IQD - Iraqi Dinar

Overview of the Iraqi Dinar (IQD)

The Iraqi Dinar is the official currency in circulation in Iraq, issued and managed by the Central Bank of Iraq. This currency has the ISO code, symbol د.د. One Dinar is divided into 1000 fils. 

The Iraqi Dinar has undergone many phases of fluctuation and reform since its initial introduction on April 1, 1932, replacing the Arab Rupee. The Iraqi dinar plays an important role in the Iraqi economy, being widely used in domestic transactions. 

As of February 7, 2023, the exchange rate of the Iraqi dinar against the USD is 1,300 dinars. Although the Iraqi dinar faces many challenges due to the economic and political situation, it remains the official currency and is used in almost all financial and commercial transactions in Iraq. The dinar currently plays an important role in the country's monetary policy and financial management.

Iraqi Dinar (IQD) Denominations

Currently, the Iraqi Dinar is in circulation with two types of currency: coins and banknotes, including the following denominations:

• Banknotes: ¼, ½, 1, 5, 10, 25, 50, 100, 250, 500, 1000, 5000; 10,000; 25,000; 50,000 Iraqi Dinar.

• Coins: 1, 2, 4, 5, 10, 25, 50, 100, 250, 500 Fils Iraq and 1, 50, 100 Dinar Iraq.

Iraqi Dinar (IQD) History

The Iraqi Dinar was officially put into circulation on April 1, 1932, replacing the Indian Rupee, which was the official currency used in Iraq during the British occupation in World War I. The exchange rate was 1 dinar = 11 rupees.

The Iraqi dinar was pegged to the British pound until 1959, then switched to being pegged to the US dollar at a rate of 1 IQD = 2.8 USD.

However, due to not adjusting for the depreciation of the US dollar in 1971-1973, the official exchange rate increased to 3.3778 USD. Then it decreased by 5% to 3.2169 USD, and this exchange rate was maintained until the Gulf War in 1990, although by the end of 1989, the black market exchange rate was 5-6 times higher than the official rate.

Iraqi Dinar (IQD) development after 1990

After the Gulf War in 1990, Iraq was subjected to United Nations sanctions and could not order more high-quality banknotes from De La Rue, so it had to issue new banknotes.

The banknotes before 1990 were called Swiss dinars, while the new banknotes were called Saddam Dinars. Due to the American and international sanctions along with excessive money printing, the value of the Saddam dinar quickly depreciated. At the end of 1995, the exchange rate was 1 USD = 3,000 Saddam dinars on the black market.

The Swiss dinar banknote is still in circulation in the Kurdistan region (however, the Saddam dinar is not accepted here due to its poor quality). Therefore, with the increase in the number of Saddam dinars while the number of Swiss dinars remained stable, the Swiss dinar significantly appreciated against the Saddam dinar.

Thanks to the stable supply, Kurdistan avoided inflation while the rest of the country was experiencing it.

In 2003, Saddam Hussein was overthrown during the invasion of Iraq, and the Saddam dinar was printed by the Iraqi Governing Council and the Office of Reconstruction and Humanitarian Assistance as a temporary measure to maintain the money supply until a new currency was issued.

From October 15, 2003, to January 15, 2004, the Coalition Provisional Authority issued new dinar coins and banknotes printed by De La Rue of England using modern anti-counterfeiting techniques, creating a unified currency used throughout Iraq. Millions of dinars were transferred to Iraq and stored at the Central Bank in exchange for Saddam Dinar banknotes. The exchange rate is 1:1. Meanwhile, the exchange rate for Swiss dinar notes is set at 1 Swiss dinar = 150 new dinars.

The situation of inflation and the depreciation of the Iraqi dinar continued thereafter. On December 19, 2020, the Central Bank of Iraq devalued the dinar by 24% to improve government revenue, which had been heavily impacted by the Covid-19 pandemic and low oil prices. 

On March 2, 2020, the Central Bank's designated exchange rate was IQD 1,190 = 1 USD. On June 18, 2021, this exchange rate was IQD 1,460.50 = 1 USD.

There is a significant misunderstanding about the role of the IMF - International Monetary Fund in Iraq. The IMF plays a role as part of the process of restructuring Iraq, monitoring Iraq's finances, so the IMF uses a single exchange rate of IQD 1170 for 1 USD. This program exchange rate is used for calculations in the IMF's surveillance program and is not the rate set by the IMF for Iraq.

Iraqi Dinar (IQD) exchange rate

The Iraqi Dinar is being implemented under a managed floating exchange rate policy to control the exchange rate. This policy is established based on the interaction of market supply and demand and the intervention of the Central Bank to maintain monetary and economic stability.

History of the Iraqi Dinar exchange rate

Period 1932 - 1959: 1 dinar = 11 rupees. The Iraqi dinar during this period was pegged to the value of the British pound.

Period 1959 - 1971: The value of the dinar was pegged to the US dollar at an exchange rate of 1 dinar = 2.8 USD. During this period, the Iraqi dinar maintained a stable exchange rate with the US dollar, but it did not keep pace with the devaluations of the dollar in 1971 and 1973. The official exchange rate of the dinar/USD was 3.3778 USD and then decreased to 3.2169 USD due to a 5% adjustment at the end of 1980.

Period 1990 - 2003 after the Gulf War: The Saddam dinar severely depreciated due to excessive printing, with the black market exchange rate in 1995 being 1 USD = 3,000 Saddam dinars.

Post-Iraq War period (2003 – 2004): During this period, the exchange rate between the Saddam dinar and the new dinar was equivalent to 1:1, while the exchange rate of the Swiss dinar was 150 new dinars.

Current period (from 2004 to present): The exchange rate of the dinar continues to fluctuate due to inflation and depreciation. The reference exchange rate in 2019 was 1,190 dinars = 1 USD and in 2021 it was 1,460.5 dinars = 1 USD.

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