Now, the question that arises in the minds of most investors is that will the Iraq government increase the value of the Iraqi currency in the future? Fact is that since an appreciating currency implies higher costs of paying for a brand new government as well as paying off past debts, a rise in the value of the Dinar seems unlikely. An unstable economy like that of Iraq is more vulnerable to a currency crash.
Several dealers in Dinars refer to the value of the Iraqi Dinar before the Kuwaiti invasion in 1990 when one Dinar was equal to a little more than $3 US Dollars, as a proof of the potential for the rise in the Dinar's value. However, they overlook the fact that before 1990, the Dinar was almost worthless and its value was set at random by Saddam Hussein. After the UN embargo, the Iraqi government was not able to manage its currency and the value of the Dinar collapsed to 2,000 or 3, 500 against the U.S. Dollar.
Hence, investing in Iraqi Dinars is a rather risky proposition, one in which the facts are not clear, and where the likelihood of risk rather than the gain looms larger.
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