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New Saddam-Free Dinar Showing Strength
As the euro, yen and other major currencies surge in value against the wilting dollar, even Iraqâs bantamweight upstart - the "Saddam-free" dinar - is showing unexpected muscle. The new Iraqi dinar, introduced last fall to replace notes bearing Saddam Husseinâs image, has strengthened by about 25 percent in dollar terms. The older notes must be turned in by Thursday - they have no value after that."You boys clear outta here -- yer moneyâs no good!" Coalition authorities see the dinarâs ascent as a vote of confidence in Iraqâs economy. But currency traders blame speculators in neighboring countries for hoarding the dinar and driving up its value in the hope of later dumping it to earn a quick profit. Sounds like the pit at the Chicago Board of Trade. Much of the dinarâs recent gain has come in just the last week. "This indicates that people are demanding the Iraqi currency, which is really flattering for us. ... This is now a currency that people want to hold," the deputy governor of the Central Bank of Iraq, Ahmed Salman Jaburi, told reporters Thursday. One dinar was worth close to 2,000 per dollar when the new notes - which depict Iraqâs important scientific contributions, history, landscape and economic life - entered circulation. After trading early Wednesday at 1,400 to the dollar, the dinar spiked that afternoon to 1,100 - an increase of 21 percent. Some Iraqis said this was the biggest same-day change in their currencyâs value since late 1995, when the dinar strengthened as the United Nations prepared to relax the economic embargo then in effect against Iraq. The dinar retreated to 1,300 by late Wednesday and slipped further on Thursday to 1,350. Traders and economists alike foresee volatile changes in the dinarâs worth in the weeks and months ahead. About 13 dinars to the penny. Itâs worse than the lira. Why not move a decimal or two while youâre introducing the new currency? Simon Gray, an adviser to the Central Bank of Iraq, said the dinarâs rise in recent weeks might not have been justified by improvements in Iraqâs economy and political stability. He attributed some of the new dinarâs strength to high-tech features such as watermarks and embossed lettering that make it harder to counterfeit compared to Iraqâs older currency. As the dinar has grown stronger, more people have shifted their savings from dollars into dinars in expectations of a further increase in value. These currency exchanges have added to the dinarâs momentum. Gray conceded speculators might be contributing to the stronger dinar. "Itâs somewhat ironic that the Kuwaitis - if thatâs what theyâre doing - are buying the Iraqi dinar," he said. "I would guess that a year ago you wouldnât have been able to persuade a lot of Kuwaitis to invest their wealth in the Iraqi dinar."
Got room for Sammy as well? Posted by: Steve White 2004-01-16 |
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