History of the Iraqi Dinar
Like Iraq, the dinar also has a colorful history. When we speak of the dinar it is important to differentiate between the Kuwiati Dinar, the Jordanian dinar, the Iranian dinar, the 'old Iraqi dinar' and the 'new Iraqi dinar'.
Kuwait, Jordan, and Iran's dinar are not related to the Iraqi dinar in any way other than their name. The old Iraqi dinar was first created in 1931. Its value was tied directly to that of the British Pound sterling, and, in fact, was printed at mints located in the United Kingdom.
Prior to the introduction of the dinar, the official currency of Iraq was the Indian rupee which dated back to British occupation of Iraq during the world war period of 1931 to 1947. During this time the dinar was printed and circulated by the Iraqi currency board; although, the tie to the Pound sterling was still in place.
After the 1958 Iraqi revolution, or coup d'etat, the connection to the Pound sterling was severed and the dinar traded at a higher rate for a short time, then plummeted.
After the first U.S. invasion of Iraq in 1991, the Hussein government began printing a cheap paper note in unsupportable quantities. The pre-1991 notes, called the 'Swiss Dinar', because they were printed on high quality paper in Switzerland, remained the official currency of the Kurdish region of Iraq for a period of time.
During Saddam's regime, Saddam decided to try and set the exchange rate himself to a little more than $3 dollars per $1 dinar. This of course was not accepted by the market and was only available to those close to Saddam.
Unfortunately, this is what most Iraqi Dinar Dealers try to play upon. They try and get you to buy into the lie that the Dinar was at one time openly traded at some incredible exchange rate and that it will be there again.
The value of the currency quickly plunged and free market support of the Iraqi Dinar collapsed.
Enter the 'New Dinar'
Immediately after Saddam Hussein was removed from power, the newly formed Iraqi Governing Council and the Office for Reconstruction and Humanitarian Assistance printed more of the preinvasion
250-dinar notes as a short-term solution to keep the economy flowing as smoothly as possible considering the circumstances. During the period of October 15, 2003 and January 15, 2004, the Coalition Provisional Authority began printing and circulating the 'new' Iraqi Dinar. This version is a thoroughly modern banknote with the latest anti-fraud and anti-counterfeiting measures built in, and no likeness of Saddam Hussein anywhere on the note.
The new Iraqi provisional government allowed citizens to exchange their Swiss dinars at a one-to-one rate.
The creation of this new dinar enabled the Central bank of Iraq (CBI) to start the process of building a sound monetary policy designed to encourage banking and investment in the country's infrastructure. It is the job of the central bank to conduct currency auctions which establish the value of the dinar. The new dinar has enjoyed some amount of appreciation since its introduction and currency speculators hope that this trend continues.
The New Iraqi Dinar
Starting October 15th 2003 a new Iraqi currency known as the 'new Iraqi dinar' began to replace the 'old Iraqi dinar', and the currency used in the North of Iraq, the 'swiss Iraqi dinar'. The new Iraqi dinar created a single unified currency that is used throughout all of Iraq. Since the production of the new Iraq dinar, the international demand for the new Iraqi dinar has continued to rise.
1 OID 25,000 = USD 80,000
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