As of October 2018, the value of Iraqi currency remained at a lower rate against other global currencies including the United States. The Iraq Central Bank plays an important role in monetary policy for stabilizing domestic prices and ensuring a sustainable growth in its economy. In 2017, the dinar value strengthened against the US dollar with results of 1,166.08 IQD equal to one dollar and an exchange rate of 1,169 IQD equal to one US dollar. Today, the Exchange-Rate converter has a result of 1,192.83 IQD against one dollar. Countries make strategic decisions to value their currencies based on significant factors which determine possible devalue or revalue valuations.
The Meaning of Currency Value, Devalue and Revalue
Economic conditions along with monetary policies and war determine the value of currencies in global countries. While the value of dinar remains low, in Iraq many investors are seeking opportunities in investments in the industrial sector. The country is patiently waiting for the revaluation of the currency.
- Currency value is the valuation of a commodity at its selling and purchasing price. The value increases when purchases are in high volume and it decreases when there are low purchases of currencies.
- Currency Devalue is the process of lowering the value of a country’s currency which reduces the cost of its exports.
- Currency Revalue is the revaluation of currency which the government decreases or increase its value in relation to other international currencies.
Although the Iraqi currency value is low now, long-term investments in Iraq could be worthwhile like Tiffany & Co. latest release of its building blocks collectible. People collect antiques and purchase new products and hold for many years for a future profit. Tiffany’s new products are extremely expensive but someone will purchase a set of 10 block pieces made of sterling silver, walnut wood, and enamel for over $1,600. Who knows, the same set may have a value of tens of thousands of dollars in 24 years. Investors who are investing in Iraqi dinar will have to use the same long-term investment concept to gain profits.
Important Factor to Influence the Stability of the Iraqi Dinar
The value of the Iraqi currency increased between 2017 and October 2018, from 1,166.08 IQD to 1,192.83. One of the ways the Central Bank of Iraq affected the dinar revalue is stabilizing its exchange rate. This monetary policy helps to stimulate the economic growth of the country in the industrial industry. Its results included an increase in national income, GDP growth, market money flow, and industrial production expansion. The rate of investments increased in Iraq when the industry sectors were unstable and regained stability.
The Iraqi currency exchange rate remained fixed when revenue decreased from oil sources in 2018. Even though the value of a dinar was questionable in 2017, the fact the country was the 4th leading country in oil production in 2016 is significant. During the time, Iraq produced nearly 4.5 million barrels of oil each day. The industry has the influence of increasing the value of its currency higher and cause revaluation, especially if there is a long-term hike in oil prices. The value of the dinar increased by 26.75 IQD.
Three Factors That Determine Reasonable Trade Value
The three factors that determine reasonable trade value are a country’s economic conditions, monetary policy, and wars among countries. Economic conditions of countries include the employment and unemployment rates and opportunities in the economy for growth. Political decisions based on governance and monetary policy contribute to stabilizing countries. War impacts the value of currency trade and will strengthen or weaken it. The government increases or decrease the value of its currency.
Exchange Rate Defined
The exchange rate is the value of a country’s currency against the currency of another country. The exchange rates are free-floating, restricted, and currency peg. Changes in the international exchange market will cause the free-floating rate to rise and fall. A restricted currency has limitations on exchange from a country to within its border. The currency peg is when the country pegs its currency to another country. The free-floating exchange rate is favorable by countries and has the effect of rising and falling based on the market’s demand and supply.