Iraqi Dinar - Is it a Safe Investment?

With the currency market gripped with a new wave of investment in Iraqi dinars, people are questioning whether the investment is a legitimate money-making venture or a fraud. If you are wondering whether making an investment would be a beneficial addition to your financial strategy, the following information could prove helpful in making such an important financial decision.

It is an indisputable fact that the value of Iraqi dinar was at an all-time low immediately following the invasion of Iraq in the spring of 2003.  When the security of Saddam Hussein's regime was thrown into turmoil, the money printed by his government was seen as having little or no value. Because of the increase in political and economic stability in the past years, however, the new Iraqi dinar is a much more legitimate form of currency in the global marketplace. The dinar has demonstrated a gradual appreciation of value, especially in the wake of nationwide elections and increased coalition pressure to have the Iraqi debt to nations such as China and the United Arab Emirates eliminated. 

In a recent statement by Takatoshi Kato, the deputy managing director of the International Monetary Fund, he stated that "the Central Bank of Iraq raised its policy interest rates sharply and allowed a gradual appreciation of the dinar."*(1) Thus, a multifaceted approach is being taken to ensure that the dinar's increase in value occurs securely and is founded upon real economic growth and development of the nation's infrastructure. Since this statement in 2007, the security situation in Iraq has greatly improved, allowing for more foreign investment to flow into Iraq. This increase in available capital has given local Iraqi industries a chance to thrive by providing products and services once supplied by outside contractors.    

The most important factors that must be analyzed before investing in a foreign currency are the stability of the market and the openness of the economy to outside investment. With the international debt of the country greatly decreased after the Paris Agreement, in which several major countries forgave the pre-war debts, the economy has a marked improvement in stability and steady growth. There are many international banks that have opened up branches in Iraq a number of international companies are making an investment in the development of the country. In 2007 the Iraqi stock exchange was opened to foreign investors, which has also had a positive impact on the economy.

The government of Iraq has also instituted updated and refined security features on the Iraqi dinar designed to minimize counterfeit scams and investment fraud. It is wise to educate yourself about these features. Also, if you choose to invest in the dinar, be sure that the dealer that you patronize has an established reputation and is registered with the US Treasury Department and the Better Business Bureau (BBB).

In conclusion, investment in the Iraqi dinar is neither a fraud nor a get rich scheme promising to deliver financial lightning in a bottle. As with any prudent investment plan, it is wise to examine your personal portfolio to determine whether or not a certain investment fits your overall strategy.  Also, you can receive up-to-the-minute financial information customized to your areas of interest via RSS (Really Simple Syndication) or direct news feeds that can be easily added to your web browser homepage.  

In essence, the fledgling economy of post-war Iraq is like a newborn baby- it is sensitive to outside influences and prone to have brief bouts of intemperance, but all-in-all it holds the potential for exponential growth similar to the German and Kuwaiti markets following the conflicts involving their nations.  

*(1) "International Compact with Iraq," statement made by Mr. Takatoshi Kato of the IMF, 2 May 2007 source: imf.org/external/np/speeches/2007/050307.htm 22 Sept 2009