Navigating the Iraqi Dinar: Exploring its FX Presence and Investment Potential

Have you ever wondered about the Iraqi dinar (IQD) and its role in the forex market?

The IQD is the official currency of Iraq, a country that has been through a turbulent history and is still recovering from decades of war and sanctions.

The IQD is also one of the most exotic and controversial currencies in the world, as it attracts many speculators and scammers who claim that it will soon skyrocket in value.

But is the Iraqi dinar really on the forex? And is it a wise investment option?

In this article, we will address these questions and explore IQDโ€™s presence and potential in the forex market.

We will also provide you with some alternative investment options and resources to help you understand and navigate the complex and risky world of foreign exchange.

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Understanding the Iraqi Dinar

Introduced in 1932, the IQD replaced the Indian rupee from the British mandate era. Initially pegged to the British pound,

it switched to the US dollar in 1959. Valued at $3.22 until the Iran-Iraq war in 1982, it was then devalued to $3.39.

Post-1991 Gulf War, hyperinflation hit the IQD due to excessive money printing for military and social spending.

It plummeted to less than a penny in 1993 and hit an all-time low of 0.00027 USD in 2004.

After the 2003 US-led invasion, new IQD notes were issued, pegged at 1,470 IQD per 1 USD.

The Central Bank of Iraq (CBI) adopted a “limited floating exchange rate,” allowing a narrow 2% fluctuation around the official rate.

CBI conducts foreign exchange auctions, controlling IQD supply and exchange rate.

Despite a stable official rate (1,460 IQD per 1 USD in Dec 2020), challenges persist, including political instability, security threats, oil price fluctuations, and economic reforms.

IQD on the Forex: Fact and Fiction

Many wrongly believe the IQD is readily tradable on the forex market, but it is not, as it lacks global convertibility.

The CBI controls IQD through auctions and intervention.

The forex market, decentralized and vast, involves major, minor, and exotic currencies.

IQD falls in the latter, facing low liquidity and volatility. Outside Iraq, it is traded through unregulated channels, often promoting fraudulent “IQD investment” schemes.

Claims of an imminent IQD revaluation are baseless; the CBI emphasizes a gradual, market-driven approach.

The investment scam contradicts economic principles, falsely assuming the CBI solely determines IQD value.

IQD’s worth depends on market forces influenced by economic factors.

CBI can not unilaterally increase its value without repercussions, risking economic instability, inflation, and decreased competitiveness.

Avoid the IQD investment hoax; it is not a secure option.

Subject to high fees and risks, IQD lacks a forex market presence and is not a reliable store of value.

Best suited for local transactions or as a souvenir, not as a viable investment.

Exploring Alternative Investment Options

If you are interested in investing in Iraq or gaining exposure to the Iraqi economy, there are other ways to do so besides buying IQD.

These alternative investment options include:

Investing in Iraqi companies:

You can invest in Iraqi companies that are listed on the Iraq Stock Exchange (ISX), which is the main stock market in Iraq.

The ISX has more than 100 companies from various sectors, such as banking, telecommunications, industry, agriculture, and tourism.

You can buy and sell shares of these companies through a licensed broker or an online platform.

However, you should be aware of the risks and challenges of investing in Iraqi companies, such as low liquidity, limited information, regulatory uncertainty, and security threats.

Investing in Iraqi infrastructure projects:

You can invest in Iraqi infrastructure projects that are funded by the Iraqi government, international organizations, or private investors.

These projects aim to rebuild and improve the infrastructure of the country, such as roads, bridges, airports, ports, power plants, water systems, and telecommunications.

You can invest in these projects by participating in tenders, contracts, or partnerships.

However, you should be aware of the risks and difficulties of investing in Iraqi infrastructure projects, such as bureaucratic delays, corruption, legal disputes, and violence.

Investing in Iraqi bonds:

You can invest in Iraqi bonds, which are debt securities issued by the Iraqi government or Iraqi entities.

These bonds pay a fixed or variable interest rate and promise to repay the principal amount at a specified date.

You can buy and sell these bonds through a licensed broker or an online platform.

However, you should be aware of the risks and drawbacks of investing in Iraqi bonds, such as low credit rating, high default risk, and currency risk.

Before investing in any of these alternative options, you should consider your risk tolerance and research thoroughly the potential returns and losses.

You should also consult a professional financial advisor who can help you make informed and responsible investment decisions.

Beyond the Dinar: Understanding Foreign Exchange

Before investing in foreign currencies, grasp forex market basics.

It is the world’s largest, decentralized market where currencies trade 24/5 through a network of banks, brokers, and traders.

Forex values hinge on supply, demand, and various factors like economic indicators, political stability, and global events.

Exchange rates reflect a currency’s value against another, like USD to EUR at 1.21.

Forex is volatile, offering both opportunities and risks. Investors speculate on exchange rate movements or hedge against currency risk.

Choosing a reputable broker is crucial, ensuring access to a trading platform and compliance with market regulations.

Managing risk involves diversification, and spreading investments across currencies and markets.

Stop-loss orders limit potential losses, closing trades at predetermined levels.

Leverage amplifies trading size and returns but heightens risk and potential losses.

Adhere to market rules and regulations based on your trading jurisdiction.

Graphs illustrations showcasing successful and responsible investment strategies
Graph illustrations showcasing successful and responsible investment strategies(IQD)

Conclusion and Responsible Action

The Iraqi dinar presents a complex profile on the forex market, with limited trading and questionable investment potential due to high risks and uncertainties.

It is not a reliable store of value, better suited for local transactions or as a souvenir.

For exposure to Iraq’s economy, consider alternatives like investing in companies, infrastructure projects, or bonds for more regulated and transparent options.

Be aware of risks tied to a developing economy, including political instability, security threats, oil price fluctuations, and economic reforms.

Interested in foreign currency investment? Understand the forex market basicsโ€”the world’s largest, most liquid financial market, operating 24/5 with high volatility.

To participate, choose a reputable broker, adhere to market regulations, and manage risk responsibly.

Thorough research is essential; forex trading demands informed and responsible decisions, not speculation or gambling.

We hope you found this article helpful and informative.
If you did, please share it with your friends who might need help with understanding the Iraqi dinar and the forex market.
And do not hesitate to take action, but do so wisely and cautiously.
You can visit the OSLA website or contact them for further assistance.

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