The Iraqi Dinar (IQD) which was introduced after the fall of the Saddam Hussein’s rule in the country has often been in the news for its impending revaluation and the opportunity for huge profits that it would offer the investors.
Investing In Iraqi Dinars and Revaluation:
Before the US invasion of Iraq the Iraqi Dinar was trading at USD 3 for an Iraqi Dinar. However, the present situation is a far cry from this. The Iraqi Dinar is now approximately trading at 1,165 Dinars per U.S. dollar. However, the Iraqi currency has managed to attract a fair share of interest from investors who rest their beliefs on the impending Central Bank of Iran’s revaluation of the currency.
Since the Iraq war in the year 2003, currency dealers have been promoting investments in the Iraqi Dinar. These sellers of the Iraqi currency have been promising investors that they will reap rich benefits if and when the Dinar is revalued. Revaluation of a currency is when the currency’s exchange rate is adjusted or increased in relation to a foreign currency. In the case of Iraq revaluation it would be increasing the currency value in comparison with the US Dollar. A person who has purchased the Iraqi Dinar at a lower rate would be eligible to get huge profits when the value of the currency increases after revaluation.
Is Revaluation of Iraqi Dinars Feasible? Factors that Impede Revaluation
Revaluation of the Dinar has renewed the interest in the struggling currency but questions do arise in the minds of the investors as to whether it is a wise option to invest in the currency. Below are some of the factors which make revaluation of the Iraqi Dinar difficult.
- Volatile Political Situation:
Revaluating the Dinar is not easy taking into consideration the volatile political and humanitarian situation in the country. The ISIS or the Daesh revolutionaries who involve themselves in terrorist and violent activities hold control over the Western part of the country including the oil rich city of Mosul while the Kurds have established control over the North Eastern part.
The ISIS has unleashed a wave of terror in the country with the Iraqi army highly inadequate to bring them under control. The terrorists have also threatened to introduce a new currency called the Gold Dinars which would give them an unprecedented hold over the country. The Sunni and Shiite groups control the rest of the country. The political situation is in shambles and is understood to be worse than what it was during the reign of Saddam Hussein and the US invasion of Iraq after the 9/11. The United States of America has just removed it troops from the country and it would take a lot of time for the country to stabilize itself.
- Lack of Transparency of the Central Bank of Iraq:
The Central Bank of Iraq is the most important bank of the country and controls most of the major financial decisions. However, the bank is not transparent in its transactions. The information in the website of the bank is outdated and no one in the country knows that total currency value in circulation. This lack of transparency does not augur well for the revaluation.
- Redenomination and Not Revaluation:
Redenomination has been on the cards by the Central Bank of Iran and this is highly probable as there is ample amount of Iraqi currency in circulation. However, this will not do any good to increase the value of the currency or revaluate the currency value.
- Inflation Rate:
The higher inflation rate of Iraq would impede the revaluation of the currency.
Is Investing In Dinars the Right Option?
- Buying Dinars a Cumbersome Process:
The currency is now used only in Iraq. Any investor who would like to purchase the Dinars does so from individual dealers around the US. Iraqi dinars are not sold in major US banks so investors need to shell out extra 20% or more than the mark up value to purchase Dinars. Also most of the Dinar dealers are not registered making the transactions illegal.
- Iraqi Dinars in Global Forex Markets:
The value of the currency is currently fixed by the Central Bank of Iran and government edits. It does not trade in the Global forex markets. This allows the Dinar dealers to charge any amount they desire to their investors.
- Dinar Scams:
Many States in the US have issued warnings about the scams related to Iraqi Dinars. The fraudulent currency peddlers fuel unrealistic situations and hopes of a windfall in the minds of unsuspecting investors. The sellers of the currency quote high level sources in the Iraqi government or the Finance ministry. The revaluation is often advertised as a means to become rich by fraudulent sellers who keep feeding fake news about imminent revaluation on the internet luring people to buy Dinars as an investment. The scheme is currently under scrutiny by various federal agencies such as the FBI and Internal Revenue Service – Criminal Investigation (IRS-CI).
It is to be understood that the revaluation of the Iraqi dinar is not going to happen anytime soon given the chaotic political situation in the country. This has been voiced by the member of the Parliamentary Economic and Investment Commission, MP Noura al-Bajari who has mentioned that the revaluation of the currency would be postponed by five years due to the security and political situation of Iraq. Consequently investing in Iraqi Dinars given the present conditions is also not an option.
The Central Bank of Iran does hope to make 1 Dinar equal to 1 US Dollar soon though this seems farfetched. However, all is not lost there is still light at the end of the tunnel. Iraq has rich oil reserves and backed by this Iraq has the potential to establish a stable economy. It is estimated that the Dinar will see an increase in its value corresponding to the increase in the oil exports. There will be a marked improvement in the value of the Dinar when Iraq reaches oil exports of 5 to 6 million barrels per day. Appropriate legislations for forex trading should also be established in the country which would greatly help in revaluating the Dinar.
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