Iraqi Dinar – Dinar
The Iraqi War and Its Effect on the Iraqi Dinar
Iraq as a country is just coming out of a long cold and bloody war. Because of this fact, the rate of development can’t be expected to be too fast. The rate at which things are rebuilt will be just gradual. We shouldn’t forget that the fabric of the country was shaken to its root while it was in this war situation. The Iraqi dinar, which was the currency of the country, was negatively affected during the period of this cold bloody war to the extent that a million Iraqi dinar does not worth more than US$1200. You will agree with me that this was a real fallen state in a country’s history.
Because of the fallen state of the Iraqi dinar, the Iraqi economy was not spared some deep level of damage. The economy of Iraq became so battered during the period of the war to the extent that Iraqis couldn’t hold their heads high at all. The standard of living became so low while the cost of living became so high. Due to the almost worthless state of the Iraqi dinar, the purchasing power of Iraqi people was greatly reduced.
The rate of inflation in Iraqi because of its battered currency and economy became very high. Commodities became very scarce during the period of the war and because of this, a lot of money was required to purchase very little commodity. This led to s situation whereby very high amount of money was chasing very little commodity. You will agree with me that inflation couldn’t really be cut off from the scene in this kind of scenario.
One of the things that led to the fall in the Iraqi dinar is the need by the Iraqi government to attract business associates to itself during the war. It will be remembered that the United Nations lay a sanction on Iraq and this lead to a situation whereby the country is not capable of doing business with various other countries of the world. The Iraqi government had to attract the few numbers of countries that would want to do business with it by reducing the value of the Iraqi dinar.
Funny enough, the Iraqi dinar had been experiencing some kind of underground and unofficial devaluation even before the Iraqi central government made up its mind to officially devaluate the Iraqi dinar. The unofficial, black market devaluation must have been one of the factors that were responsible for the official declaration of devaluation of the Iraqi dinar by the Iraqi government.
It is however believed that with the present desire of the Iraqi government to revaluate the Iraqi dinar, there is a good chance of the Iraqi dinar regaining some of its lost glory. One other thing will go a long way in helping the Iraqi dinar to come back alive is the present recession being experienced by the United States dollars. The Iraqi government can work with this and give the Iraqi dinar some rise in value now that the United States dollars is still experiencing its fall in value.
