What Is the Iraqi Dinar Scam

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Table of Contents

The Current and Historical Values of the Iraqi Dinar to the $US
Is there a “Liquid Market for Iraqi Dinar?
How Many Iraqi Dinars are Equivalent to US$1,000?
Reasons for Exchanging US$ for Iraqi Dinars Today
Risks and Potential Benefits of Investing in the Dinar
Is Investing in Dinar a Scam?
References

The Current and Historical Values of the Iraqi Dinar to the $US

Iraqi dinar was formally introduced in 1932. During this time, 1 dinar was exchanged for US$4.86, a rate which remained unchanged until 1949. Between 1949 and 1971 the rate was 1 dinar for 2.89 US$. From 1973 to 1980, the rate changed to 1 dinar for 3.39 US$. The change was influenced by the devaluation of the US$. Between 1982 and 1988, 1 dinar was exchanged for 3.22 US$, this change was effected by the Iran-Iraq War (Tyson 2010, p. 102).

There are several reasons as to why the exchange rate of the dinar and the US$ has changed so dramatically over the past 10-20 years. In 1990, the rate of the dinar to the US$ dropped to 3.20 following the United States trade prohibition on Iraq. The US embargo was meant to discipline Iraq following the Iraq’s attack on Kuwait. Since 2002, the exchange rate has been between 1 US$ to 1,000 and 1 US dollar to 1,950 Iraqi dinars. The driving factors behind the poor performance of the dinar have been the Iraq’s poor economy and the political instability in that country. Currently, the exchange rate is 1 US$ to 1,000 Iraqi dinars (Day 2007, p. 81).

Is there a “Liquid Market for Iraqi Dinar?

Currently, there is no liquid market for the Iraqi dinars. In fact, the dinars are only sold through a few websites, which are exclusively selling them for the US$. Most of the banks fear dealing in the Iraqi currency and the few, which are dealing in it, accept just small amounts of the currency. The fact that it is still difficult to predict when the economy of Iraq will improve has continued to withdraw people’s confidence from the dinar (International Monetary Fund 2006, p. 49).

How Many Iraqi Dinars are Equivalent to US$1,000?

Today, one US$ is equivalent to 1,000 Iraqi dinars. This implies that if one has US$1,000 he will be able to purchase 1,000,000 Iraqi dinars. That is one thousand times one thousand Iraqi dinars. This information regarding the exchange rates is available in the website of coinmill.com. There are many places in which one can buy Iraqi dinars. Most of these places are websites. They include DinarBanker.com, USACurrencyExchange.com and Giddassociates.com (Summer 2007, p. 36).

Reasons for Exchanging US$ for Iraqi Dinars Today

There are many reasons why the number of people exchanging US$ for Iraqi dinar has increased (OECD 2010, p. 48). However, there are only two main reasons. Firstly, the Iraqi dinar has become extremely cheap and so it is affordable to majority. In fact, even the poorest individuals, those who could not afford to invest in any currency, are finding it easy to invest in the dinar. For instance, one can buy as much as 100,000 dinars for only US$100 (Stathis 2006, p. 221).

Secondly, investing in the dinar is perceived by majority as stress free. The fact that small amount of US$ is required to purchase much of the dinar gives the investors easy time. Unlike other currencies, which trade enormously in the market, the dinar is dormant, therefore, one does not have to worry himself to follow up how it is performing in the market (Mahnken & Keaney 2007, p. 201).

Risks and Potential Benefits of Investing in the Dinar

It is evident that investing in the Iraqi dinar may be quite risky. To begin with, there are no agents who are authorized to trade in dinars. In most countries, including the United States, it is illegal to trade in hard currencies before acquiring full securities registration. Secondly, the agencies selling the dinars are doing it on a misleading hype. These agencies base the potential value of dinar investment on the Gulf War effects. However, there is no sign that the Iraq’s economy will stabilize soon (Rocha 2008, p. 46).

On the other hand, there is speculation that investing in dinar today can come with a few benefits in future. There is high probability that the economy of Iraq is likely to worsen further. This in turn is likely to result in a further devaluation of the currency. When the currency loses much of its value, those who have bought today will be able to sell it at higher prices in future (Robinson 2009, p. 190).

Is Investing in Dinar a Scam?

It is evident that investing in Iraqi dinar is a great scam. The risks behind the investment outweigh the potential benefits. There is no liquid market for the Iraqi dinars. It is easier to buy them than to sell them (Tyson 2010, p. 104). Political and economic status in Iraq is continuing to deteriorate, a sign that the inflation rate in this country will continue to rise. When the inflation rate shoots so high, it will be difficult to sell the dinars. The currencies, such as the dinar, with very low values are in most cases demonetized. For that reason, it is not wise to exchange the US$ for the Iraqi dinar (Fisher & Hoffmans 2011, p. 74).

References

Day, TL 2007, Along the Tigris: the 101^st airbone division in operation Iraqi freedom: february 2003 to march 2004, Schiffer Pub, Atglen, PA.

Fisher, KL & Hoffmans, L 2011, Markets never forget (but people do): how you memory is costing you money and why this time isn’t different, Wiley, Hoboken, NJ.

International Monetary Fund 2006, Iraq: request for stand-by arrangement-staff report: staff supplement: press release on the executive board discussion: and statement by the executive director for Iraq, International Monetary Fund, Washington, DC.

Mahnken, TG & Keaney, TA 2007, War in Iraq, planning and execution, Routledge, New York, NY.

OECD 2010, Supporting investment policy and governance reforms in Iraq, OECD, Paris.

Robinson, J 2009, Bankruptcy of our nation: 12 key strategies for protecting four finances in these uncertain times, New Leaf Press, Green Forest, AR.

Rocha, GT 2008, Development economics research trends, Nova Science Publishers, New York, NY.

Stathis, M 2006, The new Iraqi dinar investment guide, AVA Publishing, New York, NY.

Summer, WG 2007, A history of American currency, The Ludwig von Mises Institute, Washington, DC.

Tyson, E 2010, Personal finance for dummies, Wiley, Hoboken, NJ.

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