Dinar Currency of Iraq

Baghdad Invest - 12/02/2012 17:35 G.M.T: Baghdad.

When Michael Capps set foot in Iraq with Halliburton, Iraqi Freedom was well underway, but the buzz in the American bases had nothing to do with politics.

“The minute you hit the ground, there was hype,” said Capps.

Servicemembers were talking cash, Iraqi money called dinar.

“You couldn't almost walk into an American base without somebody mentioning the Iraqi dinar, the revaluation, the investment…we're going to become instant millionaires,” said Capps.

The idea? Buy dinar at the current low value, near worthless, and hope for appreciation.

When Capps bought his currency in Iraq, $14,000 worth, the dinar was valued around 1,500 to one dollar.
Best case scenario, the dinar would return to its pre-war value 3.5 to one, making Capps and many other investors instant millionaires.

“If it sounds too good to be true, come on wake up, it's too good to be true,” said Certified Financial Planner, Don Grant.

Grant is the first to steer potential investors away from the dinar. He starts with the dinar's valuation. Unlike the U-S dollar, the dinar isn't backed by a stable government.

“The dinar has been valuated initially by Saddam Hussein. He is the one who said, ‘This is what it's worth,” and it’s pretty much maintained that same value for the past decade,” said Grant.

According to online exchange site xe.com, today's value of the dinar is about 1,160 to every dollar. Back in 2005, it was around 1,500. That’s a seven year appreciation of about 30 cents.
Capps is well aware his investment might take time. He's well-aware it's nothing more than a gamble in the first place.

“I think there's definitely some potential for some real opportunity, but anybody that's got the view that it's a get rich quick overnight, it definitely isn't going to happen that way,” said Capps.

But Grant and many other advisors have one undeniable reason they don't see that potential. The Iraqi government may be the last one to want their currency to appreciate. They're in big debt. If their currency gains value, that just deepens their debt. In fact, many say Iraq would be far more likely to scrap the dinar altogether and create a brand new currency, making all that dinar sitting in American houses nothing more than pretty paper.

But say, the dinar stays put and it does appreciate. Here comes the next problem, says Grant. Where do you cash them in?

“I don't know of a place in America where I can go trade dinars other than some place that is perhaps illegal,” said Grant.

The currency is not regulated. To see for yourself, Grant offers a challenge to those thousands of Iraqi dinar dealers online.

“Present them the opportunity of buying some that you have. Tell them you'll sell them at a discount. I don’t think they'll buy it,” said Grant.

That's something both Capps and Grant agree on. It's the middle men you need to be wary of. With shipping and handling and commission charges, you end up paying two to three times the dinar's true value, making the dealers the ones who may be getting rich.

Yet the trend of dinar investment continues to grow and there's one reason for that; hope.
No one knows for sure if it will or won't pay off.

But even Capps offers this advice:

“The dinar as a whole is completely a risk. You know, one of the things people will tell you about any investment is, don't invest money you're not prepared to lose.”

Grant encourages anyone interested in foreign currency investment to get with a certified financial planner. Visit cfp.net for more information.

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