Betting on Iraq

A pair of foreign exchange dealing companies have gotten together to start a site called BetOnIraq.com.

They want to sell the world Iraqi currency and are offering 2,000,000 dinars for US $2100.

hmm - Another site fxcmtr.com seems to be offering 3 million for the same money, but nevermind....

These aren't the gazillion dinar notes with Saddam Hussein's head that were filling up Ebay after the liberation, but new currency issued by the Central Bank of Iraq.

Marketing the notes to prospectors, their reasoning is that, although the dinar may be worth fluppence ay the moment (what with the terrorist problem and recovering infrastructure), when Iraq's rehabilitation is complete the dinar will have a very healthy rate of exchange - meaning that your $2,100 investment in 2-3 million dinars will be worth a fortune!

Now i don't particularly want to get into a long discussion about how the war is goingh, because I seem to remember us debating that before at some time....

ahem

But if Iraq does manage to turn into a new Dubai, will these post-war dinar notes still be legal tender?

Will the currency change - rendering these notes valueless?

I mean - fuck - I figure it might be worth a $20 punt....even just to have 30,000 dinars in my wallet....

I guess the best thing would be to look at post WWII Yen and Marks and see what happened. It would probably be the closest comparison you could find.

I don't think that helps.



[Edited on Apr 29, 2006 by Andvari]

it's interesting - makes me wonder what happened to the rouble after the cold war

I find it fascination how many times and places American Cigarettes have been used as curency.

I remember sseing a story about this on CNN Moneyline last year, supposedly it was a very hot investment. Good potential for huge returns.

But now, with the all sectarian violence going on, you'd be crazy to risk it.

But it's the sectarian violence is causing the exchange rate to be so stacked against the dinar.

If anyone was going to buy, it would be now - rather than later when / if it's a normal Middle East oil producer.

My only worry is that that inflation and too many gaijins with 50 billion dinars, will cause them to introduce a new currency "The Iraqi Pound" or something - thus rendering any dinars we buy now irrelevent.

Well, that and the $125 billion in outstanding foreign debt, the fact that the Iraqi Central "Bank" doesn't permit the thing to be freely traded (and that it has been officially pegged to the dollar since its inception in 2003), the fact that NO foreign banks will exchange the dinar for as much as an after-dinner mint, the fact that the thing sells in the thousands of dollars daily, compared to $2 trillion traded in actual currencies daily, the fact that there is next to zero FDI (aside from U.S. public dollars), and the fact that there is next to no oil production in Iraq. It is essentially a dangerously speculative piece of pretty paper, with next to no actual value outside of Iraq. You can't even short the dinar as NO ONE will trade it.

Pretty big "If" right there. Not even the most risk-hungry hedge funds consider it.

Current dinars are already irrelvant. You're not worried about all of the other indicators that pretty clearly indicate that the thing is currently worthless? That said, I don't think you really have to worry about currently valueless paper becoming a different valueless piece of paper, as there is only one Iraqi Central Bank, and it would be in the best interest of the bank to make sure that the dinar floats to those who currently hold it, should it turn into something else. You certainly would have to worry about something like the new regime nationalizing the banking sector / oil sector, rampant devaluation should the dinar actually be permitted to be freely traded in say, New York, London, Hong Kong, or Tokyo (as soon as that happens hedge funds will short the thing to even less relevance than it currently is), increased public debt, perhaps some sort of pilfering of the public coffers (I mean more than already exists), and further destruction of internal infrastructure.

But, hell, buy away. You might be able to line your bird cage with them or something - or maybe some pretty wall paper.

They're businessmen. They wouldn't do this if there were a chance in Hell of those 3 mil Dinar ever being worth more than $2,100. Somehow that's the most depressing indicator of Iraq's future I've heard in a long time.

but they're forex traders...this IS their business

brilliant - thanks for this

oh well...on the off chance, I may splash out $20

Actually, and I have only heard this from a couple of people who trade foreign currency, the OLD Iraqi dinar has more market value as a novelty item, than the NEW dinar as a monetary instrument. The new dinars do look pretty cool though:

When you get done with that let me know. I have some American Confederate money I want to sell you.

Wouldn't that be worth a lot now?