What is the IQD (Iraqi Dinar)
The currency abbreviation or currency symbol for the Iraqi dinar (IQD), the currency of Iraq. The Central Bank of Iraq circulates the Iraqi dinar which is made up of 1,000 fils. The dinar replaced the Indian rupee as the country's national currency.
BREAKING DOWN IQD (Iraqi Dinar)
The dinar, first introduced in 1932, to replace the Indian rupee had a conversion rate was 1 dinar for 11 rupees. IQD was pegged to the British pound until 1959 when it changed to the U.S. dollar. The exchange rate remained constant until the Gulf War in the early 1990s.
The IQD pegged to the U.S. dollar after the war, and the dinar was worth over $3 in U.S. currency until the 1990-91 Gulf War. Shortly before the second Gulf War, the black market exchange rate was five- to six-percent higher than in the foreign exchange market (FX). Currency printed before the Gulf War became known as Swiss dinar. After the fall of Saddam Hussein, the government issued a new currency.
The new currency has anti-counterfeit protections included in its design. The exchange of old dinar for new dinar notes was on a one-to-one basis, except for the Swiss dinar which exchanged for 150 new to 1 old. This new currency has been valued at a set rate by the International Monetary Fund. The Iraqi dinar (IQD) continues pegging to the U.S. dollar. However, there is little call for them on the foreign exchange market. The street exchange rate is approximately 1,300 dinar for one U.S. dollar. The black market trade has grown in proportion, and many agencies and publications warn investors against investing in IQD securities scams.
According to World Bank data, Iraq experiences negative 12.9% annual inflation and has a gross domestic production (GDP) of 11.0%, as of 2016, which is the most current year of available data.
Scams of Investing in the Iraqi dinar
The reason that the IQD-US$ forex trading market is virtually non-existent. No banks are offering Iraqi dinars. If you have to buy Iraqi dinars, you can buy them only at select money exchangers, who may, or may not, be legally registered. Secondly, they charge a hefty markup fee, to the tune of up to 20%, for such transactions. This fee will erode the profit potential even for short-term trading.
As Reuters reported in 2012, Iraq did plan to redenominate its currency, but not revalue. In the absence of any revaluation, there is going to be no change in the forex exchange rate of Iraqi dinar IQD. Redenomination happens in cases of high inflation where old, high-value notes convert to new, smaller value notes by removing zeros to increase the buying power of the currency. The calculated adjustment made to a country's official exchange rate relative to a chosen baseline such as gold or the USD is known as a revaluation.