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Iraq currency (Iraqi Dinar, IQD) in forex

Fact 1 - Prior to World War I, Turkish (Ottoman) currency had been used throughout Mesopotamia, although other currencies had been in use, including the Indian rupee in Basra and Persian coins in the middle Tigris towns and Kurdistan. Once the War had commenced, Ottoman paper money began to circulate at a discount against gold, both in Mesopotamia and elsewhere. The expeditionary force’s Proclamation No.1 of 22 December 1916 forbade the use of Ottoman paper money in Mesopotamia and by 1918 the Indian rupee had become the universal currency of Iraq. The rupee continued to hold this status when Iraq became a mandated territory of the British after the Great War. Despite the general acceptance of the Indian rupee, there was a nationalist desire for Iraq to have its own currency.

In 1926, following a mission by Sir E. Hilton Young to Iraq in 1925, the British finally proposed a Currency Board based in London as an authority that could issue a distinctly Iraqi currency. However, this proposal was roundly rejected by the Iraqi authorities because it would not be based in Iraq. In the following year, 1927, Iraq resolved to establish a National Bank, but debate over the basis on which the currency would be issued caused the idea to founder. Under the new Law, the currency unit was declared to be the Iraqi Dinar (I.D.), which was sub-divided into 1000 Fils. The Iraqi Dinar was to be linked to the gold standard and administered by an independent authority based in London.

The new authority, the Iraq Currency Board, was to be represented in Iraq by a ‘Currency Officer’. The new currency that was to be introduced under Law No. 44 was originally due to be released by 1 January 1932. However, under one of many amendments to the original law, the final date for release became 1 April 1932. During the period leading up to the introduction of the currency, the gold standard was dropped by Britain (in September 1931) and Iraq was advised to also drop the standard. Law No. 44 was subsequently amended, by Law No. 101 of 1931 (passed on 12 December 1931), to link the Iraqi Dinar to the pound sterling. Under article 10 of Law No. 44 of 1931, the bank notes to be issued by the Currency Board were to be in the denominations of ¼, ½, 1, 5, 10 and 100 dinars. These notes were to be issued by the Currency Board, for the Government of Iraq, until a National Bank could be established to issue currency.

Fact 2 - CURRENCY: ISO symbol ‘NID’, formerly IQD prior to January 22, 2004, New Iraqi Dinar. At time of review on July 1, 2004, the Iraqi dinar had an exchange valuation of 1456 IQD to the US-dollar (‘USD’). As of January 2004, Iraq has a new unified Iraqi dinar with a then high valuation of 1,000 NID to the USD. Formerly, Iraq had two dinars in circulation, a perceived stronger currency in the largely autonomous Kurdish north ‘Swiss dinar’ (printed in Switzerland) and the other ‘Saddam dinar’ circulating in the rest of the country ‘IQD’. On October 15, 2003, the New Iraqi dinar was launched with a 3-month deadline to swap the old dinars currency notes to the NID which expired on January 15, 2004. The New Iraqi dinar has appreciated by approximately 25 percent to the USD since its inception 9 months ago in October 2003. The Swiss printed dinar during the 3-month conversion time was converted at a rate of 150 to the USD, valuations for the Swiss dinar have included March 2003 at 10 to the USD. It should also be stated that there is no plans to fixed the NID to the USD due to America’s impression, the NID is a Hussein-free dinar note.

Fact 3 - BANKING SYSTEM: Iraqi citizens are now able to bring foreign currency into Iraq, no restrictions to the amount. Iraqi banks are allowed to lend hard currency with foreign banks now given permission to operate and in invest in Iraqi banks up to 100 percent ownership. Most Iraqi assets remain frozen overseas. Although Central Bank of Iraq (CBI) was established in 1947, it is being restructured to reflect more of a modern Western style monetary system including management of the currency, holding of foreign exchange reserves, liberalizing of interest rates, price stability, etc. Iraq’s banking system presently remains for the most part on a cash basis. There is basically no electronic banking including no ATM’s, credit cards, etc. The banking system under former regime of Mr. Hussein, most Iraqis during this time kept dinars as mattress money rather than depositing at state banks. The banking system consists of 17 private banks, 6 state-owned banks that are considered insolvent plus banking licenses granted to United Kingdom’s HSBC & Standard Chartered and the National Bank of Kuwait of which these 3 banks have yet to open up branch offices.