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UN Office for the Coordination of Humanitarian Affairs |
IRAQ: New currency on the way
BAGHDAD, 6 October 2003 (IRIN) - The smell of burning 250-dinar notes - the Iraqi currency - permeates the air at the Central Bank just a little more than a week before the new currency is to go into circulation. Workers around the central lobby are busy counting new notes in various denominations, which will be available in banks on 15 October.
Since March, Iraqis have been buying and selling virtually all their goods using the purple and blue 250-dinar notes bearing Saddam Hussein’s portrait. The notes are the equivalent of about 10 US cents at the current exchange rate. Because banknote printing presses were stolen from the Central Bank, notes of all other denominations are considered suspect by merchants - even a 10,000-dinar note worth about US $3.
Introducing new notes will help stabilise the currency and stop counterfeiting, according to Muhammad Salman Muhammad, the Central Bank governor, who recently unveiled images of the new notes and their security features. The new notes were identical to those in circulation before 1990, Muhammad said. None of them pictures Saddam Hussein.
"Iraq's currency has faced many difficulties over the years," Muhammad told IRIN in the capital, Baghdad. "This currency will be hard for counterfeiters to duplicate. It will also stabilise the general level of prices," he added.
Exchange rates bounced around like tennis balls after the former regime fell in April, but appear to have stabilised recently at about 2,000 dinars to the dollar. As bank employees count stacks of the new money, rubber-banded together in blocks, money changers on the street are discussing how they will be affected. Some speculators who have kept the 10,000-dinar notes stand to make money on the deal. Many of them bought the 10,000 note from residents at a rate much lower than its worth, after people panicked when merchants refused to accept it. Those speculators will be allowed to turn it in for the full value.
One man who recently started working as a money changer said it was not as easy as he had thought it would be. "I thought I'd make money in this business, but I'm losing my shirt," 32-year-old Kase al-Sharra, who owns a barber's shop near two central hotels where many foreigners are staying, told IRIN. "I have no phone, so I can't change my rate when the official rate changes."
While the first old 250-dinar notes are already being burned, residents could not start exchanging their old money for the new before 15 October, Muhammad said. The changeover will continue until 15 January. No banks in central Baghdad other than the heavily fortified Central Bank are operating at the moment, an issue Muhammad declined to address.
Meanwhile informal money changing is proceeding briskly around the city. "No banks are open now, because there's no security," Nur al-Din, told IRIN, another money changer who has set up shop near al-Sharra's. "This money changing is safe. Who would want [to steal] these notes?"
The new denominations will range from 50 dinars to 25,000 dinars. Security features include a silver strip embedded in the note as dashes that appear as a continuous line when held up to the light. Watermarks and metallic ink are also embedded into various notes.
Along with having more security features, the new currency will also bring northern, central and southern Iraq back together, according to Muhammad. Residents in the north have been using the "Swiss dinar" - so named for having been printed in Switzerland - for more than 10 years.
Exchange rates were arrived at after discussions with Iraqis, Muhammad said, but he declined to be more specific. Government workers, including teachers and many hospital staff, received "emergency payments" of $20 each in May. The payments flooded the market with dollars, which drove the price down against the extremely weak Iraqi dinar, al-Sharra said.
"Central Bank officials will be able to control the new currency better than they are the current money," Muhammad said. Many Iraqis try to keep money in dollars now, although most business transactions are done in dinars. The country is awash with fake 250-dinar notes, which are smaller than the originals. Police recently foiled several counterfeiting rings, seizing several printing presses and bales of official currency paper.
"We expect the Central Bank to be a core element in the stability of the exchange rate," Muhammad explained. In the meantime, the exchange tables continue to do a brisk business in the colourful, oversized 250-dinar bill.
"I don't know about the future, but dollars are more stable for now," al-Sharra said. "I'm also keeping the 10,000 notes, even the fake ones, because the Central Bank will take them sooner or later."
Theme(s): (IRIN) Economy
[ENDS]
This material comes to you via IRIN, a UN humanitarian information unit, but may not necessarily reflect the views of the United Nations or its agencies. If you re-print, copy, archive or re-post this item, please retain this credit and disclaimer. Quotations or extracts should include attribution to the original sources. All materials copyright © UN Office for the Coordination of Humanitarian Affairs 2003
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