Currency of Iraq: Iraqi Dinar (IQD)
The Iraqi Dinar is the official currency of the Republic of Iraq, abbreviated as IQD. It is divided into smaller units called fils, although fils are rarely used today due to inflation. The Iraqi Dinar has undergone many changes and fluctuations in value, especially due to political instability, wars, and economic challenges.
1. History and Origin
The history of the Iraqi currency dates back to 1932, when the Indian rupee, which was in circulation at the time, was replaced by the Iraqi Dinar. This was based on the British monetary system.
Initially, the Iraqi Dinar was pegged to the British pound, with 1 Dinar = 1 British pound.
Over the decades, the Iraqi Dinar has undergone several changes, including after major wars and economic sanctions that affected its value.
2. Reforms and Changes
After the invasion of Iraq in 2003, the US-led administration issued a new series of banknotes, replacing the old currency that bore the image of Saddam Hussein. These new banknotes were introduced to stabilize the Iraqi economy after the invasion.
Post-2003 currency: The new banknotes had modern designs and included different denominations to improve the Iraqi economy after years of war and sanctions.
3. Currency units
The Iraqi dinar is divided into:
1 dinar = 1000 fils.
However, due to inflation, the use of fils has become rare, and only dinar notes are used primarily in circulation.
4. Currency denominations
The current Iraqi currency includes the following banknotes:
500 dinars
1000 dinars
5000 dinars
10000 dinars
25000 dinars
50000 dinars
In addition, coins are available in denominations of 1 dinar, 5 dinars, 10 dinars and 25 dinars, although coins are rarely used in daily transactions.
5. Inflation and Currency Fluctuations
Iraq has experienced high inflation at various points due to political and economic instability:
After 2003: After the 2003 invasion, the currency experienced significant fluctuations due to instability in the country. Efforts have been made to stabilize the Iraqi dinar through monetary policies and control inflation.
The value of the Iraqi dinar has been affected by factors such as wars, sanctions, political unrest, and changes in oil prices (since Iraq’s economy is heavily dependent on oil exports).
6. Exchange Rate
The exchange rate of the Iraqi dinar against foreign currencies, especially the US dollar and the euro, has experienced significant fluctuations. The Central Bank of Iraq sets the official exchange rate, but there is often a discrepancy between the official rate and prices on the black market.
As of November 2024, one US dollar is approximately equal to 1,300 Iraqi dinars. However, the exchange rate may vary depending on local market conditions.
7. Central Bank of Iraq
The Central Bank of Iraq is responsible for issuing currency and regulating monetary policy in the country. The bank aims to maintain the stability of the Iraqi dinar by controlling inflation and managing foreign exchange reserves. The Central Bank plays a crucial role in economic stability and financial governance.
8. Economic Challenges
The Iraqi economy faces several challenges that affect the value of the Iraqi dinar, including:
Political instability.
Reliance on oil as a primary source of revenue.
Corruption within governments and financial institutions.
A large informal economy that often impacts official financial reporting.
9. Cryptocurrencies and Iraq
With the rise of cryptocurrencies such as Bitcoin, some individuals in Iraq have begun using these digital currencies for online transactions. However, the Iraqi dinar remains the official and dominant currency within the country.
10. Outlook
Iraq aims to stabilize the value of the Iraqi dinar by:
Diversifying the economy away from heavy reliance on oil.
Improving the banking system and financial infrastructure.
Controlling inflation and stabilizing prices.
Despite the challenges facing Iraq, the Iraqi dinar remains a vital part of the country’s financial system, and the government continues to make efforts to enhance its stability amid ongoing economic and political challenges.
