The Dinar (Arabic: دينار, (sign: د.ع; code: IQD) is the currency of Iraq. It is issued by the Central Bank of Iraq and is subdivided into 1,000 fils (فلس), although inflation has rendered the fils obsolete since 1990.
The dinar was introduced into circulation in 1932, by replacing the Indian rupee, which had been the official currency since the British occupation of the country in World War I, at a rate of 1 dinar = 11 rupees. The dinar was pegged at par with the British pound until 1959 when, without changing its value, the peg was switched to the United States dollar at the rate of 1 dinar = 2.8 dollars. By not following the devaluations of the US currency in 1971 and 1973, the dinar rose to a value of US$3.3778, before a 5 percent devaluation reduced the value of the dinar to US$3.2169, a rate which remained until the Gulf War, although in late 1989, the black market rate was reported at five to six times higher than the official rate.
After the Gulf War in 1991, due to UN sanctions, the previously used Swiss printing method was no longer available so new, inferior quality, notes were produced. The previously produced notes became known as the Swiss dinar and continued to circulate in the Kurdish region of Iraq. Due to sanctions placed on Iraq by the United States and the international community along with excessive government printing, the new dinar notes devalued quickly. By late 1995, US$1 was valued at 3,000 dinars at the black market.
Following the deposition of Saddam Hussein in the 2003 invasion of Iraq, the Iraqi Governing Council and the Office for Reconstruction and Humanitarian Assistance began printing more Saddam dinar notes as a stopgap measure to maintain the money supply until new currency could be introduced.
Between 15 October 2003, and 15 January 2004, the Coalition Provisional Authority issued new Iraqi dinar coins and notes, with the notes printed by the British security printing firm De La Rue using modern anti-forgery techniques to "create a single unified currency that is used throughout all of Iraq and will also make money more convenient to use in people's everyday lives". Multiple trillions of Dinar were then shipped to Iraq and secured in the CBI for distribution to the masses in exchange for the 'Saddam dinar'. Old banknotes were exchanged for new at a one-to-one rate, except for the Swiss dinars, which were exchanged at a rate of 150 new dinars for one Swiss dinar.
There is considerable confusion (perhaps intentional on the part of dinar sellers) around the role of the International Monetary Fund in Iraq. The IMF as part of the rebuilding of Iraq is monitoring their finances and for this purpose uses a single rate (not a sell/buy) of 1170 dinars per dollar. This "program rate" is used for calculations in the IMF monitoring program and is not a rate imposed on Iraq by the IMF. For a wider history surrounding currency in the region, see British currency in the Middle East.
Since Iraq has few exports other than oil, which is sold in dollars, there is little demand for dinars, resulting in an extremely high exchange rate compared with other currencies: on 2 March 2019, the Central Bank’s indicative exchange rate was 1,190 dinars for one dollar, or 1,355 dinars for one euro.
However, downfall of Saddam Hussein resulted in the development of a multi million-dollar industry involving the sale of dinars to speculators. Such exchange services and companies sell dinar at an inflated price, pushing the idea that the dinar would sharply increase in value to a profitable exchange rate some time in the future, instead of being redenominated. This activity can be either a legitimate service to currency speculators, or foreign exchange fraud: at least one major such currency exchange provider was convicted of fraud involving the dinar. The phenomenon re-surged following the election of Donald Trump in November 2016, with many buyers believing that Trump would cause value of the dinar to sharply increase.
In 2014, Keith Woodwell (director of the Utah Division of Securities) and Mike Rothschild (writer for Skeptoid blog) stated that the speculation over the Iraqi dinar originated from a misunderstanding of why the value of the Kuwaiti dinar recovered after the first Gulf War, leading to an assumption that the Iraqi dinar would follow suit after the fall of Saddam: Woodwell and Rothschild noted substantial differences with the economic and political stability of Iraq and Kuwait, with Iraq facing pervasive sectarian violence amid near-total reliance on oil exports.
In response to the growing concerns with fraud and scams related to investment in the Iraqi dinar, State agencies such as the Washington state, Utah, Oklahoma, Alabama and others have issued statements and releases warning potential investors. Further alerts have been issued by news agencies.