Iraqis to get new currency

Iraqis will soon have a currency without the face of their deposed leader Saddam Hussein, a US official said on Monday (July 7).

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By  Massoud Derhally Published  July 8, 2003

Iraqis will soon have a currency without the face of their deposed leader Saddam Hussein, a US official said on Monday (July 7).

US civilian administrator Paul Bremer said that a new Iraqi dinar would replace the widely circulated Saddam dinar, which is the legal tender in Baghdad and the southern parts of Iraq. Other currencies circulating in the Kurdish provinces of Iraq, in the North, will also be phased out. The phasing out process will begin October 15.

According to an unnamed US official who spoke to AFP, the US will reintroduce the Swiss dinar, which was introduced in 1941 by the Iraqi Currency Board and was published in Britain.

The US official said the occupying power considered four options: to keep the Saddam dinar, reintroduce the Swiss Dinar; opt for the US dollar or create a new currency.

“The second option won out,” the official said.

Meanwhile, Bremer also announced that an Iraqi budget of US $6 billion (9 trillion Iraqi dinars), half of which are likely to be derived from oil revenues. The remainder of the budget will come from US $1.7 billion in Iraqi frozen assets in the US.

According to news reports Britain’s de la Rue Plc is likely to secure the contract to print the new Iraqi currency.

Throughout the war in Iraq, inflation was as high as 70% and the currency has depreciated as much as 84%. The exchange rate fluctuated sporadically shooting up from 3000 dinars to the dollar to 16,000 dinars to the dollar.

By mid May, however, it appeared the dinar started to make a comeback, surging by as much as 30% in value against the US dollar.

Iraqi bankers and analysts that Arabian Business has spoken with say a central bank is essential to Iraq’s reconstruction and a sound monetary system. They say as long as the country continues without a central bank, there will be no banking infrastructure and an Iraqi dinar will be unable to hold its value.

Before the war, Iraq was pumping 2.8 million barrels of oil a day and revenue at current prices was equivalent to US $17 billion a year and the Iraqi economy had a gross domestic product (GDP) of $100 billion at the start of the 1980s, whereas today the GDP is estimated to be around $26 billion. Had certain factors not intervened Iraq’s GDP could be $300 billion today, according to a prominent Iraqi banker.

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