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< Back to Iraqi Dinar in the News July 6th, 2006

Iraq says considering knocking zeros off dinar

Updated: 1:36 p.m. ET July 6, 2006

BAGHDAD - Iraq is considering redenominating the dinar, printing new banknotes to remove inflation-generated zeros from its currency, the finance minister said on Thursday.

Senior government and central bank officials have told Reuters the proposal has been under consideration for some time to make one new dinar equal to 1,000 current dinars, a move that would bring the currency closer to parity with the U.S. dollar.

Asked about such a suggestion in an interview on Arabiya television, Finance Minister Bayan Jabor said: "This is the ministry's suggestion to the central bank. We think in the long term it will be for the benefit of Iraq."

Jabor said surveys indicated popular support for the move. The oil-rich nation's currency was once worth more than $3, he recalled, before the ruinous wars and international sanctions during the rule of Saddam Hussein.

There are currently about 1,450 dinars to the dollar, a rate that has been relatively stable since shortly after the U.S. invasion in 2003. At that time new banknotes were issued by the U.S. occupiers to remove Saddam's image.

Other nations that have been through rampant inflation have followed a similar course, notably Russia in the 1990s. Until the 1980s, many prices in Iraq commonly also used the fils. One dinar equals 1,000 fils. The smallest denomination note today is 250 dinars.

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URL: http://www.msnbc.msn.com/id/13738902/