Iraqi Dinar-All Is Quiet Are You Buying Iraqi Dinar?

So Are You Buying Iraqi Dinar? Let's Hear From You!

Excerpt From Article On Thriving Dinar Trade In Japan.

Saturday, May 9, 2009
Speculators turn to shaky Iraqi currency
By MINORU MATSUTANI
Staff writer

...Customers are buying into Iraq for several reasons, including the expectation of economic recovery, a desire to help the economy and the dream of a more than 500-fold capital gain. With a short list of competitors in the dinar exchange market, Rise International and other exchange houses running a similar business are thriving.

"When I heard about the dinar, I thought I would buy it for the same reason I buy lottery tickets," said Katsunori Arai, 50, who bought seven 25,000 dinar bills from Rise International. "People are suffering there, so I am hoping the Iraqi economy will recover."...

...The currency is a minor one, the political situation there is unstable, and we don't get much information about Iraq. Above all, buying for quadruple the trading rate is too much," Shieida said. "If you buy it, it should be with money you won't regret losing."

Motohiro Ono of the Middle East Research Institute of Japan said the political, economic and security situation in Iraq is clearly better than right before the U.S.-led invasion in 2003, and thus the current dinar level is very low.

However, the stability is based largely on the security situation, and it may become unstable again as the U.S. withdraws its forces, who, because they are neutral, are probably better at suppressing tribal conflicts than local soldiers hired by the Iraqi government, he said.
If conflicts break out, the locals may join their tribes instead of fulfilling their governmental duties of suppressing conflicts, he said.

On the macroeconomic front, Iraq has been keeping prices of goods stable, compared with the figures in the 1990s.

The inflation rate in Iraq fluctuated between minus 8 percent and 8 percent from January 2007 to this March, and the dinar has been gradually strengthening against the dollar, from about 1,300 dinar per dollar to about 1,170 dinar in the same period, according to the Central Bank of Iraq.

The dinar was worth $3.20 before the U.N. embargo that followed Iraq's 1990 invasion of Kuwait, according to GlobalSecurity.org, a Web site compiling information on defense. Inflation mushroomed and the currency plummeted further on massive printing of counterfeit currency, driving the dinar down to anywhere between 3,500 and 4,000 against the dollar by mid-April 2003.

To improve the situation, the U.S.-led transition government Coalition Provisional Authority issued new dinar bills with watermarks and other technology making it difficult to counterfeit in October 2003.

Expectations of the dinar's appreciation against the dollar prompted Americans to start similar businesses, which inspired Taniguchi to start his.
Taniguchi gets dinar delivered from currency brokers who fly in from Saudi Arabia and other Middle Eastern countries with backpacks full of unwrinkled dinar bills worth about ¥10 million to ¥15 million, he said.

The brokers visit Japan every other week, he said. Taniguchi pays the brokers in dollars, he added.

He attributed his success to "honestly explaining risks."

Rise International will exchange bills if the Iraqi government issues new bills, he said. If his company goes bankrupt, clients can change the dinar to dollars and other currencies in the Middle East, he said.

What he is most cautious of is to make sure bills he sells are genuine. He said the current bills have watermarks and use other technology to prevent counterfeiting, and he has never seen fake dinar bills.