DINAR REVALUATION REPORT: USD/IQD Exchange Rates Stabilization in Baghdad, Iraq 2024, 16 SEPT

USD/IQD Exchange Rates Stabilization in Baghdad, Iraq 2024

As of September 16, 2024, the US dollar exchange rates against the Iraqi dinar have stabilized in Baghdad and Erbil. The exchange rates recorded by Al-Kifah and Al-Harithiya central exchanges in Baghdad show a consistent rate of 147,250 IQD per 100 and a buying price of 146,250 IQD per $100. 2

Historical Background

The Iraqi dinar, denoted as IQD, has been the currency of Iraq since it entered circulation on April 1, 1932. 3 The dinar was initially pegged at par with sterling and later switched to the US dollar at a rate of IQD 1 = US3.3778 before a 5% devaluation reduced it to US$3.2169, a rate which remained until the Gulf War in 1990.

Post-1990 Developments

After the Gulf War in 1990, due to United Nations sanctions, Iraq was unable to order further issues of high-quality notes from De La Rue. New notes were produced, leading to the differentiation between pre-1990 notes known as Swiss dinars and new notes called Saddam dinars. The Iraqi dinar has since undergone several significant devaluations, including a 23% devaluation from 1,182 to 1,460 dinars per US dollar in December 2020. 6

Causes of Dual Exchange Rates

Iraq's dual exchange rate system is influenced by excessive demand for US dollars internationally, particularly in countries like Iran and Syria where local currencies have significantly devalued. This demand for dollars is driven by currency devaluation in neighboring countries and the preference for physical dollars over electronic funds transfers . 6

Conclusion

The stabilization of the USD/IQD exchange rates in Baghdad and Erbil as of September 16, 2024, reflects a period of relative calm in Iraq's currency market. The historical context and recent developments, particularly the dual exchange rate system, provide insight into the dynamics influencing the Iraqi dinar's value against the US dollar.