Historical Sketch

In the mid-16th century, the region of ancient Mesopotamia came under Ottoman rule. It was organized into three separate provinces, Baghdad, Basra, and Mosul. During World War I, Great Britain occupied the Ottoman lands and created the Iraq territory, a name that originally designated a region in the South. In 1921, the kingdom of Iraq was established under a British League of Nations mandate. Full independence was attained in 1932. In 1958, the monarchy was overthrown, and a republic was proclaimed. In 1980, Iraq attacked Iran which led to an eight years' war. Ten years later, Iraq invaded and briefly annexed Kuwait, until it was driven back in early 1991 by U.S.-led forces. IAs a consequence, the Iraqi lost control of the Kurdish areas in the Northeast, where an autonomous government got established. In 2003, the United States invaded Iraq for the second time, establishing a Provisional Authority which ruled the country until mid-2004. The U.S: troops finally withdrew in 2011, leaving back a vacuum that was filled by terrorist groups. In 2014, the "Islamic State in Iraq and the Levant" carved out a portion of Iraq and Syria and established there a quasi-state. It lasted until 2017 when it was crushed by Iraqi and Kurdish forces. After the victory, Kurdistan seceded and declared independence, which was not recognized internationally.

Monetary History Overview

After the Ottoman defeat in the First World War, Great Britain took over the rule in Mesopotamia, uniting it into the territory of Iraq. The military administration declared the British Indian Rupee current, although during the Turkish rule Egyptian money had been circulating in the region. The mandate government of 1921 did not change the monetary standard. In prepration of full independence, the London-based Iraqi Currency Board began operations in June 1931. The Iraqi Dinar was created as national currency in April of the following year, and the Indian currency was demonetized within three months. The Dinar was at par with the Pound Sterling and remained so through the 1949 devaluation. In July 1949, the National Bank of Iraq began operations and succeeded the Currency Board. The 1958 revolution overthrew the monarchy and ended the British domination in Iraq. The Dinar repegged to the US Dollar at an unchanged value. It did not follow the devaluation of the US currency in the early 1970s, but the peg was kept with an adjusted ratio. Apart from a tiny 4% devaluation in 1982, the Dinar exchange rate remained frozen at an unrealistic value. The Iraqi currency was, however, inconvertible and parallel rates were used in transactions. The war with Iran in the 1980s had already devastated the Iraqi economy. The two Gulf Wars between 1991 and 2003 and the subsequent U.S. occupation brought it to a collapse. The Dinar practically disappeared from the market. In March 2004, the central bank resumed operations. In October 2003 already, forex trade for the Dinar had been re-established, the exchange rate had been slashed by a factor 4000 compared the official pre-war rate. In the post-war economy, the Dinar recovered somewhat, and the exchange rate appreciated by about 30% until the mid-2000s. The currency has remained relatively stable since then.

Iraq joined the International Monetary Fund (IMF) on 27.12.1945 as a founding member.

Currency Units Timeline

Currency Institutes Timeline

Monetary History Sources