Posted on 24 August 2010.
There has been much speculation in recent months that the Iraqi dinar would be re-based, knocking off the last three zeros.
The lastest news is that Iraq will not in fact remove the zeros from its currency, because it will not resolve inflation and will create opportunities for corruption, reports AKnews, citing a senior source in Iraq’s ministry of finance and economics.
The Iraqi dinar was largely devalued after Iraq’s invasion of Kuwait in 1991 and the imposition of international sanctions on the country.
While before 1991, one Iraqi Dinar was equal to around $3, now $1 is worth roughly 1170 Dinars, according to Iraqi Central Bank’s exchange rates.
Some experts have suggested that removing the zeros will enhance the country’s currency and allow it to better tackle inflation.
“The Central Bank wanted to remove the zeros three years ago, we alleged that it was impossible. They wanted to do it again last year and we rejected the proposal again. The issue is currently brought up once again, but the Ministry of Finance and Economics insists that Zeros will remain,” said Fazil Nabi, the deputy minister of finance and economics.
Nabi said removing the zeros will not reduce the inflation rates as Iraq’s inflation has been stable and remained low for quite some time.
“Besides, it will create problems for many citizens because it takes time for them to learn to use the new currency,” he said.
Nabi also stated that certain people will be harmed by removing the zeros because their salaries will decrease while it is unlikely that the price of goods in the markets would decrease. It is not clear to IBN how the minister came to this conclusion.
Dr. Mark A. DeWeaver
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