No deposit, no returns
It took two pickup trucks to cart away $950,000 when armed robbers looted the state-owned Rafidain Bank in Baghdad in July.
Baghdad, Iraq (FORTUNE Magazine) -- It took two pickup trucks to cart away $950,000 when armed robbers looted the state-owned Rafidain Bank in Baghdad in July.
With the Iraqi currency trading at 1,477 dinars to the dollar and inflation running at 53%, more and more cash is needed to make ends meet as the three-year-old war grinds on. Some banks, such as the Iraq Middle East Investment Bank, have also experienced a cash-flow problem as depositors either leave the country or lose confidence in the safety of their money.
Still, the dinar, once valued at about $3, has remained relatively stable since it was reissued without Saddam Hussein's portrait in 2003.
"The macroeconomic framework has held together well, despite serious strains on the broader environment," says Ahmed Saeed, the U.S. Treasury's deputy assistant secretary for the Middle East. "Not to say that things are perfect."
The Iraqi stock exchange now lists 96 companies. Registered businesses have more than quadrupled since 2003. And oil production, the pillar of Iraq's economy, jumped 8% in June, to 2.2 million barrels a day, the highest level in almost two years.
Now Iraq's Finance Minister, Bayan Jabor, has come up with a plan to make it easier to shop (not to mention rob a bank): He wants to revalue the currency, chopping three zeroes off the dinar, and peg it to the dollar. That's one way of lightening the average Iraqi's wallet.