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September 15, 2002
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Sunday
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Rajab 7, 1423
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Iraq devalues dinar mirrors fortunes of US war threats
BAGHDAD, Sept 14: US President George Bush may be threatening war, but Iraq’s dinar is strengthening against the dollar in Baghdad where the standoff is reflected in the day-to-day rate of the local currency.
Before Bush’s speech (on Thursday) the dollar was worth 2,025 dinars while today it has fallen to only 1,980 dinars, money-changer Salem Habib told AFP.
By Saturday morning the greenback had risen again slightly to 1,995 dinars.
For Habib, seated in his central Baghdad office, Friday’s fall in the value of the dollar was due to the fact that Bush had put the issue in the hands of the UN Security Council and his speech did not threaten imminent military intervention.
The dollar slumped to its lowest level this year in mid-June — 1,560 dinars — after Baghdad agreed to a reform of the UN sanctions regime which has been in place since Iraq invaded Kuwait in 1990.
But the currency has been on a downward trend since early July when talks with the world body failed to produce any results and US threats to overthrow President Saddam Hussein mounted.
In Iraq, political news is the main factor behind the fall or increase in value of the dollar. Our currency is strong but it is not protected against political developments, Habib said.
People are tending to buy dollars more at the moment, but speculators run the risk of regretting it if a deal is struck between Iraq and the UN, on the return of disarmament inspectors, he cautioned.
The dinar has plunged from a rate of more than three dollars before the 1991 Gulf war.
Today it takes a million dinars to buy $500.
When the dollar falls, people buy but when it goes up against the dinar they sell in the hope that it will continue, he said.
Riyad al-Qabissi, a textile merchant, came in to exchange just 20 dollars.
I only take the dinar amount that I need and prefer to keep my dollars because even if they are down today they will end up higher.
You know I import textiles from Dubai and Syria and I have to pay in dollars, he added. —AFP
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