Iraqi dinar
The Iraqi dinar 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 since 1990.
History
The dinar was introduced into circulation in 1932, 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 = 2.80 dollars. By not following the devaluations of the US 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 than the official rate.After the Gulf War in 1991, due to UN sanctions, the previously used Swiss printing method was no longer available so new, inferior quality, notes were produced. The previously produced notes 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 in the black market.
Recent developments
After Saddam Hussein was deposed 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 15 October 2003 and 15 January 2004, the Coalition Provisional Authority issued new Iraqi dinar coins and notes, with the notes printed by the British security printing firm 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". Multiple trillions of dinars were then shipped to Iraq and secured in the CBI for distribution to the population in exchange for the 'Saddam dinar'. 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.
There is considerable confusion 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 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.
Use in speculation and fraud since the Iraq war (2003–present)
Since Iraq has few exports other than oil, which is sold in dollars, there is little international demand for dinars, resulting in an extremely high exchange rate compared with other currencies: on 2 March 2019, the Central Bank's indicative exchange rate was 1,190 dinars for one dollar, or 1,355 dinars for one euro.However, the downfall of Saddam Hussein resulted in the development of a multi-million-dollar industry involving the sale of dinars to speculators. Such exchange services and companies sell dinars at an inflated price, pushing the idea that the dinar would sharply increase in value to a profitable exchange rate some time in the future, instead of being redenominated. This activity can be either a legitimate service to currency speculators, or foreign exchange fraud: at least one major such currency exchange provider was convicted of fraud involving the dinar. This trade revived after the election of Donald Trump in November 2016, with many buyers believing that Trump would cause the value of the dinar to increase sharply.
In 2014, Keith Woodwell and Mike Rothschild stated that the speculation over the Iraqi dinar originated from a misunderstanding of why the value of the Kuwaiti dinar recovered after the First Gulf War, leading to an assumption that the Iraqi dinar would follow suit after the fall of Saddam: Woodwell and Rothschild noted substantial differences in economic and political stability between Iraq and Kuwait, with Iraq facing pervasive sectarian violence amid near-total reliance on oil exports.
In response to the growing concerns about fraud and scams related to investment in the Iraqi dinar, State agencies such as Washington State, Utah, Oklahoma, Alabama and others issued statements and releases warning potential investors. Further alerts were issued by news agencies.
These alerts usually warn potential investors that there is no place outside Iraq to exchange the dinar, that they are typically sold by dealers at inflated prices, and that there is little evidence to substantiate the claims of significant appreciation of their investment due to revaluation of the currency.
In February 2014, the Better Business Bureau included investing in the dinar as one of the ten most notable scams in 2013. There has also been a book written on the subject.
Coins
Coins were introduced in 1931 and 1932 in denominations of round 1, and 2 fils in bronze, and scalloped 4, and 10, fils in nickel. 20, 50, and 200 fils were 50% silver. The 200 fils coin is also known as a rial. Bronze substituted nickel in the 5 and 10 fils from 1938 to 1943 during the World War II period and reverted to nickel in 1953. Silver 100 fils coins were also introduced in 1953. These coins first depicted King Faisal I from 1931 to 1933, King Ghazi from 1938, and King Faisal II from 1943 until the end of the kingdom.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 this series an allegorical sun replaced the image of the king, shapes and sizes remained the same with the exception of the 1 fil which was decagon shaped. This image was then replaced by three palms in 1968. In 1970, 250 fils pieces were introduced, followed by 500 fils and 1 dinar coins in 1982. A number of the coins for 1982 were a commemorative series celebrating Babylonian achievements. During this period, many of the coins were identified by their shape due to being made of similar composition metals, as from 1980 onward 250 fils were octagonal, 500 fils square, and 1 dinar decagon shaped. Coin production ceased after 1990 due to the emergency conditions generated by the Gulf War and international sanctions.
In 2004, a new series of coins were issued in denominations of 25, 50 and 100 dinars and were struck in bronze, brass, and nickel-plated steel respectively. They are sparse in design and depict an abstract map of Iraq and the main rivers.
| Value | Diameter | Weight | Composition | Obverse | Reverse |
| 25 dinars | 17.4 mm | 2.5 g | Copper-plated steel | Inscriptions: "Central Bank of Iraq" and "25 dinars" | Outline map of Iraq with the two rivers |
| 50 dinars | 22 mm | 4.34 g | Brass-plated steel | Inscriptions: "Central Bank of Iraq" and "50 dinars" | Outline map of Iraq with the two rivers |
| 100 dinars | 22 mm | 4.3 g | Stainless steel | Inscriptions: "Central Bank of Iraq" and "100 dinars" | Outline map of Iraq with the two rivers |
Banknotes
In 16 March 1932, banknotes were issued by the government in denominations of,, 1, 5, 10 and 100 dinars. The notes were printed in the United Kingdom by Bradbury, Wilkinson & Co. From 1932 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-dinar 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 and inferior quality lithography.
The primitive printing techniques resulted in a limitless variety in coloration and detail, one layer of the printing would be too faint while another would be too dark. Counterfeit banknotes often appeared to be of better quality than real notes. Some notes were very poorly cut, and some notes even lacked serial numbers. 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 on their website the removal of the 50-dinar notes from circulation on 30 April 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.
In November 2015, the Central Bank of Iraq announced the introduction of a new 50,000-dinar banknote. This is the first new denomination banknote since the new series was first issued in 2003, and also the largest ever printed by the CBI. The current notes no longer depict an image of former Iraqi president Saddam Hussein and now feature inscriptions in both Arabic and Kurdish. The banknotes are printed using new security features from Giesecke & Devrient & De La Rue and measure 156 × 65 mm. They feature an outline map of Iraq showing the Euphrates & Tigris rivers as well as the Great Mosque of Samarra.