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History of the Iraqi Dinar

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1 History of the Iraqi Dinar on Thu May 13, 2010 8:10 pm

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1932: Currency unit consisting of 1,000 lils or 20 dirhams. When officially introduced at the end of the British mandate the dinar was equal to, and was linked to, the British pound sterling, which at that time was equal to US$4.8S.

1932-1949: Iraqi dinar (ID} equaled US$4.86

1949-1971: Iraqi dinar (ID} equaled US$4.86 between 1932 and 1949 and after
devaluation in 1949, equaled US$2.80 between 1949 and 1971.

1959-1967: lraq officially uncoupled the dinar from the pound sterling as a gesture of independence in 1959, but the dinar remained at parity with the pound until the British unit of currency was again devalued in 1967.

1971: One Iraqi dinar remained equal to US$2.80 until December 1971, when major realignments of world Currencies began.

1973: Upon the devaluation of the United States dollar in 1973, the Iraqi dinar appreciated to US$3.39.

1980: It remained at this level until the outbreak of the lran-lraq War in 1980.

1982: In 1982 lraq devalued the dinar by 5 percent, to a value equal to US$3.22, and sustained this official exchange rate without additional devaluation despite mounting debt.

1988: In early 1988, the official dinar-dollar exchange rate was still lD1 to US$3.22; however, with estimates of the nation's inflation rate ranging from 25 percent to 50 percent per year in 1985 and 1986, the dinar's real transaction value, or black market exchange rate, was far lower-only about half the 1986 official rate.

1986-2003: between .33 cents to 1.32 to a dollar.

2001: Oil-production: 2.452 million bbl/day (2001 note - production was disrupted as a result of the March-April 2003 war (2001 est.)

2002 GDP: purchasing power parity - $58 billion (2002 est.}
2002 Exports-partners: US 40.9%, Canada 8.2%, France 8.2%, Jordan 7.5%, Netherlands 6.4%, ltaly 5.4%,Morocco 4.7%, Spain 4.4% (2002)

2003: In October 2003, the official dinar-dollar exchange rate was lD1 to US$0.00027.

2004-2005: August 2004 till 2005, the official dinar-dollar exchange rate is ID1 to US$0.00068. Population: 25,374,691 (July 2004 est.)

Positive Changes in lraq - Upon Saddam Hussein's deposition in 2003, lraq has undergone political and economic changes. Many believe that the re-building of lraq's infrastructure will stabilize lraq socially, politically, and economically. With the new government establishing a new monetary system that encourages foreign investment, and the central bank of lraq awarding foreign licenses,
many also believe that the value of the new lraqi dinar banknote is poised to escalate.

More Treasury Bills on the Way - The government of lraq will issue more Treasury bills to the secondary market. For the first time in years, the central bank auctioned Treasury bills in July. Thus far, local banks have bought 900 billion lraqi dinars ($628 million) worth of three-month bills with coupons ranging between 2.5 percent and 6.8 percent. To improve lraq's local currency, the dinar against the dollar, lraq's central bank also plans to build up its foreign-currency reserves. Creating viable domestic capital markets will start the process of trimming the massive pre-war debt. lraq's path to debt reduction along with the generosity of the Paris Club by forgiving 80% of lraq's debt is good news for the lraqi economy. lraq's growth-oriented policy, along with lraq's prospects of economic stability makes investing in the dinar potentially lucrative.

The Central Bank of lraq - For the first time in decades, the central bank of lraq awarded foreign bank licenses to the following banks: HSBC, Standard Chartered, National Bank of Kuwait, lranian National Bank, Commercial Housing bank, and Bahraini Arab Banking Institute. The Bahraini Arab Banking Institute is listed on the Bahrain, Kuwait, and Paris stock exchanges, and its major shareholders include the Kuwait Investment Authority, the central bank of Libya, and the Abu Dhabi Investment Authority. Granting foreign licenses and liberalizing interest rates will create a vibrant free-market economy. lraq's re-invigorated banking policies will positively affect the value of the dinar in the near future.

The Potential of the Dinar - Prior to United Nations sanctions, the Iraqi dinar traded at 3.35 per U.S. dollar, and prior to the war in lraq, the Iraqi dinar traded at .33 U.S. Dollars. During major combat operations, the Iraqi dinar declined to an all time low. However, after major combat operations, the value of the dinar increased 25%. Countries such as Germany (post WVVII) and Kuwait (post Iraqi
invasion} experienced a similar devaluation of their currency, but both countries recovered.Today, the dinar has increased from 3,500 against the dollar during the U.S. led invasion last year to 1,400 against the U.S. dollar. Imagine the growth potential of the Iraqi dinar once lraq recovers and begins to enjoy the potential revenue of a country rich in oil and other natural resources.

The New Iraqi Dinar Banknote - Today, De La Rue, the world`s largest commercial security printer and papermaker based in Great Britain, prints the new Iraqi dinar banknote. The new Iraqi dinar banknote has various security features making the dinar very difficult to counterfeit, and the dinar banknote is now available in 50, 250, 1000, 5000, 10000, and 25000 bills. With the re-building of lraq's infrastructure and with the prospect of stability at hand, the Iraqi dinar is quickly becoming a very attractive investment opportunity.


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