Question about 1170

[jcampjr]

Why does the dinar always stay at 1170? The rest of the worlds money is constantly changeing, but why does the Iraqi Dinar stay exactly the same? You would think with its demand and future earnings potential it would be moving around to? Anyone have any idea why it is always 1170?

[oldtown]

the dinar is not yet tradeable money

[Psych]

I am no economist, first it's not traded outside of Iraq. That means Iraq can control it's value. Iraq has kept it at an articificial rate of 1170 for the past couple of years. There are probably many more people DV that can give you a better explanation of why they have kept it at this rate. If you go the the CIB website under Currency Auctions, you can see how Iraq has slowly raised the Dinars value over the last 7 or so years. The Dinar was twice as worthless after Saddam's rule ended, as the country was in shambles. You should look at the secondary markets if you want to see supply and demand in play. If you go to Ebay and try to buy some lower denoms, you will see that you pay 6-8 thousand for 1,000,000 dinar. Others please correct me where needed.

[Darin]

It is a pegged currency, therefore, they are basically relying on foreign economies for the strength of their own currency.

Regardless of the value of any currency they trade for (to see the list, check out the indicative rates listed on the CBI website).

Therefore, if the USD dropped significantly in value, the exchange rate would remain the same as the currency is pegged.

One dollar would still get you 1,170 IQD regardless of the USD.

These reserve currencies are what are held by the CBI & make up the total foreign reserves.

I would assume a majority of the currencies is USD, but would include the euro, franc, SDRs, etc

They follow article XIV from the IMF, so all M1 & M2 figures are backed 100 % by the foreign reserves.

Hope this little bit of information helps you.