Dinar investors believe that the Iraqi dinar will rise in value against the United States dollar. The increase in the value of a currency is called a “revaluation,” or “RV” for short. The uncertainty over when a dinar RV will occur has triggered many rumors. In this article, we will review some popular dinar rumors circulating on dinar intel websites, blogs, and forums to help you discern what’s true and false.
DINAR INTEL: 7 DINAR RUMORS TO KEEP AN EYE ON
- The Central Bank of Iraq will redenominate, revalue, or reissue Iraqi currency.
- The Iraqi government plans to release the dinar on FOREX.
- US President Donald Trump spent millions buying Iraqi Dinar.
- Inflation has undermined the true value of the Iraqi Dinar, so it will rise in value against the USD.
- The Kuwaiti Dinar revalued to become one of the most valuable currencies in the world.
- The Iraqi dinar will become a strong currency without revaluation.
- Many countries have recovered after a devastating war ruined their economy.
It’s important to understand the historical backstory of how Iraqi currency fell in value to appreciate the reason for the unshakeable faith dinar investors have about why the dinar Iraqi currency will revalue someday.
Rumors about how to make a handsome profit from the dinar began shortly after the US-led coalition won the Gulf war and occupied Iraq. Before Saddam Hussein’s military fiasco against Kuwait, Iraq had been a prosperous country with the Iraqi dinar worth $3.20 on the foreign currency exchange rate.
On August 2, 1990, Hussein’s forces invaded the sovereign country of Kuwait, compelling its government leaders to flee to Saudi Arabia. After Iraqi forces occupied Kuwait City, Iraq established a provisional government. At this time, Iraq controlled an astonishing 20 percent of the earth’s oil supply. Although the Iraqi dinar replaced the high-value Kuwaiti dinar, a comprehensive United Nations embargo thwarted Iraq’s efforts to recoup from their financial losses after the Iraq-Iran war. Iraq was unable to gain redemption from their Middle East neighbors who had loaned them $41 billion. Because the embargo prevented Iraq from importing or exporting, it crippled the Iraqi economy, so by August 2002, the dinar fell to a fraction of a US penny.
The value of the dinar fell even lower after the US invaded Iraq on March 20, 2003. The United States government believed Hussein harbored weapons of mass destruction. Since the Iraq dinar had fallen to such a low price, currency investors bought as much as they could afford. They believed that the Iraq dinar would rise again after the UN sanctions lifted its sanctions.
They were partially right. Iraqi dinar news announced that the UN lifted most of its sanctions on May 22, 2003. However, the part investors got wrong was that the Bank of Iraq did not make any efforts at a currency reset. No revaluation occurred because Iraq plummeted into a crisis.
The remaining UN sanctions expanded to restrict Iraqi imports to prevent arms shipments to the Iraqi military. UN Security forces allowed only goods for humanitarian purposes into the country. The restrictions banned basic essentials that most people take for granted. For example, a doctor could not access a medical book, a teacher could not get chalk for a classroom blackboard, and a government clerk could not stock pen and paper. Iraq’s government administration, national health services, and schools began to crumble. Many jobs disappeared and wages dropped to a bare minimum. Famine spread because of the high cost of food and disease spread because water treatment plants could only pump out water but not decontaminate it.
Investors turned their hopes to expect an economic recovery. Rumors circulated about how Iraq planned to rebuild its oil-driven economy and how the dinar would rise in value to match the United States dollar or get closer to its old value of around $3.00 USD dollars. As these events unfolded, US currency investors continued buying Iraqi dinar notes in the hopes of a revaluation.
We will now take a closer look at each of these rumors to see which are plausible. The possibility of an imminent revaluation has sparked many rumors. Here are some of the popular dinar rumors frequently discussed among investors.
Rumor 1: The Central Bank of Iraq will redenominate, revalue, or reissue Iraqi currency.
On May 3rd, 2007, the International Monetary Fund issued a statement about an International Compact with Iraq. This triggered a fresh round of rumors. According to the latest dinar recaps appearing at the time, the Central Bank of Iraq was about to improve the value of Iraq’s currency. Since the exact nature of their intended action was not clear, dinar guru speculated that it could be a redenomination, a revaluation, or a re-issuance of the Iraqi currency.
Investors found many encouraging statements in the official letter to add credence to the rumors. Here are two examples from the official statement:
“Iraq has also embarked on an ambitious structural reform program in order to make the transition to a more market-based economy.”
“To combat inflation, action has been initiated on three fronts. First, the Central Bank of Iraq raised its policy interest rates sharply and allowed a gradual appreciation of the dinar. These measures aimed to de-dollarize the economy in order to enhance the central bank’s control over monetary conditions, and also to reduce imported inflation.”
Things looked even more promising after the value of Iraqi dinar rose by 8.5% over the next few years. In April 2007, one United States dollar equaled 1,270 Iraqi dinars, but by Aug 2014, one United States dollar equaled 1,160 Iraqi dinars.
Although the rate did not continue to improve, this rumor is hard to dismiss as unfounded. While the expected changes did not occur for a long time, it’s possible that the Central Bank of Iraq is still working on taking some action behind the scenes to strengthen the Iraqi currency.
Rumor 2: The Iraqi government plans to release the dinar on FOREX.
Although there is no evidence to suggest that the Iraqi government will release the dinar on the FOREX, this rumor offers speculators a vision of how their stock of dinars could make them wealthy. If the Iraqi government were to release the Iraqi dinar on FOREX, investors would make a lot of money.
Here’s an example: Let’s say you purchased $1,000 worth of Iraqi dinars. At the current rate of exchange (1 United States dollars equals 1,190 Iraqi dinars), you would get 1.19 million IQD. Ideally, you would wait for trustworthy dinar intel to inform you when the Iraqi dinar would rise in value against the United States dollar. Should the Iraqi currency rise to a point where 1 United States dollar (USD) is equal to 1 Iraqi dinar (IQD), you would become a millionaire because your money would now be worth one point 1.19 million United States dollars.
Rumor 3: US President Donald Trump spent millions buying Iraqi Dinar.
Many articles on the Internet began claiming that US President Donald Trump purchased millions of dollars’ worth of Iraqi currency. This led to many internet searches like “Is Donald Trump buying Iraqi dinar,” and “Donald Trump dinar rumors.” Many dinar investors blindly followed his lead and started buying Iraqi dinar, spending as much as they could afford and a little bit more because they expected a large, quick return on their investment.
Some investors jumped to the conclusion that Trump had his finger on the pulse of global currency exchange news and knew what he was doing. Some speculated that Trump recognizes a good deal when he sees it and shrewdly grasped the potential of the Iraqi dinar to revalue. And some investors guessed that he knew the real story of what was happening in Iraq. The rumor grew because of circumstantial evidence. People thought they were connecting the dots.
One clue was that Trump had made a statement on the news that all currencies would soon be on a level playing field. Dinar investors assumed that this was a statement about a global currency reset. However, Trump may just have been reflecting on the trade war with China.
Another clue that Trump followers construed as evidence was that the Trump administration has been highly supportive of the Iraqi government. This idea dovetailed into another rumor that the United States government was secretly helping the Iraqi government revalue its currency. However, this rumor about the US government assisting in the revaluation of Iraqi dinar predates Trump’s presidency. Rumor mills even credited the Bush’s administration with clandestinely nudging the Iraqi dinar up in value.
So, did Donald Trump buy Iraqi dinar? Frankly, we do not know whether he bought the Iraqi currency. There is no evidence that he purchased any dinars, let alone millions of dollars’ worth as some claim.
Rumor 4: Inflation has undermined the true value of the Iraqi Dinar, so it will rise in value against the USD.
The driving force of this rumor is the belief that the Iraqi dinar inflationary trends following the UN sanctions undermined the true value of the Iraqi dinar. Once the central bank fixed this, the Iraqi currency would rise against the United States dollars and might even go back up to its old value. This correction would make a revaluation inevitable.
This rumor confuses two financial concepts, the definition of the words “revaluation” and “redenomination.” These two words are not synonymous.
A revaluation is a price change in the value of a currency in relation to another currency in the fixed exchange rate market. Meanwhile, a redenomination is changing a banknote’s face value because of inflation. Inflation may have made the purchasing value of smaller units of currency worthless so only large denominations have value.
There has been no mention of redenomination, just public speculation that this could be a possible solution.
Rumor 5: The Kuwaiti Dinar revalued to become one of the most valuable currencies in the world.
This rumor, too, confuses the difference between revaluation and redenomination. Yes, the Kuwaiti dinar fell to an all-time low after the Iraqi invasion and then rose again to become one of the most valuable currencies on earth, with an exchange rate of 1 Kuwaiti Dinar equaling 3.29 United States Dollar. However, this impressive change in the value of the Kuwaiti dinar did not happen because of a revaluation. The Kuwaiti central bank released a new series of Kuwaiti dinars because Iraqi forces had looted the central bank of Kuwaiti dinars. So, the redenomination nullified the old issue by replacing the money with a new issue.
The Kuwaiti dinar is as powerful as it is right now because Kuwait has a thriving oil-based revenue. Since Kuwait added no new assets to increase the Central bank’s reserves, it is inaccurate to talk about a Kuwaiti dinar revaluation.
Rumor 6: The Iraqi dinar will become a strong currency without revaluation.
If Iraq can reconstruct and get its oil production back up to the level before Saddam Hussein started his wars against Iran and Kuwait, then a stronger economy would eventually lead to a stronger currency.
Iraqi oil has some unique qualities that could help the country earn billions. It could not only pay off its war reparations to Iran and Kuwait and its loans from Middle East countries for the Iraq-Iran war, a total of around $122 billion, but it would still have plenty left over.
This is actually possible because Iraqi oil is amongst the highest -quality oil in the world and Iraq has about 11% of the world’s proven oil reserves. What’s more, since the oil is only about 1,800 feet below ground, production costs are low, which makes a higher profit yield per barrel.
Estimates for Iraq’s oil reserves range from 200 billion barrels to 400 billion barrels. Economists base the higher number on the fact that geologists have yet to explore many areas of Iraq for oil and natural gas.
Rumor 7: Many countries have recovered after a devastating war ruined their economy.
This “rumor” is true. After the Second World War, allied forces ruined the economy of Germany and Japan with extensive bombing. Yet, today both enjoy a robust economy. Germany has the largest economy in Europe and the fourth largest nominal GDP on earth. Japan had the second largest in the world after the United States from 1968 until 2010. In 2010, China’s economy surpassed it.
Similarly, the Iraqi invasion ruined Kuwait’s thriving economy. Besides looting cash and gold from Kuwait’s central bank, Iraqi forces also set 600 oil fields ablaze when retreating from the US-led coalition. Despite these crushing setbacks, Kuwait’s currency is now the most valuable in the world, and the country is the fourth richest in the world based on per capita.
So, yes, the Iraqi economy could recover.
DINAR RUMORS TO KEEP AN EYE ON
Here at Treasury Vault, we promise to earn our reader’s trust by only basing facts and opinions on real Iraqi dinar news. While Iraqi dinar recaps spiced with rumors might be more engaging, we prefer to share investment advice based on facts from verifiable sources and actual breaking news.
Dinar gurus often base rumors on misconceptions and misinterpretations. Sometimes, too, they extrapolate some recent Iraqi news. For instance, they might extrapolate on a US Treasury Department press release about a visit to Iraq to discuss progress on financial latest issues to suggest the Baghdad government planned on a currency reset.
All too often, rumors are merely hyped-up statements about mere possibilities. For instance, it’s possible that there could be an Iraqi currency auction or Iraqi currency trading in the FOREX market, but unless readers can find Iraqi dinar currency news sources establishing this as a fact, they should dismiss such questionable dinar intel as mere speculation.
Dinar rumors are unnecessary to keep investor’s hopes up because the latest news out of Iraq suggest the Iraqi economy is on the mend. For instance, the central bank is building up its reserves, Iraq has elected a new Prime Minister, and Iraqi forces have almost defeated ISIS. Additionally, oil prices have recovered from a three-year slump, and the new Iraqi government is addressing the country’s economic challenges.
Iraq’s leaders must crackdown on corruption and rebuild the oil industry. Also, Iraq must repay war reparations, as well as pay back the billions the country owes to the Middle East states who funded the Iraq-Iran war. Additionally, Iraq must encourage foreign investments, and its public institutions have to support investments in the private sector, like real estate development or retail enterprises. Many issues remain and Treasury Vault will share the latest updates and breaking news on when the Iraqi government takes proactive steps.