The Iraqi Dinar exchange rate has fluctuated dramatically over the years since its inception in 1932. The Dinar of Iraq was officially launched for use when British rule came to an end in Iraq. At that time, the Iraqi Dinar was linked to and was equivalent in value to the British pound sterling. In 1932, the exchange rate was equal to US $4.86. This exchange rate stayed constant until it depreciated in 1949, at which time it was equal to US $2.80.

In 1959, Iraq formally disconnected the Iraqi Dinar from the British pound sterling as a display of its independence from Britain. The Iraqi Dinar exchange rate remained comparable to the pound sterling of Britain until 1967 when the British pound devalued. Until the month of December in 1971, the Iraqi Dinar exchange rate continued to equal us $2.80. In December of 1971, all of the world's currencies underwent major realignments, which dramatically affected the Iraqi Dinar exchange rate as compared to major world currencies.

In 1973, the United States Dollar significantly depreciated, which caused the Iraqi Dinar exchange rate to rise to US $3.39. The Dinar of Iraq remained steady at this exchange rate until the Iran and Iraq War broke out in 1980. The uncertainty of a country at war has a direct affect on that country's economic status.

Iraq officially and purposefully lessened the Iraqi Dinar value by five percent (5%) in 1982, which then made it equivalent to US $3.22. At this time, the Iraqi national debt was steadily getting deeper and deeper. However, despite this deepening of national debt, the Iraqi Dinar exchange rate remained at this solid quotient.

Iraq's economy saw inflation rates rising drastically in 1985 and 1986, with rises from 25 percent (25%) up to 50 percent (50%) during both years. The official Iraqi Dinar exchange rate remained unchanged at US $3.22 but its actual operational value was much lower -at almost half the value - than this official rate. Between 1986 and 2003, the Iraqi Dinar exchange rate was approximated to have a fluctuating value between ID0.33 to ID1.32 to one United States Dollar. By October 2003, the formal Iraqi Dinar exchange rate was US $0.00027. Between August 2004 and 2005, the official Iraqi Dinar exchange rate was at US $0.00068 and was steady at this rate at the beginning of 2006.

In 2008, world currencies have experienced tremendous upset and uncertainty as the world's credit market is forecasting recession and decline in many major world currencies. This has the potential to disrupt the Iraqi Dinar exchange rate against other major currencies, such as the United States Dollar, the Euro, the Japanese Yen and the British pound sterling. Up until October 2008, the Iraqi Dinar exchange rate has averaged US $1.00 equals IQD1000.00.

The Iraqi Dinar exchange rate, in comparison with other major world currencies - such as the Dollar, Pound, Yen and Euro amongst others, is directly affected by social, political and economic changes in the world and in Iraq.