The currency marked as “IQD” or better known as the Iraqi dinar has always been interesting for both currency collectors as well as investors. Some find it fascinating because of its history, while others find it a brilliant collector’s piece due to the depictions on the Iraqi dinar.
The Iraqi dinar is also a pretty popular currency when it comes to investing and the foreign currency market, otherwise known as forex. Forex is the largest market in the world. Even huge financial institutions and global corporations use foreign exchange markets in order to curb currency risks.
However, we are not here to talk about the basics of foreign currency markets. We are here to uncover the infatuation with the Iraqi dinar. Let’s explore the history, as well as the current situation with the Iraqi dinar. We will uncover Iraqi dinar information that will definitely be of great value to you. So let’s start where all great stories start - the beginning.
Significance and History of the Iraqi Dinar
The Iraqi dinar, as you can assume, is the currency that is being used in Iraq. It was first established as Iraq’s currency back in 1932. The currency that the people of Iraqi were using before 1932 was the Indian rupee. Because the Indian rupee was tied to the British pound, the Iraqi dinar remained tied to it as well. That is, until 1959.
The Swiss dinar vs. The Saddam dinar
After the year 1959., the Iraqi dinar was tied to the U.S. dollar. Initially, it was printed using, what was called, the Swiss printing method. Nobody knows why it was called the Swiss method, since the notes were printing in the United Kingdom - not in Switzerland. These notes were known for their good quality. These were known as the Swiss dinar.
However, after the Gulf war, Iraq was hit by sanctions from the UN. This meant that Iraq could not continue using the Swiss printing method, which prompted the printing of banks notes that were lower in quality. These notes were known as the Saddam dinar. However, the Iraqi government was facing inflation and heavily overprinted the new Iraqi dinar.
The Swiss dinar banknotes were still being used in the Kurdish region of Iraq without much bother since that part of Iraq was politically isolated. This way, people living in the Kurdish region of Iraq evaded inflation altogether; while the rest of Iraq was suffering the consequences of heavy inflation.
Sadly, depreciation of the currency, as well as inflation, are something that the Iraqi dinar still faces even today. Another issue that the Iraqi dinar was facing was counterfeit bills. The Central Bank of Iraq upped their game when it comes to anti-counterfeit measures, replacing their bills with banknotes that have optical security features.
The Iraqi Dinar in the Recent Years
Iraq’s government has been working for years to find a way to deal with the inflation and fluctuation of the Iraqi dinar. In 2015., the Central Bank of Iraq introduced the 50,000 dinar banknote. Up until that point, the largest banknotes were ones of 10,000 and 25,000. This was a necessary step for the Central Bank of Iraq, as well as the people of Iraq.
Oil and the Iraqi dinar
Due to the country’s heavy reliance on oil, which is mostly sold to American markets, oil revenue is of great importance for Iraq. In 2020., the whole world went into lockdown, causing a massive change in how we live our day-to-day lives. However, something also changed for the Iraqi government - the price of oil.
The prices of oil started heavily declining. The oil demand went drastically down, and as a consequence of the panic that was occurring on a global scale, as well as travel bans and restrictions, oil ended up being trapped or stranded without any ability to transport or sell it. This severely impacted Iraq since about 90% of its budget comes from oil revenue.
Now, what does that mean for the Iraqi dinar? For the people who are using the Iraqi dinar daily, this meant a lot more than for serious investors and collectors. The demand and interest in the Iraqi dinar is still there. The only thing that actually changed is the fact that Iraq’s government is more actively working on revaluating the Iraqi dinar.
Fixed Exchange Rate
Since the Iraqi dinar is tied to the American dollar, the Iraqi government has worked out a plan to get to the point of a fixed exchange rate. This has been in the works ever since the end of 2020. At the end of August in 2021., Ali Allawi, who is the Deputy Prime Minister and Finance Minister as of May 2020, has stated that he supports a “floating exchange rate” for the currency. This fixed rate will remain until 2025.
This means that the Central Bank of Iraq will intervene when needed in order to keep the dinar at a certain price range. In an official statement, he states that this move from the Iraqi government will lead to a better economic situation. The country is in desperate need of a more stable financial balance and doing all that it can to achieve it.
Native Iraqi people have voiced some disagreement with this decision, fearing the worst, since the financial situation is changing on a global scale. However, poverty indicators for Iraq have risen significantly in the past two decades, meaning that something has to be done to ensure the future of the country, the people, and the Iraqi currency.
The Future of the Iraqi Dinar
The world is incredibly unpredictable and chaotic, however, most people have an optimistic stance in regards to the Iraqi dinar and its future. Even though the future of any currency is unforeseeable, people’s interest in the Iraqi dinar hasn’t changed that much. Some will say that now is the ideal time to buy it due to the newly implemented fixed exchange rate.
Others are either holding the currency, while silently buying more, as others wait for more confirmation in order to purchase it. Many financial experts have given their opinions when it comes to the Iraqi dinar, predicting that the worth of the currency will likely rise. Growth is happening. It might be slow, but it’s there.
No matter if you are an investor, currency trader, or simply a collector - the Iraqi dinar is a turbulent currency worth looking into. When buying, one of the most important things is that you make sure that you are buying authentic Iraqi dinars. Stay safe from scams by only buying from reputable sources, places, or companies.
