DINAR DETECTIVES UPDATES: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 U.S. 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.
IMF ON DINAR DETECTIVES UPDATES
There is considerable confusion 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.
DINAR DETECTIVES UPDATES OBJECTIVES |As of at least March 28, 2011, the official website of the CBI states “the primary objectives of the Central Bank of Iraq (CBI) are to ensure domestic price stability and to foster a stable competitive market-based financial system. The CBI shall also promote sustainable growth, employment, and prosperity in Iraq”.
The CBI website further states that the functions of the CBI in addition to the primary objectives mentioned above include:
To implement the monetary policy and the exchange rate policy for Iraq.
To hold gold and manage the state reserves of gold.
To issue and manage the Iraq currency.
To establish, oversee, and promote a sound and efficient payment system.
To issue licenses or permits to banks and to regulate and supervise banks as further specified by the Banking Law.
To carry out any related ancillary tasks or transactions within the framework of Iraqi law.
The objectives of the Central Bank of the Iraq are as follows:
DINAR DETECTIVES UPDATES MAINTAINING INFLATION STATBILTIY
Issuing and managing the Iraqi dinar
Implementing monetary policy (including exchange rate policies)
Managing the state’s reserves
Regulating private banks
As of December 2009, the bank reported total assets valued at over 57 trillion dinars.The bank’s head office is located in Baghdad with four branches in Basrah, Mosul, Sulaimaniyah, and Erbil.
However, currently the bank does not control the financial and administrative affairs of Erbil and Sulaimaniyah branches, as these branches are technically reporting to the Baghdad headquarters and for all other issues they are reporting to Kurdistan Regional Government (KRG) and they are financed by KRG.
As of July 2010, steps and measures have taken place in order to integrate these branches with the headquarters in Baghdad.
Foreign exchange reserves have increased to nearly US$67 billion (as of September 2012) due to a rise in oil revenues, indicating the improved ability since 2003 to deal with the repayment of foreign debt, the currency stabilization, and the coverage of average monthly imports.
DINAR DETECTIVES UPDATES Iraq’s economy is dominated by the oil sector, which has provided about 95% of foreign exchange earnings in modern times. In the 1980s, financial problems caused by massive expenditures in the eight-year war with Iran and damage to oil export facilities by Iran led the government to implement austerity measures, borrow heavily, and later reschedule foreign debt payments; Iraq suffered economic losses of at least $80 billion from the war. After the end of hostilities, in 1988, oil exports gradually increased with the construction of new pipelines and restoration of damaged facilities.
Since mid-2009, oil export earnings have returned to levels seen before Operation New Dawn and government revenues have rebounded, along with global oil prices. In 2011 Baghdad probably will increase oil exports above the current level of 1,900,000 bbl (300,000 m3) per day as a result of new contracts with international oil companies, but is likely to fall short of the 2,400,000 barrels (380,000 m3) per day it is forecasting in its budget.
Iraq’s recent contracts with major oil companies have the potential to greatly expand oil revenues, but Iraq will need to upgrade its oil processing, pipeline, and export infrastructure to enable these deals to reach their potential.
An improved security environment and an initial wave of foreign investment are helping to spur economic activity, particularly in the energy, construction, and retail sectors. Broader economic improvement, long-term fiscal health, and sustained increases in the standard of living still depend on the government passing major policy reforms and on continued development of Iraq’s massive oil reserves.
Although foreign investors viewed Iraq with increasing interest in 2010, most are still hampered by difficulties in acquiring land for projects and by other regulatory impediments.
Inflation has decreased consistently since 2006 as the security situation has improved. However, Iraqi leaders remain hard pressed to translate macroeconomic gains into improved lives for ordinary Iraqis. Unemployment remains a problem throughout the country. Reducing corruption and implementing reforms – such as bank restructuring and developing the private sector – would be important steps in this direction.
THE CBI ON DINAR DETECTIVES UPDATES
The primary objectives of the Central Bank of Iraq (CBI) are to ensure domestic price stability and foster a stable competitive market-based financial system. The CBI shall also promote sustainable growth, employment, and prosperity in Iraq.
The functions of the CBI in addition to achieving its primary objectives are:
- Issue and manage the Iraqi currency.
- Hold gold and manage the state reserves of gold.
- Implement the monetary policy and the exchange rate policy of Iraq.
- Issue licenses or permits in addition to regulating and supervising the banking sector as specified by the Banking Law.
- Establish, oversee, promote a sound and efficient payment system.
- Carry out any ancillary tasks or transactions within the framework of Iraqi law.
DINAR DETECTIVES UPDATES SPECULATION
In response to the growing concerns with fraud and scams related to investment in the Iraqi dinar, State agencies such as Washington state, Utah, Oklahoma, Alabama and others have issued statements and releases warning potential investors. Further alerts have been issued by news agencies.
The Better Business Bureau has included Dinar Investments in its list of top 10 scams.There has also been a book written on the subject.
These alerts warn potential investors that there is no place outside of Iraq to exchange their dinar, that they are typically sold by dealers at inflated prices and
that there is little to substantiate the claims of significant appreciation of their investment due to the revaluation of the currency.
Coins were introduced in 1931 and 1932 in denominations of round 1, and 2 fils in bronze, and scalloped 4, and 10, fils in nickel. 20, 50, and 200 fils were 50% silver.
The 200 fils coin is also known as a rial. Bronze substituted nickel in the 5 and 10 fils from 1938 to 1943 during the World War II period and reverted to nickel in 1953.
Silver 100 fils coins were also introduced in 1953. These coins first depicted King Faisal I from 1931-1933, King Ghazi from 1938, and King Faisal II from 1943 until the end of the kingdom.
DINAR DETECTIVES UPDATES MONETARY POLICY
The Board of Directors of the CBI has approved new Banking Facilities Regulations. The banking facilities shall be applied as from the date of issue which is 23-Sep-2004.
- Reserve Requirements
- Monetary Policy Instruments
- Bank Facilities
- Press communiqué issued by Central Bank of Iraq concerning the new CBI monetary policy instruments.
- The Board of Directors of the CBI has approved the Reserve Requirements Regulations below.
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