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Why Iraqi’s Dinar Should be Around the Value of Kuwaiti’s Dinar

Why Iraqi’s Dinar Should be Around the Value of Kuwaiti’s Dinar

Sunday, 5 December 2021

Why Iraqi’s Dinar (IQD) should be around the value of Kuwaiti’s Dinar (KWD) at USD 3.3

By Maijanfad (1 July 2018)

When one looks at the historical data available in public domain, it is clear that IQD has always been the same or around the value of KWD.

Why Are They Far Apart?11

Let’s us look at 2 of the major economic indicators of both countries. These are oil and gold.

Before we begin, let’s understand the assumptions behind this writing first. It is assumed that both countries’ major source of income are coming from oil production and both have sufficient gold reserve that makes their currencies valuable and at par. Of course there are other economic components that we are not going to touch.



Let’s begin by looking at the historical IQD and KWD relative to each other and United States Dollar (USD) from the chart below.

Why Iraqi’s Dinar (IQD) Value Equals Kuwaiti’s Dinar (KWD) 1



Source: http://fxtop.com/en/historical-exchange-rates.php (1 July 2018, processed).

From the chart, one can see that historically since 1960, IQD (purple line) has always been in the range between 1 – 0.97 to KWD (red line) until 2000 – 2001 when it dipped to 0.0002. Interestingly, it went back to 0.97 in 2002 – 2003 before it plunged to 0.00024 (average 1 KWD = IQD4,100) in 2004 until to date (2018).

Correspondingly, IQD value relevant to USD follows the same trends (average 1 USD = IQD1,198). Strangely, KWD (dashed green line) value remains relatively stable at USD3,30/KWD since 1960.

The chart does not show revaluation of KWD purportedly took place in 1991 when Iraq invaded Kuwait.

This article http://articles.latimes.com/1991-03-24/news/mn-1395_1_kuwaiti-banks  (1 July 2018) suggests that the revaluation of KWD was against IQD to prevent bank’s clients exchanging IQD with KWD. “Clients will not be able to exchange Iraqi currency issued during the occupation, when Baghdad pegged the rates of the strong Kuwaiti dinar to the far less valuable Iraqi dinar.”

But then this happened in 1991 and was not captured in the historical data!

On different angle, it can be argued that given the history of both IQD and KWD that was always at par on 1 : 1, KWD was revalued against IQD twice. First, between 2000 – 2001 and second, 2003 – 2004.

In the next paragraphs, let’s assume that KWD is always stable against USD at USD3.30 and correspondingly, stable toward IQD at 1 : 1.

KWD Was Revalued Against IQD And Not USD

The chart below was plotted to show the value of IQD/KWD (red line) against both Iraq (blue line) and Kuwait (light-green line) Gross Domestic Product (GDP) in Billion USD.

It is clearly seen that both Iraq and Kuwait have enjoyed increased GDP having almost similar pattern and trends. Why IQD/KWD value dipped in 2000-2001 and 2004?

Why Iraqi’s Dinar (IQD) Value Equals Kuwaiti’s Dinar (KWD) 2



  1. i) World Oil Prices


One of the reasons of looking at the world oil prices is to see whether USD as Petrodollar has influenced the revaluation of KWD against IQD.

Why Iraqi’s Dinar (IQD) Value Equals Kuwaiti’s Dinar (KWD) 3

The data shown in the graph above suggests that there is no correlation between the revaluation of IQD/KWD with the world oil prices as the prices sharply increased. This means, both countries enjoyed financial benefits from selling oil.

Both Iraq and Kuwait main sources of income are coming from oil production at 99% and 89% respectively (Source:http://www.worldsrichestcountries.com/top-iraq-exports.html). Thus, logically speaking both countries enjoy the rising oil prices. But, why KWD was revalued against IQD and subsequently IQD towards USD?

If the case is linked to USD, there is no plausible explanation as both Iraq and Kuwait during 2000 – 2005 were exporting their oil denominated in USD.

Iraq And Kuwait Oil Production

Let’s see the data on Iraq and Kuwait’s oil production.

Both countries’ oil productions appear to be stable for the period of 2000 – 2005 with upward trend within which Iraq production is more than Kuwait.

Traditionally, Iraq produced more oil than Kuwait. To date, Iraq production of oil of 4,380 Blue Barrel per day/1000 (BBL/D/1K) is almost double that of Kuwait.

Why Iraqi’s Dinar (IQD) Value Equals Kuwaiti’s Dinar (KWD) 4



Source: ieconomics.com

  1. ii) Gold Reserve

Now, let’s see the relationship between IQD and KWD from both countries gold reserves.

It appears that this is where the root cause of the KWD revaluation against IQD as it is obvious from the graph that Iraq has no gold being reported as its reserve from 2000 – 2004. Another way of stating this is that KWD departing itself from its traditional 1 : 1 relationship from IQD relevant to the gold holding of Iraq.

Could This Be The Main Cause Of The Revaluation?

Despite Kuwait’s gold reserve data for 1960 – 2000 is not present, it is apparently stable in the range of 80 metric tonne for the period of 2000 – 2018.

Correlating this with IQD/KWD relationship since 1960, IQD had been significantly at par on 1 to 1 with KWD and the graph below suggests that Iraq has always got more gold reserve than Kuwait which is on average above 100 metric tonne.

Why Iraqi’s Dinar (IQD) Value Equals Kuwaiti’s Dinar (KWD) 5



Source: www.gold.org (both Iraq and Kuwait from 2000 – 2018) andwww.24hgold.com (Iraq, 1962 – 1977) (1 July 2018)

From the graph, it can be seen that Iraqi’s gold of 127 metric tonne have disappeared in 1978 and started to be recorded by World Gold Council (gold.org) in 2005 from 5.9 metric tonne. Where did the 121 metric tonne of Iraqi’s gold go?

Where is Iraqi’s gold reported from 1960 – 1977 and why there was no record from 2000 – 2004? Will Iraq be able to get them back?

Interestingly, IQD/KWD revaluation happened within this time frame (2000 – 2004) and during which IQD has been at 4,100/KWD or 1,190/USD. These values linger till to date.

What Is Happening With IQD?

If macro-economic data of Iraq and Kuwait are correlated, there seem to be non-technical reasons that have been affecting IQD value. Could this be linked to Iraq’s gold reserve?

The data suggest that by 2015 IQD—when Iraq gold reserve is approaching 100 metric tonne—should be about the same as KWD at 1 : 1. Why to date this has not happened?

It appears the main reason is political and has got very little to no relationships with macro-economic and the wealth of Iraq.

Could this be changed by President Trump?

IQD future

Since 2015, using Iraq’s gold reserve as benchmark which has been steadily increased to beyond Kuwait’s, the future of IQD’s value looks similar to KWD that is USD3.0 – 3.3 using IQD 1 – 0.95 per 1 KWD.

Why Iraqi’s Dinar Should be Around the Value of Kuwaiti’s Dinar