AJ : Devaluation Vs. Revaluation, 4 APRIL

 AJ 

Devaluation Vs. Revaluation

I’ve put together a detailed chart showing the monthly movements of the Iraqi Dinar (IQD) against the U.S. Dollar (USD) on the ICE exchange the largest FX exchange, spanning from 2005 to 2025.

This chart highlights the all-time high and low of the IQD, along with key moments of revaluation and devaluation. Let’s break it down and clear up some common misconceptions about how the IQD’s value moves against the USD. The Chart: Key Levels and Movements All-Time High and Low: The chart shows the IQD’s all-time high at 1,086 IQD per USD (equivalent to $0.000996 in USD) and its all-time low at 1,476 IQD per USD (equivalent to $0.000676 in USD). 

At the current price, 1,309 IQD equals $0.000776 in USD. Counterintuitive movement, It might seem strange at first, but a lower number of IQD per USD (e.g., 1,086) means the Dinar is stronger (a revaluation), while a higher number (e.g., 1,476) means the Dinar is weaker (a devaluation). 

Think of it like a scale: the closer the exchange rate gets to 0, the stronger the IQD is against the USD. Down Arrow (Revaluation): Around 2010, you’ll notice a sharp downward move on the chart frome the high 1476 IQD to 1,186 IQD. This indicates the IQD revalued higher against the USD, meaning it took fewer Dinars to buy a dollar...a sign of the IQD gaining value. Up Arrow (Devaluation): Fast forward to 2020, during the COVID-19 pandemic, and you’ll see a sharp upward spike (from 1,186 IQD to 1,450 IQD). This was a devaluation of the IQD, meaning it took more Dinars to buy a dollar.

Why? The crude oil market crashed...CME Futures for crude oil even traded below zero (yes, I couldn’t believe it either!). Since Iraq’s economy heavily relies on oil exports, this crash forced Iraq to devalue its currency to stabilize its economy. Why Did Iraq Devalue in 2020? Iraq’s economy is deeply tied to oil, which makes up over 90% of its export revenue When oil prices plummeted in 2020 due to the global lockdown and oversupply, Iraq faced a severe financial crisis.

Devaluing the Dinar made their oil exports cheaper in USD terms, helping to boost demand and bring in more foreign currency to stabilize their economy. 

However, this meant the IQD lost value for Iraqis, as imports (like food and goods) became more expensive. A Common Misconception: Revaluation vs. Devaluation in Times of Trouble Some people speculate that if Iraq faces economic trouble, it will revalue its currency ( make the IQD stronger).

But history shows the opposite. As seen in 2020, when Iraq was in crisis, they devalued the Dinar (moving from 1,186 to 1,450 IQD per USD). A revaluation would make their exports more expensive, which is the last thing a struggling oil-dependent economy needs. So, if someone tells you Iraq will revalue its currency because they’re in trouble, take it with a grain of salt. 

Based on past patterns, a devaluation is far more likely in such scenarios. Current State and What to Watch As of April 2, 2025, the IQD is at 1,309 per USD ($0.000776). 

It’s weaker than its all-time high but stronger than its 2020 low. Iraq’s economy is still heavily tied to oil prices, so keep an eye on global oil markets and Iraq’s efforts to diversify its economy will also play a role in the IQD’s future value Non-Oil-Revenues. Converting Recent Amounts 1,086 IQD (the all-time high) = $0.000996 USD 1,476 IQD (the all-time low) = $0.000676 USD 1,309 IQD (current rate) = $0.000776 USD If you’re holding Dinar or following its value, understanding these dynamics is key. Let me know if that helped you understand currency markets betterAJ

9:28 PM · Apr 2, 2025