What’s Ahead for the Iraqi Dinar?

It’s generally accepted internationally that the elections in Iraq were, in the main, free and fair, but former prime minister Ayad Allawi’s narrow margin of victory means the results will be challenged.

Prime Minister Nouri al- Maliki’s Shiite Muslim State of Law alliance filed a complaint on Tuesday with the Supreme Court, asking for a recount in several areas. When the dust settles, the Sadrist Iraqi National Alliance (INA) could be the kingmaker, having secured a strong third place.

Meanwhile, plans to re-base the Iraqi currency, the dinar, appear to be going ahead, but the exact timing of the change is still to be decided. The new dinar will be worth one thousand times the old one, which will help facilitate trade and foreign exchange, but will be otherwise neutral in terms of valuation.

While the local currency has gained in value in recent years, the planned increase in petroleum production, and the expected boom that this will create in the domestic economy, have led many to speculate that the dinar will continue to strengthen.

The dinar is already becoming more acceptable and credible as a means of exchange; mobile phone operator Asiacell just announced that it will change its tariffs and billing from dollars to dinars. And as AAIB’s Rob Edwards reports, his company will write insurance policies in either currency.

Where do you think the dinar is headed? We’d welcome your opinions in the comments section below.

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8 Responses to What’s Ahead for the Iraqi Dinar?

  1. […] This post was mentioned on Twitter by Iraq News Weekly. Iraq News Weekly said: What’s Ahead for the Iraqi Dinar? http://bit.ly/astIGC via @AddToAny […]

  2. steve March 31, 2010 at 9:14 pm #

    THE WAIT IS THE WORSE THING,BUT PATIENCE IS THE KEY,WE HAVE TO BE
    PATIENCE AND RELAX AND DONT THINK TOO HARD ABOUT IT AND LET THE DINAR
    FAIRY WORK ITS MAGIC,I GO TO SCHOOL EVERDAY,WORK EVERY NIGHT,PLAY GOLF SOME EVENINGS AND OCCUPY MY TIME WITH OTHER STUFFS WHILE IM WAITING.THIS DINAR EXPERIENCE IS A MOTIVATION BOOSTER TO DO WHATEVER
    WE ARE DOING AND AWAIT THE BIG DAY.I HUNG ON TO MINE SINCE 2005 IN KUWAIT WHILE I WAS DEPLOYED(ARMY).IM STILL SITTING ON IT AND CRUISE.
    I WISH EVERY EACH ONE OF YOU THE BEST AS WELL AS MYSELF AND FAMILY.GOOD LUCK.

  3. Barry Kountz April 1, 2010 at 5:55 am #

    Will the authors please expound on the following excerpted quote from the article:

    “The new dinar will be worth one thousand times the old one, which will help facilitate trade and foreign exchange, but will be otherwise neutral in terms of valuation.”

    If the “new” Dinar will be worth 1000 times more, but will be otherwise neutral in valuation, what does that mean?

  4. Michael Celentano April 2, 2010 at 10:17 am #

    Is it planned to change the currency altogether or to revalue only. What will be the result to those who currently hold Dinars?

  5. gl April 3, 2010 at 7:49 am #

    Treasury bills are more liquid and should be more representative of the Iraq economy. Its currency, is tied up! Iraq needs international trade equality. Investors in currency, myself included, did not foresee oversold currency. A sudden value cannot now happen. Iraq will become a substantial economy and is irreversibly on its way. Linking this positive to a negative, is unrealistic. Global money managers will time out the best solution for Iraq to stand on its own. Currency investors, will see a modest gain. This is how I read the tea leaves. gl

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  7. virgil kendrick October 22, 2010 at 4:38 pm #

    if they drop the three 0 from their currency it will devalue it.I think that is the reason they are doing this,so they don’t have to pay the people that bought their currency.

  8. TimL July 10, 2011 at 7:49 pm #

    This amounts to indexing the value of the currency. Something that has been done in economies to respond to hyperinflation. If Iraq does this, then they can kiss goodbye many investors.

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