Formerly known as the 'Cradle of Civilization' and Mesopotamia, Iraq has been home to dozens of societies since the sixth millennium B. C. Following World War I, when Iraq became a protectorate of Great Britain, the coin of the realm was the Indian rupee. In 1932, the Kingdom of Iraq achieved independence from the British and the new Iraqi dinar (IQD) was used instead of the rupee. During this period, people paid 11 rupees for purchase Iraqi dinar.
The new currency was initially pegged to the Great British pound. The purpose of pegging a currency, that is, fixing it to the currency of another country, is to stabilize it. The IQD was pegged to the American dollar in 1932. One IQD was equivalent to USD 2.80. The physical notes were printed in the United Kingdom, while the plates from which the money was printed were located in Switzerland. The currency then was known as the Swiss Dinar. Whether it was coincidence or not that both Iraq and Switzerland had low rates of inflation is the subject of debate.
In the wake of the Gulf War in 1991, the United Nations imposed various sanctions on Iraq. The import of the Swiss dinar into the country became illegal. Vast numbers of poor quality Saddam notes were printed. The Kurds in northern Iraq continued to accept the Swiss notes as legal tender. Unfortunately, the Kurds did not have access to the Swiss plates and so they could print no new notes. As they refused to accept the Saddam notes as legal tender, 'their' currency appreciated compared to the Saddam notes.
It must certainly have been irritating to the Kurdish population in northern Iraq not to have the ability to print its own currency, it turned out to be a blessing in disguise. The Iraqi government began printing the new notes like crazy, which resulted in devaluation of the Saddam currency. By 1995, one US Dollar was worth 3,000 Saddam dinars. The Kurdish currency remained stable and thus protected from the runaway inflation that plagued the rest of Iraq.
After the fall of Saddam, the government at the time decided to print new notes as an interim measure while a new currency was in the pipeline. Some time after October 2003 and January 2004, a new form of 'unified' IQDs were established and exchanged at parity with the old IQD. Swiss notes, however, were valued at a rate of 150 per new IQD.
Speculators bought large numbers of new IQD notes with the expectation of making a profit when the nation's economy got back on its feet. This lead to a boom in counterfeit notes. As a result, new security features have been woven into the new currency. Now, six separate authentication characteristics differentiate genuine 25,000 IQD notes from the false ones.
The value of the new currency soared from an exchange rate of 4,000 IQD to 1 US Dollar to a high of 980 IQD per dollar. Today, the 'street value' of the IQD is 1,200 IQD to the dollar.
The IQD is at a critical turning point. There have been plans since 2010 to redenominate the currency. At the end of 2012, this change had still not occurred. The effect of redenomination would be to drop three zeroes from the notes, while the value of the IQD would not change. One post-denomination IQD would have the same value as 1,000 old IQDs, i. E., one American dollar. What this means for speculators who purchase Iraqi dinar is unclear.
The new currency was initially pegged to the Great British pound. The purpose of pegging a currency, that is, fixing it to the currency of another country, is to stabilize it. The IQD was pegged to the American dollar in 1932. One IQD was equivalent to USD 2.80. The physical notes were printed in the United Kingdom, while the plates from which the money was printed were located in Switzerland. The currency then was known as the Swiss Dinar. Whether it was coincidence or not that both Iraq and Switzerland had low rates of inflation is the subject of debate.
In the wake of the Gulf War in 1991, the United Nations imposed various sanctions on Iraq. The import of the Swiss dinar into the country became illegal. Vast numbers of poor quality Saddam notes were printed. The Kurds in northern Iraq continued to accept the Swiss notes as legal tender. Unfortunately, the Kurds did not have access to the Swiss plates and so they could print no new notes. As they refused to accept the Saddam notes as legal tender, 'their' currency appreciated compared to the Saddam notes.
It must certainly have been irritating to the Kurdish population in northern Iraq not to have the ability to print its own currency, it turned out to be a blessing in disguise. The Iraqi government began printing the new notes like crazy, which resulted in devaluation of the Saddam currency. By 1995, one US Dollar was worth 3,000 Saddam dinars. The Kurdish currency remained stable and thus protected from the runaway inflation that plagued the rest of Iraq.
After the fall of Saddam, the government at the time decided to print new notes as an interim measure while a new currency was in the pipeline. Some time after October 2003 and January 2004, a new form of 'unified' IQDs were established and exchanged at parity with the old IQD. Swiss notes, however, were valued at a rate of 150 per new IQD.
Speculators bought large numbers of new IQD notes with the expectation of making a profit when the nation's economy got back on its feet. This lead to a boom in counterfeit notes. As a result, new security features have been woven into the new currency. Now, six separate authentication characteristics differentiate genuine 25,000 IQD notes from the false ones.
The value of the new currency soared from an exchange rate of 4,000 IQD to 1 US Dollar to a high of 980 IQD per dollar. Today, the 'street value' of the IQD is 1,200 IQD to the dollar.
The IQD is at a critical turning point. There have been plans since 2010 to redenominate the currency. At the end of 2012, this change had still not occurred. The effect of redenomination would be to drop three zeroes from the notes, while the value of the IQD would not change. One post-denomination IQD would have the same value as 1,000 old IQDs, i. E., one American dollar. What this means for speculators who purchase Iraqi dinar is unclear.
About the Author:
When you visit www.cheapestdinar.com you can purchase Iraqi dinar and many other world currencies. Take a look at everything we have to offer at http://www.cheapestdinar.com today.
No comments:
Post a Comment