What does it mean to "invest" in the Iraqi dinar? In simple terms, it's conducted in the same fashion as any currency investment. As with buying stocks, bonds or other currency, you purchase dinar at a given price and then expect the price to rise.
Check out Investopedia's large selection of forex tutorials. In the case of the Iraqi dinar investment scheme, there might be additional red flags:. First, here's a very rudimentary explanation of what it means to invest in a currency.
But what happens if the dinar takes the opposite direction? Now your invested holding of IQD1. Iraq has also embarked on an ambitious structural reform program, in order to make the transition to a more market-based economy.
First, the Central Bank of Iraq raised its policy interest rates sharply and allowed a gradual appreciation of the dinar. These measures aimed to de-dollarize the economy in order to enhance the central bank's control over monetary conditions, and also to reduce imported inflation. No big significant price moves have been observed since then, considering the long duration. If that happens, the payday may as well never come for investors holding Iraqi dinar and waiting for value appreciation.
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. Additionally, the following incorrect statements are heavily publicized by the propagators of Iraqi dinar Investment schemes:.
Revaluation is the actual calculated adjustment made to a country's official exchange rate relative to a chosen baseline gold or USD. Revaluation results in that currency becoming expensive to the base currency by the factor of adjustment and hence changes the purchasing power of that currency. It simply drops off the zeroes keeping the purchasing power the same as before.
There are confirmed news items that Iraq did plan to redenominate its currency, but not revaluate. In the absence of any revaluation, there is going to be no change in the forex exchange rate of Iraqi dinar IQD with or without redenomination. Economists also point out that it would not be beneficial to the Iraqi economy to allow any such value appreciation by the authorities even by means of revaluation.
Doing so will lead to multiple problems for Iraq:. However, this is misleading. The new release was to prevent use of stolen and looted old Kuwaiti dinars.
Examples of European countries like the Netherlands, UK, etc. These other countries managed to make a rapid comeback from the effects of World War II, and are today considered among the developed countries. One important fact missed here is that these countries were able to progress faster because the war situation was completely different from the Iraq War. It was then a case of world war where the European countries in question were on the winning side and got maximum support in the post-war aftermath.
The case of Iraq, by contrast, is more of a civil war, where there exists a possibility of the country being split into multiple fragments. Even if it stays as one nation, it will still take a good long time for the economy to recover. Similar to Iraqi dinar, similar rumors are reported for Vietnamese dong and, most recently, the Egyptian pound. No banks are offering Iraqi dinars. If you have to buy Iraqi dinars, you can buy them only at select money exchangers, who may or may not be legally registered.
How Iraq, its economy and hence the forex rate develop over the long term, is going to be a long term uncertain bet. 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. Dictionary Term Of The Day. Broker Reviews Find the best broker for your trading or investing needs See Reviews.
Sophisticated content for financial advisors around investment strategies, industry trends, and advisor education. A celebration of the most influential advisors and their contributions to critical conversations on finance. Become a day trader. By Shobhit Seth Updated December 10, — 2: Is there the possibility of a scam in such an investment scheme? Financial scams usually have certain characteristics.
A few tip-offs include: In the case of the Iraqi dinar investment scheme, there might be additional red flags: The basics of forex First, here's a very rudimentary explanation of what it means to invest in a currency.
Trends further down the line will depend on the current and future developments in the region. Now to the other side of the coin: Additionally, the following incorrect statements are heavily publicized by the propagators of Iraqi dinar Investment schemes: Doing so will lead to multiple problems for Iraq: The inability to repay the national debts due to revised valuations Literally putting barricades for foreign companies to enter Iraq for business Overall restricted growth in the post-war era, due to ripple effects of above 2.
In the Kuwaiti example, the pre-war forex rates were retained, simply changing the bank notes. Possibly Yes, but practically No. Can this be a good bet for a long term investment? Forex trading in general comes with a few challenges: The misleading practices of foreign exchange dealers as forex is primarily an OTC market. Further complications and malpractice exist in trading such illiquid and unregulated asset class.
Investors' basic ignorance about international forex valuations Loss aversion — investors holding onto loss-making assets further deteriorating the valuations of their investments How Iraq, its economy and hence the forex rate develop over the long term, is going to be a long term uncertain bet. How much a fixed asset is worth at the end of its lease, or at the end of its useful life. If you lease a car for three years, A target hash is a number that a hashed block header must be less than or equal to in order for a new block to be awarded.
Payout ratio is the proportion of earnings paid out as dividends to shareholders, typically expressed as a percentage. The value of a bond at maturity, or of an asset at a specified, future valuation date, taking into account factors such as No thanks, I prefer not making money. Get Free Newsletters Newsletters.More...