Thinking of Investing in Dinar?

Investors across the country have chosen to put money into the iraqi dinar, hoping that the Iraqi dinar exchange rate would rise from it’s all time low of 1260 dinar to the U.S. dollar reached last year. Since the last U.S. troops in Iraq withdrew in December 2011, ending almost nine years of war, they have waited with bated breath to see if the dinar trade value would rise, rendering their investments profitable. At the time this article was written, nearly two full years after the last troops left Iraq, the Iraqi dinar exchange rate had risen to 1,162.60 IQD per 1 USD. This article will trace the history of the Iraqi dinar from its introduction in 1932 until today.

The Dinar is Born

The dinar, introduced into circulation in 1932, replaced the Indian rupee at a rate of one dinar to 11 rupees. The rupee had been the official currency since the British occupation of India in World War I. When the dinar first entered circulation, the Iraqi dinar exchange rate was equal to that of the British pound until 1959 when the peg was switched to the U.S. dollar. At that time, the Iraqi dinar exchange rate was 1 IQD to 2.8 USD. Because it didn’t follow the devaluations of U.S. currency in 1971 and 1973, the Iraqi dinar exchange rate rose to 1 IQD per 3.3778 USD until a five percent devaluation brought it to a value of US$3.2169. That rate remained until the Gulf War, except for a 1989 change in the black market rate, which was reported to be fiver or six times higher than the official Iraqi dinar exchange rate.

After the Gulf War

The dinar had been printed by the Swiss until the Gulf War ended in 1991. Though the previous issue, known as the Swiss dinar, remained in circulation in the Kurdish region of Iraq, the new currency spread throughout most of Iraq. It was printed both locally and in China on poor grade wood pulp paper instead of on cotton or linen and using inferior lithography like newspaper presses. The Iraqi dinar exchange rate plummeted, reaching 3000 IQD per 1 USD in late 1995. Following the war, 50 and 100 dinar banknotes were introduced. Later, in 1995, 250 dinar notes were issued as well. Notes issued between 1990 and October 2003 were marked with an engraving of former President Sadaam Hussein.

The War in Iraq

After Saddam Hussein’s deposition in the 2003 invasion, more Saddam dinar notes were printed as a stopgap measure to maintain the money supply until new currency could be introduced. De La Rue printed new dinar coins and notes using modern security features including, ultraviolet writing, a watermark, security threads, and color changing images.
In 2004, dinar coins were reintroduced in denominations of 25, 50, and 100 dinar, but proved unpopular and were withdrawn from circulation. The new banknotes introduced in 2003 came in denominations of 50, 250, 1000, 5000, 10000, and 25000 dinar. In 2004, a 500 dinar note was also issued.

Speculation

The Iraqi dinar exchange rate certainly has seen its ups and downs in the last eighty years, but it is difficult to say whether revaluation is imminent. There are skeptics and optimists, each claiming very different expectations for the market. It will be interesting to see whether investments in the dinar prove profitable or disappointing.