Iraqi dinar

Iraqi dinar
source
Name	Iraqi dinar
Local name	دينار عراقي
Iso code	IQD
Introduced	1932
Subunit name	fils
Issuing authority	Central Bank of Iraq
Inflation rate	variable

Iraqi dinar is the currency of the Republic of Iraq, introduced in 1932 to replace the Indian rupee used under British influence. The dinar has circulated through regimes including the Hashemite Kingdom of Iraq, the Republic under Abdul Karim Qasim, the Ba'athist period under Ahmed Hassan al-Bakr and Saddam Hussein, the post-2003 Coalition Provisional Authority era, and current administration overseen by the Central Bank of Iraq. It has been subject to wartime disruption, international sanctions, and reconstruction efforts involving actors such as the United Nations, International Monetary Fund, and multinational firms.

History

The dinar was established during the reign of King Faisal I of Iraq following mandates administered by the United Kingdom. Early issues were linked to gold standards and trade with neighboring states like Iran and Turkey. During the 1958 14 July Revolution (Iraq), currency policy shifted amid the overthrow of the Hashemite monarchy. The Ba'athist takeover in 1968, consolidation under Ahmed Hassan al-Bakr, and later rule by Saddam Hussein saw state-directed economic measures, nationalization of oilfields formerly under concessionaires such as the Iraq Petroleum Company and monetary maneuvers during the Iran–Iraq War and the Gulf War (1990–1991). Following the 2003 invasion by forces including the United States Department of Defense and the British Armed Forces, the Coalition Provisional Authority implemented currency replacement and reforms coordinated with the International Monetary Fund and World Bank. Post-conflict reconstruction involved the United Nations Development Programme, multinational contractors like KBR, Inc., and advisors formerly of central banks including the Federal Reserve and the Bank of England.

Design and denominations

Banknotes historically featured leaders, monuments, and symbols tied to periods such as the Hashemite era and Ba'athist iconography under Saddam Hussein. Designs have included portraits and depictions linked to sites like Babylon, Erbil Citadel, and the Tigris River. Denominations have evolved from fils-based subdivisions to high-value notes including 250,000 dinars in contemporary series. Commemorative and specimen issues have been produced by mints and printers contracted internationally, such as De La Rue, Thomas De La Rue, and printing firms used by central banks including the Giesecke+Devrient group. Coinage for coins of 1, 5, 10, 25, 50, and 100 fils appeared in early decades; later phases emphasized banknotes amid inflation episodes resembling patterns seen in countries like Zimbabwe and Yugoslavia during hyperinflation.

Issuance and monetary policy

Issuance is managed by the Central Bank of Iraq, with governance interacting with Iraq's Ministry of Finance and parliamentary bodies including the Council of Representatives of Iraq. Monetary policy has responded to oil revenue flows controlled by entities such as the Iraq National Oil Company and international oil companies like BP and ExxonMobil under various contracts. Iraq's fiscal position has been affected by OPEC decisions and relations with Organization of the Petroleum Exporting Countries. Post-2003 reforms sought to modernize accounting, auditing, and reserve management drawing on assistance from the International Monetary Fund and central bank specialists from institutions including the European Central Bank and the Bank for International Settlements. Currency issuance has also involved security printing contracts, logistics coordinated with custodians such as the United States Mint for technical support in emergency phases, and coordination with central banks like the Central Bank of Kuwait on regional liquidity.

Exchange rates and redenomination

The dinar has experienced fixed, managed, and floating exchange regimes tied to political conditions and foreign reserves. Historic exchange-rate episodes include pre-war pegs, wartime collapses paralleling events like the Iran–Iraq War and the Gulf War (1990–1991), and post-2003 re-pegging and auctions conducted by the Central Bank of Iraq. Redenomination discussions have involved domestic policymakers and international advisors in contexts similar to reforms in Turkey and Russia during their currency transitions. Speculative markets and informal exchange networks across borders with Jordan, Syria, and Kurdish-controlled regions such as Kurdistan Region (Iraq) have influenced parallel rates. Debates over redenomination intersect with fiscal consolidation efforts advocated by finance ministers and institutions like the International Monetary Fund and the World Bank.

Counterfeiting and security features

Counterfeiting has been a persistent concern, especially after sanctions and during conflict when older series remained in circulation; notable criminal prosecutions have involved cooperation with law enforcement agencies such as INTERPOL and national police forces. Modern issues incorporate security features including intaglio printing, watermarks, security threads, microprinting, holographic elements, and ultraviolet inks implemented by printing firms like De La Rue and Giesecke+Devrient. The Central Bank has mounted public-awareness campaigns with assistance from organizations such as the International Monetary Fund and the United Nations Office on Drugs and Crime to educate banks like the Rafidain Bank and the Trade Bank of Iraq on counterfeit detection. Cross-border smuggling and illicit trade affecting currency integrity have engaged customs authorities and multinational anti-counterfeiting initiatives.

Economic role and criticism

The dinar functions as the principal medium of exchange for petroleum revenues directed to the Iraqi Ministry of Finance and social spending programs including public-sector payrolls tied to ministries such as Health and Education. Critics cite inflationary risks, reliance on oil-export rents, and political interference echoing historical critiques made of state-led economies in contexts like Venezuela and Russia. International agencies including the International Monetary Fund and non-governmental organizations like Transparency International have highlighted governance, transparency, and fiscal diversification challenges. Local economists, central-bank officials, and parliamentarians debate reforms involving banking sector modernization with actors such as the Iraq Stock Exchange and commercial banks like the Bank of Baghdad. Proposals range from exchange-rate management to structural reforms modeled on transitions in countries such as Poland and Chile.

Category:Economy of Iraq