Iraqi dinar defies spiraling violence

Azzaman ^ | 2005 Jun 3 | Intisar Maki

[Wiz]

The upsurge in violence has worsened conditions for almost everyone and everything in Iraq, but the new currency.

The Iraqi dinar is the winner as it has so far weathered the impact of mounting violence and car bombs that would have sent any other country’s currency tumbling.

Since its launch in October, 2003, the new dinar has preserved its value vis-à-vis the U.S. dollar and other major countries.

It is probably the only symbol of stability in a car torn by wars, civil strife and violence.

However, Iraqi economists are not surprised to see the currency fending off the political turmoil and the descent into violence, a major characteristic of the past two years.

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“The (central) bank has pursued sound monetary policies,” says Thuraya Khazraji, Baghdad University’s professors of economics.

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In the 1970s one Iraqi dinar was worth more than three U.S. dollars as Central Bank coffers were then stashed with hard cash, gold and other assets to support the currency.

But the dinar started losing its shine in early 1980s mainly due to the 1980-1988 Iraq-Iran war.

And the currency began to decline drastically after the 1990 invasion of Kuwait and plunged to nearly 3,000 to one U.S. dollar in mid 1990s.

A new currency was launched shortly after the fall of the former regime.

While Iraqis had no trust in the former currency, confidence is growing in the new dinar which is currently changing hands at about 1,400 for one U.S. dollar.

“The adoption of new monetary policies by the Central Bank … has led to higher confidence locally, regionally and internationally in the new currency,” said Khazraji.

[DUMBGRUNT]

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