Should You Invest in Iraqi Dinar? Five Points to Consider About Buying Iraq's Currency

Investing in Iraqi Dinar

The Iraqi Dinar is a hot topic on discussion boards like dinarvets.com, nenosplace.com and investorsiraq.com where people have been debating the pros and cons of investing in the devalued currency of Iraq. It appears most of those who post on these boards are in favor of investing some disposable funds in the currency based on the fact Iraq’s currency was devalued as part of economic sanctions which are expected to be lifted soon.

Comparing Iraqi Dinar to Kuwaiti Dinar

Dinar investors point to Iraq’s vast oil reserves as a prime reason why Iraq’s economy will soon rebound. Investors hope the Iraqi dinar will follow the Kuwaiti dinar which dropped to 10 cents after Iraq invaded Kuwait and then rose in value to $3.39 in 2004, according to USAToday. Many are enthusiastically buying Iraqi dinar, and they may be on to something.

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Iraqi Dinar Increasing in Value

The Iraqi dinar was worth about $3 before the United Nations embargo that followed Iraq’s 1990 invasion of Kuwait. After the embargo, the dinar was trading at just below 2,000 to the US dollar in August 2002. In April of 2003 the dinar had dropped to between 3,500 and 4,000 dinar per dollar. In 2011, the average exchange rate has climbed up to around 1,173 Iraqi dinar per dollar. Many investors believe the dinar will shoot up even more in value when the final sanctions are lifted in Iraq.

The Rumor Doctor Jeff Schogol reports the case of one woman who already experienced a modest increase. She paid $700 for the currency, and five years later, its worth had increased to about $850. However, Schogol urges caution, referring to John Nagl, president a Washington think tank, who says buying Iraqi dinar is not a sound investment.

Buying Iraqi Dinar a Gamble

While calling investing in the dinar a ‘stupid currency trick,’ CNN/Money contributing columnist Walter Updegrave says the value of the dinar fluctuated between around $5 and $3 per dinar between 1932 and 1982, and points out that even if the dinar climbed in value back up to just a penny, that would represent a 1,329% return. However, Updegrave calls investing in dinar ‘gambling.’ Others are not so kind.

Selling Dinar a ‘Borderline Scam’

Financial wizard Dave Ramsey says trading in dinar is ‘borderline on a scam’ and John Jagerson with Learning Markets is even less enthusiastic, writing and syndicating several articles about what he calls a ‘new investment scam.’ However, even a sceptic like Jagerson notes that the dinar had already increased in value about 23% between the time the new dinar was introduced after the U.S. invasion of Iraq and 2010.

Buying Iraqi Dinar an Investment

Other financial observers are more positive. Jim Cramer of Money Matters says Iraq is receiving tremendous support from the US and indicates Iraq’s oil reserves are reasons why investing in dinar is not a bad idea, and CNBC has run several segments which can be found on YouTube about the potential the dinar has as a good investment.

Five Points to Consider About Investing in Iraqi Dinar:

  1. The dinar has been devalued deliberately and dramatically as part of economic sanctions against Iraq.
  2. When the sanctions are lifted, if Iraq is able to overcome its many problems and develop its oil fields, the dinar, which has already shown some growth, may show moderate to significant growth.
  3. Some experts say the dinar could be devalued further after sanctions are lifted, or even abandoned for a new form of currency.
  4. Other say that the worst-case-scenario is that the currency, even if devalued somewhat, could be still be traded back in for dollars.
  5. If you decide to invest, be sure you invest in new Iraqi dinar, not the old ones with Saddam Hussein’s picture on them.

Where to Buy Iraqi Dinar

Iraqi dinar can be found on specialized website as well as places like Amazon. They can be purchased in 25,000 notes, 5,000 notes, and 2,000 notes. As a collector’s item, you can even find the old dinar with Saddam Hussein on them, but do not buy these for investment purposes. More info about Buying Iraqi Dinar.

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