Although speculative thoughts about Iraqi dinar Investments have been going around for a long time, there were developments based on reports which led to spike in speculation in IQD-US$ trading (like the statement issued by IMF around mid-2007, in the post-Saddam Hussein era). It mentioned the International Compact with Iraq, which was interpreted in multiple ways and led to further speculation in the Iraqi dinar currency trading.
Just prior to these, the IQD-USD exchange rate was around 1270 (April 2007) and in August 2014 it was around 1160 – a positive return of around 8.5%. No big significant price moves have been observed since then, considering the long duration. Trends further down the line will depend on the current and future developments in the region.
Backed by the oil reserves, Iraq has the potential to spring back and establish itself as a stable economy. It managed to do so after the eight-year long Iran-Iraq war. But that will need a peaceful, promising business atmosphere to establish investor confidence, which will in turn help revive its economy and bring back the IQD forex rate to realistic levels.
Is there the possibility of a scam in such an investment scheme?
There are reasons pointing to Iraqi dinar investments being a hyped scam, most important factor being IQD literally trading in the “forex black market” instead of regular banks and trading desks. Financial scams usually have certain characteristics. A few tip-offs include:
- If the scheme is run and promoted by individual agents instead of known entities;
- If there are heavy unofficial promotions through internet/emails/telemarketing calls instead of open and fair marketing;
- If transactions occur primarily through street-based dealers, high variations in available rates, and high markup fees yet promises of overly exaggerated returns.
The Iraqi dinar is still a good buy, even without a “revaluation” is based on the strong belief by a few investors that Iraq’s oil reserves and development potential make the dinar a good purchase. Some investors argue that the market could drive a strong appreciation for the Iraqi dinar in the post war era, simply because the huge oil reserves will eventually make it a strong currency.
Trading forex currencies is always risky, as external factors at international levels are difficult to control or predict. Unless you are trading on regulated markets or through regulated agents, traders and investors should use extreme caution for trading such currencies. As with any traded commodity, investing in foreign currencies can be extremely risky and generally unsuitable for all but the most seasoned investors who can afford the high risk.