Every savvy investor seeking to diversify their portfolio is keenly aware of the lucrative nature of investing in foreign currencies. Recently, the Iraqi dinar (IQD) has once again captured the attention of investors through its perceived economic potential. However, considering the dinar’s investment is often associated with significant risks and questionable claims, the question remains: Is investing in Iraqi dinar currency a legitimate financial opportunity or just your average scam?
Why the Iraqi Dinar Appeals to Worldwide Investors
Iraq has a long history of war, and though it’s often still perceived as a war-torn nation, after decades of unrest, Iraq has finally settled into its most peaceful period since the early 2000s. Though a country typically requires several years (or even decades) to regain stability after war, many experts are hopeful that Iraq will soon experience an economic boom, often drawing parallels with other post-conflict economic recoveries, like Kuwait after the Gulf War.
While the optimism about investing in the Iraqi Dinar currency overlooks some of the current economic and geopolitical realities within the country, there are still several practical reasons why the Iraqi Dinar appeals to global investors.
Iraq’s Oil Reserves and Economic Potential
The appeal of this investment opportunity is mainly due to Iraq’s substantial oil reserves and the assumption that an economic boom will lead to the Iraqi Dinar revaluation. Iraq is currently the second-largest crude oil producer in the Organization of the Petroleum Exporting Countries (OPEC) and holds the fifth-largest proved crude oil reserves in the world (accounting for 8% of global reserves). Oil exports generate roughly 95% of the government’s revenue, heavily contribute to the country’s GDP, and underpin Iraq’s long-term economic recovery and growth.
Dinar proponents predict Iraq’s natural resource wealth will bring the country into a season of rapid prosperity. While this makes the economy vulnerable to oil price fluctuations, many investors believe that as Iraq stabilizes politically and economically its GDP, and by extension, the dinar’s value, will improve.
Potential High Return on Investment
Investors are attracted to the dinar for its potential for high returns. Historical examples of post-conflict currency revaluations fuel the optimism that the dinar will eventually follow the same path. Although, as of December 2024, the Iraqi dinar rates to USD remains relatively stable, 2025 forecasts estimate a 0.70% rise from the current rate, indicating a slight potential for further appreciation.
There’s also the potential for revaluation—a government-led adjustment that increases a currency’s value relative to others—which is a major reason why investors are once again interested in the dinar. Supporters believe that as Iraq’s economy recovers the government will revalue the currency, resulting in massive gains for those who already hold IQD.
The Risks and Realities of Dinar Investment
While investing in the Iraqi Dinar currency is alluring, there are still several risks associated with this investment opportunity which many investors are wary of. One concern with investing in IQD is the fixed exchange rate. The Central Bank of Iraq sets the currency’s exchange rate, therefore the currency’s value isn’t subject to market forces. This could mean that even if Iraq’s economy grows, the dinar may not experience the significant appreciation seen in freely traded currencies.
Another significant setback is the limited accessibility. Unlike major currencies, USD/IQD currency exchange is virtually nonexistent on international forex markets. Unless trading through legitimate means like Dinarit, investors often acquire IQD through specialized dealers or money exchangers, who may charge exorbitant fees, further diminishing potential gains.
The fixed exchange rate and lack of access are serious concerns, but the main risk associated with investing in IQD is the fact that profits are based on the potential that the nation’s economy will improve. While this investment could bring massive earnings in the future, unlike other investments, the dinar generates no interest or dividends in the interim. Investors rely solely on speculative currency appreciation, which unfortunately still remains uncertain at best.
Iraqi Dinar Scams Targeting Foreign Investors
Similar to any other form of investment, purchasing IQD comes with its risks and potential benefits. Why then do so many investors fear this may be a scam? The reality is that there are several unscrupulous brokers in the currency trading industry, and Iraq isn’t exempt. Many uninformed investors have fallen prey to fraudulent, exploitative schemes.
Scammers will often attempt to convince investors that IQD’s value will skyrocket in the near future due to government action or international intervention without providing any credible proof to support their claims. They emphasize the urgency of purchasing IQD immediately and pressure individuals into buying IQD at inflated prices. Some will even falsely claim endorsements from international organizations or well-known financial experts.
Despite these (and many other) fraudulent practices, investing in IQD isn’t inherently a scam. Every investor is responsible for vetting potential brokers/platforms for themselves and staying informed on the political and economic state of the nation to make the best decision for their financial future.
Will Investors Lose Money Investing in Iraqi Dinar Currency?
Although the dinar looks like a good speculative investment, especially for those who are expecting a revaluation, there’s no way to confirm or deny investing in IQD could result in a loss.
In 2020, the Central Bank of Iraq devalued the dinar by 20% against the USD to reconcile with the financial crisis brought on by the pandemic. While the exchange rate has improved over the years and it’s expected to continue to improve, there is no set timeframe within which investors can expect to receive a return on their investment.
The devaluation and depreciation of the dinar brought with it an increase in prices for imported goods, further reducing the citizen’s purchasing power. This economic strain has, unfortunately, diminished the appeal of the dinar in the eyes of some foreign investors. For those already holding this currency, it would be increasingly difficult to find lucrative opportunities to trade this currency which could result in a loss.
Investing in the Iraqi dinar isn’t a guaranteed way to wealth, but it could still be a beneficial investment. Investors who want to invest in the Iraqi dinar should do so with some level of caution. To minimize losses, treat the dinar as a high-risk speculative asset by working with reputable dealers, avoiding over-investing, and setting realistic expectations.
The Future of the Iraqi Dinar
While investing in IQD isn’t a scam, given the earning potential is linked to the economy of the country, the future of the Iraqi dinar is shrouded with a lot of uncertainty.
The prospect of a revaluation is the most commonly discussed expectation for the IQD, with many claiming that Iraq’s improving economic and political conditions might support this idea of setting a new, higher exchange rate for the currency. While investors holding the IQD would potentially enjoy substantial returns, there still isn’t a concrete timeline or assurance that this policy change will take place.
Another frequently discussed possibility is the deletion of zeros. This monetary policy would seek to control the value of the currency by removing three zeros from its denominations. However, experts believe that while this can simplify transactions and reflect economic stability, it won’t necessarily increase the currency’s purchasing power or benefit foreign investors holding IQD.
Over the last several years, The Central Bank of Iraq has been focused on stabilizing the existing exchange rate to address inflation and other economic concerns. While it isn’t impossible that the government could implement a revaluation and deletion of zeros, this change won’t take place overnight. Iraq will likely need to experience further economic growth and stability before these policies can be addressed.
Conclusion
While it’s common to encounter scams within the currency exchange industry, investing in the Iraqi dinar is not inherently a scam. Iraq’s economic potential is undeniable as it works toward economic and political stability. However, earning profits from direct investments in the dinar is still speculative and comes with its unique risks.
While there’s no credible evidence to support beneficial policy changes, like the Iraqi Dinar revaluation, the future of the IQD remains uncertain. Though many view this as a high-risk high-reward opportunity, potential investors should protect themselves from loss by maintaining realistic expectations and ensuring all investments are made through regulated and credible channels.