The Iraqi Dinar (IQD) serves as the official currency of Iraq, a country located in the Middle East. 

People use the Dinar for everyday transactions, including shopping, dining, and paying for services. 

Knowing the Dinar is essential for anyone interested in Iraq’s economy, trade, or travel. 

Read on to explore the origins of the Iraqi Dinar, its current status, and how it functions within Iraq’s economy.

What is the Iraqi Dinar (IQD)?

The Iraqi Dinar (IQD) is the official currency of Iraq, a country located in the Middle East. 

People often abbreviate it as IQD, and the symbol used for it is ع.د. (pronounced “dinar”). 

The Central Bank of Iraq manages the issuance and regulation of the Dinar. 

This currency is essential for daily transactions within Iraq, from buying groceries to paying for services.

Is the Iraqi Dinar a Wise Investment?

Investing in the Iraqi Dinar is generally not considered a wise decision for several reasons:

1. Poor Liquidity

The Iraqi Dinar (IQD) has extremely low liquidity, making it difficult to sell without incurring significant losses. 

For example, if you purchase 1 million IQD for about $1,075, you might only be able to sell it for around $625. 

This indicates a substantial bid-ask spread, meaning the currency would need to appreciate by 72% just to break even​

2. Speculative Nature

Many investors are drawn to the Dinar in hopes of a “revaluation” that would increase its value dramatically. 

However, these expectations are largely based on conspiracy theories and speculative narratives rather than solid economic fundamentals. 

Past evaluations have been minor and do not support the high expectations some investors hold​

3. Economic Instability

Iraq has a history of economic instability, with its economy heavily dependent on oil exports. Fluctuations in oil prices directly impact the Dinar’s value. 

The lack of a stable economic environment makes it a risky investment​

4. Potential Redenomination

There is a possibility that Iraq might redenominate its currency, which could render existing Dinars less valuable or even obsolete. 

This would require currency holders to exchange their old currency for new, often under unfavorable conditions​

5. Scams and Fraud

The market for Iraqi Dinars is rife with scams. Many investors have been misled by promises of high returns, only to find themselves unable to redeem their currency for a reasonable amount. 

Authorities have issued warnings about various fraudulent schemes related to Dinar investments​

History of the Iraqi Dinar

The history of the Iraqi Dinar dates back to 1932 when it replaced the Indian Rupee as the country’s official currency. 

This change occurred during the reign of King Faisal I, marking a significant step in establishing an independent financial identity for Iraq. 

The Dinar was originally made of silver and later transitioned to banknotes. Over the years, the currency has gone through several changes, especially during and after conflicts in the region.

In the 1990s, during the regime of Saddam Hussein, the Iraqi government introduced several new banknotes, some of which featured images of Hussein himself. 

After the fall of his regime in 2003, the Dinar underwent another transformation. Coalition forces introduced new banknotes, which the Central Bank of Iraq issued. 

These new notes no longer displayed Hussein’s image and featured a modern design.

Subdivisions and Denominations

The Iraqi Dinar is divided into 1,000 fils, but fils coins are not commonly used in everyday transactions. The Dinar itself comes in various denominations. 

Coins include 50, 100, and 250 fils. Banknotes are available in higher denominations: 1, 5, 10, 25, 50, and 100 Dinars. 

Each banknote has distinct colors and designs that reflect Iraqi culture, historical figures, and landmarks.

Exchange Rate and Value of Iraqi Dinar

The value of the Iraqi Dinar can change daily based on market conditions. As of now, the approximate exchange rates for 100 IQD are:

• 1 USD = 1,309 IQD
• 1 EUR = 1,560 IQD
• 1 GBP = 1,414 IQD
• 1 NGN (Nigerian Naira) = 0.80 IQD
• 1 AED (United Arab Emirates Dirham) = 356.54 IQD

Economy and Challenges

Iraq’s economy relies heavily on oil, which contributes significantly to its revenue. 

The country has some of the largest oil reserves in the world, making oil exports a crucial part of its economy. 

However, Iraq faces numerous challenges that impact the value of the Dinar. Political instability, security issues, and fluctuations in oil prices can lead to economic uncertainty. 

These factors often affect inflation rates and the overall strength of the currency.

The Iraqi government has made efforts to stabilize the economy and enhance the value of the Dinar. These efforts include managing inflation and promoting investment in various sectors beyond oil. Agriculture, construction, and services are some areas that the government seeks to develop to create a more diversified economy.

Conclusion

The Iraqi Dinar (IQD) is the official currency of Iraq, with a rich history that reflects the country’s journey toward economic independence. 

Managed by the Central Bank of Iraq, the Dinar plays a critical role in daily transactions and the overall economy. 

Despite its challenges, such as political instability and reliance on oil, Iraq continues to work towards stabilizing and strengthening its currency for a brighter economic future.

The Dinar’s unique design and subdivisions, alongside its fluctuating value, showcase Iraq’s cultural identity and economic situation.