and push the idea that the dinar will "RV" or be revalued to greatly increase the exchange rate against the dollar. The Dinar is currently pegged to the dollar at a rate of 1166/1164 (sell/buy) dinars per dollar as can be seen on the Central Bank Of Iraq's home page. The exchange rate reportedly available on the streets of Iraq is around 1,200 dinars per U.S. dollar.
There is considerable confusion (perhaps intentional on the part of Dinar sellers) around the role of the International Monetary Fund in Iraq. The IMF as part of the rebuilding of Iraq is monitoring their finances and for this purpose uses a single rate (not a sell/buy) of 1170 dinars per dollar. This "program rate" is used for calculations in the IMF monitoring program and is not a rate imposed on Iraq by the IMF. For a wider history surrounding currency in the region, see 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.
In response to the growing concerns with fraud and scams related to investment in the Iraqi Dinar, State agencies such as Washington state, Utah, Oklahoma, Alabama and others have issued statements and releases warning potential investors. Further alerts have been issued by news agencies.
The Better Business Bureau has included Dinar Investments in its list of top 10 scams. There has also been a book written on the subject.
These alerts warn potential investors that there is no place outside of Iraq to exchange their Dinar, that they are typically sold by dealers at inflated prices and that there is little to substantiate the claims of significant appreciation of their investment due to revaluation of the currency.
Coins
Coins were introduced in 1931 and 1932 in denominations of 1, 2, 4, 10, 20, 50 and 200 fils. The 200 fils coin is also 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-dinar coins were introduced. However, these coins proved to be unpopular and were withdrawn from circulation.
Banknotes
In 1931, banknotes were issued by the government in denominations of ¼, ½, 1, 5, 10 and 100 dinar. The notes were printed in the United Kingdom by Bradbury, Wilkinson & Co. From 1931 to 1947, the banknotes were issued by the Iraqi currency board for the government of Iraq and banknotes were convertible into pound sterling. From 1947, the banknotes were issued by the National Bank of Iraq, then after 1954 by the Central Bank of Iraq.
100 dinars notes ceased production in the 1940s, however, the same denominations were used until 1978, when 25 dinars notes were introduced. In 1991, 50 dinars were introduced and 100 dinars reintroduced, followed in 1995 by 250 dinar notes and 10,000 dinars notes in 2002.
Banknotes that were issued between 1990 and October 2003, along with a 25-dinars note issued in 1986, bear an idealized engraving of former Iraqi President Saddam Hussein. Following the 1991 Gulf War, Iraq's currency was printed both locally and in China, using poor grade wood pulp paper (rather than cotton or linen) and inferior quality lithography (some notes were reputedly printed on presses designed for printing newspapers).
Counterfeit banknotes often appeared to be of better quality than real notes. Despite the collapse in the value of the Iraqi dinar, the highest denomination printed until 2002 was 250 dinars. In 2002, the Central Bank of Iraq issued a 10,000-dinars banknote to be used for "larger, and inter-bank transactions". This note was rarely accepted in practice due to fears of looting and counterfeiting. This forced people to carry around stacks of 250-dinars notes for everyday use. The other, smaller bills were so worthless that they largely fell into disuse. This situation meant that Iraq, for the most part, had only one denomination of banknote in wide circulation.
Currency printed before the Gulf War was often called the Swiss dinar. It got its name from the Swiss printing technology that produced banknotes of a considerably higher quality than those later produced under the economic sanctions that were imposed after the first Gulf War. After a change-over period, this currency was disendorsed by the Iraqi government. However, this old currency still circulated in the Kurdish regions of Iraq until it was replaced with the new dinar after the second Gulf War. During this time the Swiss dinar retained its value, whilst the new currency consistently lost value at sometimes 30 percent per annum.
In 2003, new banknotes were issued consisting of six denominations: 50, 250, 1,000, 5,000, 10,000, and 25,000 dinars. The notes were similar in design to notes issued by the Central Bank of Iraq in the 1970s and 1980s. A 500 dinars note was issued a year later, in October 2004. In the Kurdish regions of Iraq, the 50 Dinar note is not in circulation.
In March 2014, the Central Bank of Iraq began replacing banknotes with anti-counterfeiting enhanced versions that include SPARK optical security features, scanner readable guarantee threads in addition to braille embossing to assist vision-impaired persons.
In February 2015, the Central Bank of Iraq announced in Arabic on their website the removal of the 50 denomination notes from circulation on April 30, 2015. Citizens holding these banknotes were immediately advised to redeem them at their nearest bank for the 250 and higher denomination dinar notes at a one-to-one rate at no charge.
Swiss Dinar Series (1978-1990)
1990-2003 Series
2003-present
Exchange rate
See also
- British currency in the Middle East
- Central Bank of Iraq
- Economy of Iraq
- Iraqi Swiss dinar
- Kuwaiti dinar
References
External links
- Central Bank of Iraq Homepage
- Council on Foreign Relations: benefits of the new Iraqi dinar
- Iraqi Dinar Scam - Washington State Department of Financial Institutions warning
- Iraqi Dinar Scams - Oklahoma Securities Commission warns residents
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