Iraq's central bank plans to issue a 10,000 dinar banknote for commercial transactions.

"This note will be used in relatively large commercial deals, notably for real estate and costly machinery," Iraqi Central Bank (ICB) governor Isam Rashid Huwaysh was quoted as saying by local newspapers.

One US dollar buys about 1,900 dinars, but the highest denomination currently used is the 250 dinar.

Bills in shops, restaurants and hotels can reach hundreds of thousands of dinars and many are equipped with cash-counting machines.

But Dr Huwaysh said the new banknote will not be used for everyday transactions.

Credit cards and cheques are no longer accepted in Iraq.

New dinar

The new banknote will reportedly be the same size as the 250 dinar and include a visible security thread inscribed with the words Iraqi Republic, phosphorescent filaments and a watermark

Dr Huwaysh said that the ICB is also replacing worn out currency and has issued new 25, 100 and 250 dinar banknotes.

The US dollar peaked at 3,000 dinars in 1996, but the dinar climbed to 450 a dollar by 1997 after the introduction of the United Nations "oil-for-food" programme.

Before the UN embargo, imposed after Iraq invaded Kuwait in 1990, the dinar was worth $3.20.

The "oil-for-food" programme allows Baghdad to export crude oil in exchange for basic foods, some medicines and pays for UN operations.