Is it true that in a couple of years the Iraqi Dinar (Currency) is supposed to go up in value to the U.S. $?

Question

There's been rumor of this and if this is true then some people are going to be really rich.

Answer 1

Overview

A number of people have begun touting so-called "investment" opportunities in the Iraq Dinar as a "sure way" to make a lot of money with little or no risk. Many of our clients have asked our opinion on the legitimacy of this.

Is "investing" in the Iraq Dinar a sure way to profit? We don't think so. In our opinion, buying the Iraq Dinar is a high risk investment with a poor outlook.

A Little History

The official rate of the old Iraq Dinar, $3.22 USD (U.S. Dollars), was set in 1982 by Saddam Hussein. The old Iraq Dinar could not be freely traded, so this rate was never tested or upheld on the world market.

The current Iraq Dinar (IQD) was introduced between October 2003 and January 2004 by the Coalition Provisional Authority in close consultation with financial experts from Iraq and the international community. The IQD is currently valued at a little less than seven hundredths of a US cent. (1 USD = 1460 IQD). The old "Saddam" Dinar has no current value and is worth only what a collector is willing to pay for it.

What's Happening Now?

The IQD is not freely traded, and is not being used in any significant international transactions. We are unaware of any official bank or foreign exchange office outside of the middle east that will exchange the IQD.

The IQD trades on a very small, tightly controlled exchange. The total volume of IQD traded by the Central Bank of Iraq is in the thousands of dollars, compared to the $1,900 billion dollars traded on the Foreign exchange market every day. This small number of trades makes the IQD's value effectively immaterial.

The Central Bank of Iraq's stated objective is not to promote the free trade of IQD, as is the case in a true free market economy, but rather to keep the value of the IQD stable. The only way the Bank can ensure the semblance of stability is by tightly controlling the exchange of IQD on the market, and by ensuring that the currency cannot freely trade on the open market. They evidently fear that open trading of the IQD would lead to a rout in which the value of the IQD would sink to practically nothing.

Consider the situation. Why tightly control the trading of the IQD if it is likely to appreciate in value? If the value of the IQD were to surge, this could be held out as evidence of a surge of confidence in Iraq's economy. So why not open the IQD to free trading? Why would this be done unless the Iraqi Central Bank itself feels that the IQD would decline in value in a free market?

A Snapshot of Iraq Today

The current situation in Iraq is pretty grim:
o Over a decade of international economic sanctions and a devastating war has left the infrastructure in tatters
o $125 billion of external debt
o Millions of dollars in post-war debt
o No stable government
o Insurgency steadily on the rise
o Oil facilities and pipelines are sabotaged regularly
o Many predict out-and-out civil war, such as the former Prime Minister of Iraq and the outgoing UK abmassador in Baghdad

These aren't the kind of conditions typically conducive to the creation of booming economies. More to the point -- a 450,000% increase in the value of the IQD (as predicted by some of its promoters) seems ridiculous in the face of these challenges.

Much more on this at the web site listed below:

Answer 2

it is true, the gov't also bought dinars like crazy... the rate Has already improved from earlier 2006 at 1477 to 1318 today (1/9/07) ... waiting on hydro-carbon laws etc..

Answer 3

It depends on how attractive investment is in Iraq vs investment in the US (assuming a constant monetary supply).

US investment risk generally varies very little.

So the answer to your question depends on whether Iraq is more stable in "a couple years" or not.

I doubt whatever dumbass told you this rumor holds the master plan to MidEast peace.

Answer 4

I've heard that too. My realtor said he put some investing on Iraqi money and if it keeps going at the rate it is, he said he'll never have to work again. I've been interested in this too.

Answer 5

Investment rumors are for fools.