Dinar nearly worthless in war-ravaged Iraq
Photo: AP
Looking for investment opportunity? Try the Iraqi dinar
Despite Trading with the Enemy Act prohibiting trade in enemy currency, finance minister approves trade in Iraqi dinar for another year. Buying Iraqi dinar at unprecedented lows could prove enormously profitable if and when war-torn nation returns to economic prosperity
Despite the Trading with the Enemy Act, which forbids trade in enemy currency, Finance Minister Abraham Hirchson renewed authorization to traffic in the Iraqi dinar for another year this week.
The CashFlow Club Israel, which unites entrepreneurs and investors in various financial sectors, said the extension constitutes an investment opportunity with potential for significant profits.
The guiding principle in the move can be traced back to World War II, when the German mark collapsed. The few people who purchased German currency at its low point and held onto it for a few years were rewarded with astronomical profits when the mark regained strength a few years later.
The same went for the Kuwaiti dinar, which slumped during the Iraqi invasion of the country and soared when the economy restabilized.
The forecast that Iraq will someday return to economic prosperity is based on the nation’s tremendous oil reserves.
Bibi okayed trade
After the outbreak of the war in Iraq, the Iraqi dinar plummeted to all time lows. For the sake of comparison, before the war one Iraqi dinar was equal to USD 3. Nowadays, one American dollar is equal to about 1,000 Iraqi dinars. In other words, the value of the dinar plunged over 99 percent. According to historical trends, the purchase of 100,000 dinars for USD 100 could bear significant yields – if and when Iraq stabilizes.
The current situation in Iraq precludes electronic foreign currency trade in dinars, and therefore dinar bank notes must be directly purchased and kept. Since the days of the British Mandate, Israeli law prohibits trading with the enemy and bans, among other things, trade in the currency of enemy countries like Iran and Syria.
Until three years ago, Iraq was also on that list. However, since Saddam Hussein’s regime was deposed and the United States gained control in Iraq, then-Foreign Minister Benjamin Netanyahu decided to okay trade in the Iraqi dinar.
The go-ahead is only temporary and must be considered for re-approval every 21st of July. This week, despite the war in the north, Hirchson decided to extend the authorization for another year. As a result, the CashFlow Club Israel brought hundreds of millions of dinars, in cash, into Israel from Jordan.
