There has been a lot of talk about investing in the Iraqi dinar in recent years. This exotic currency seems appealing to forex traders because it comes from an oil-exporting country in its post-war era.
However, it has also given rise to many questions, mainly the ones concerning the legality and the risk involved in trading with this currency. So, is it wise to invest in the Iraqi dinar? In this article, we have approached this topic from various angles in order to help you form an informed opinion on this matter.
Table of Contents
Background
To be able to follow Iraqi Dinar news and information, it’s important that we run a little background check. Iraq is a predominantly Arab country in Western Asia with a history so rich that many consider it the cradle of civilization. Now, we all know how rocky things used to get in that region throughout the past century.
Somehow this is all connected with mankind’s sudden discovery of modern industry’s need for oil, and the fact that this region is full of the stuff. This juncture has caused a couple of wars that only seem to hit the pause button from time to time.
Well, such instability makes it interesting for traders to try and predict the fluctuations of local currencies, in this case, the Iraqi dinar. After the Gulf War in 1991, for a multitude of reasons, the currency had experienced a significant decrease in value.
After another round of devastation in the early 2000s, the Iraqi dinar was once again devalued. With the downfall of long-time Iraqi president Saddam Hussein, a multi-million dollar industry involving the sale of dinars to speculators emerged.
There was an idea that if you buy Iraqi dinars at an inflated price, at one point you will profit as the currency increases in value. This was often backed up by the idea that the Iraqi government will re-value the currency.
Is IQD the New KWD?
Agitators of IQD investing often like to mention the case of neighboring Kuwait, whose currency, the Kuwaiti dinar, has become one of the most valued in the world. A lot of them think (or they want you to think) that this was achieved by re-valuing the currency.
However, that was not the case. After the Gulf War, the Kuwaiti government had just released new notes to prevent the usage of the stolen pre-war dinars, but the value remained the same.
Is It a Scam?
Most people considering trading with the Iraqi dinar are concerned about the legitimacy of this business. So is it legitimate? Well, like with any other currency exchange practice, the answer is yes and no. Some people were convicted of fraud with the Iraqi dinar exchange.
One of the reasons a lot of people worry that this business is a scam is because the major US banks won’t exchange IQD for USD. Another reason lays in some incorrect statements hyped by the investment agitators, like the one saying that the Iraqi government is planning on revaluating the currency very soon.
This was actually a mistakenly conveyed statement. The original statement contains the word redenomination, instead of revaluation. Redenomination actually means changing the face of the banknotes and cutting of zeroes from the old ones. The exchange value still remains the same.
On the other hand, the majority of exchange service providers are legitimate. You just need to learn how to spot a scam.
Signs of a Scam
While looking for the right currency exchange service provider, you should beware of the signs of fraudulent behavior. Firstly, if you’re approached by an individual agent instead of a reputable company, you should probably stay away from them. Aggressive marketing can also be interpreted as a sign of a scam.
Whenever something sounds too good to be true, that’s because it’s probably not. Don’t let anyone tell you fairy tales about getting rich quickly, because you don’t live in a fairytale world.
If someone promises exaggerated returns, you shouldn’t trust them. This also stands for offers promising to be risk-free, because there is no such thing as risk-free forex trading.
Can You Buy IQD?
One of the biggest issues with IQD trading is actually getting this currency. As was mentioned before, major US banks refusing to exchange this currency for the US dollar is one of the reasons a lot of people think this is a scam.
Even if you find a bank in the US that will sell you IQD, the markup fee will be so high that in the case of the currency’s increase in value you won’t make a profit. At least not as much as you would with the right exchange rates. We should also probably mention that you should stay away from the black market for, well, obvious reasons.
However, there are legit online exchange services that deal with the Iraqi dinar and offer a reasonable exchange rate. You will recognize them for being transparent about their contact info and physical address. Once you’ve found a website like that, you should compare their exchange rate to the official IQD rate.
These companies provide safe home delivery of the ordered cash in 1-2 days. This way you don’t have to wait in lines and worry about transferring the cash to a safe place.
The Bottom Line
The political future of the Arabian Plate remains uncertain. Even the contemporary industry’s demand for oil is decreasing, and it looks like the long-awaited revaluation of the currency is not going to happen.
However, Iraq did rise after the war before, more than once. After all, this country is still rich with one of the world’s most demanded ores. If led wisely, there’s no reason why this ancient country shouldn’t reach the stability of its oil-rich neighbors, such as Kuwait or Saudi Arabia. With or without revaluation, the Iraqi dinar can still increase in value.
You shouldn’t take part in any gold rush, but investing in IQD is more than that. It’s important to deconstruct the paranoia that follows it. No investment is certain, but he who dares, wins.