New Iraqi Currency Unveiled in Effort to Foil Counterfeiters And Stabilize Rates By Theola Labbé Washington Post Staff Writer Sunday, October 5, 2003; Page A26
BAGHDAD, Oct. 4 -- The Iraq Central Bank today unveiled new bank notes bearing scenes from Iraqi life and history in place of the face of ousted president Saddam Hussein. The bank also announced the start of auctions in an effort to bring stability to the wildly fluctuating exchange rates of the currency, the dinar.
In the auctions, banks bid to buy dinars, setting an exchange rate that will remain in effect for at least several days, said the bank's deputy governor, Ahmed Salman, at a news conference in the lobby of the bank's headquarters. At present the rate can fluctuate hour by hour.
Salman said two banks took part in the first auction.
"This is the first time we have done this in Iraq," Salman said. "We hope in a short time we'll reach a stabilized exchange rate, especially against the U.S. dollar."
Salman displayed the designs of the new bank notes, which will enter circulation beginning Oct. 15. Instead of the current five, there will be six kinds of bills, ranging from 50 dinars, about 4 cents at current exchange rates, to 25,000 dinars, about $18. The images on them include lions from the ancient city of Babylon and the face of a 10th-century mathematician.
Two local currencies are in use in Iraq, one known as the Saddam dinar because the notes bear his likeness, the other the Swiss dinar because it was once printed in Switzerland. It circulates in the mostly Kurdish regions in the north. The U.S. dollar is also widely used.
"The new currency will be one currency for one united Iraq," Salman said.
Plans call for Iraqis to exchange their old notes for new ones by Jan. 15. A Saddam dinar will be exchanged for one new Iraqi dinar, and a Swiss dinar for 150 new Iraqi dinars.
Salman said the first printing of the new dinar would be in "sufficient quantity" to meet the needs of the first three months of circulation. He declined to provide specific numbers, citing security precautions. The initial printing will also cover up to two years of reserves, he said.
This will be the second time Iraq's currency has been re-created due to war. In 1990, after Hussein invaded Kuwait and the United Nations imposed sanctions on Iraq, the country was forced to print its own money. Iraqis went from using coins called fils and bank notes without Hussein's likeness, in denominations of 25 dinars or less, to five new denominations printed on cheap paper that all bore the president's picture.
With counterfeiting a rampant problem, the new bank notes will have security features including a centerline thread, watermarks, metallic ink and raised letters.
Basil Twaij, 32, who with an older brother runs one of the sidewalk exchange shops that dot the city, pored over the colorful flier announcing the new currency and said he was happy it would likely be more difficult to counterfeit.
Since Baghdad was captured by U.S. forces in April and looters stole the government's printing presses, fake notes have abounded, Twaij said, and he has had to carefully examine the money his customers bring in to avoid being cheated.
At that point, his brother Basim, 41, looked at his hands and mimicked checking a bill for a security thread. "We want to take a break from checking the money," Basim Twaij said.
Basil Twaij chimed in: "We'll be left with just counting, not checking."
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