The Iraqi Dinar Revaluation Update 2018
This is our first update on the Iraqi Dinar revaluation for 2018.
The currency continues its range-bound valuation of the past several years. It’s value today is approximately 1,185 Iraqi Dinar (IQD) to 1 U.S. dollar. The 10-year range of the Iraqi Dinar to the U.S. dollar is between a high of 1,086, and a low of 1,202.
It’s unlikely that an Iraqi Dinar revaluation will take place this year, barring a significant change in its circumstances (which we’ll cover in this article). But it’s equally important to remember that until the Gulf War in 1991, the Iraqi Dinar was actually a strong currency. At its all-time high, it was trading at 3 IQD to 1 U.S. dollar.
That’s approximately 4,000 times more than what it’s trading at right now, and that shows the potential of what an Iraqi Dinar revaluation holds and why we need to follow its prospect closely.
Despite the current low trading status of the Iraqi Dinar on international exchanges, it could be one of the biggest currency investments of the 21st century. That’s why it’s important to pay close attention to – and monitor – every Iraqi Dinar revalue update.
Oftentimes, revaluation events move slowly, but once they do happen, they move pretty quickly. Our job is to keep you updated on the current trends so that you’ll be in the best position to maximize profits on your currency trades.
What is Revaluation?
A revaluation is a change in a currency’s official exchange rate. Usually, it’s a change in the exchange rate compared to other major world currencies, but it can also be some other baseline measure, such as the price of gold, oil, or even wage levels in the issuing country.
Revaluation is undertaken by an official authority in a country, which is either the central government, the country’s central bank, or a combination of both. Revaluation can go in either direction, either increasing the value of the currency relative to the baseline or decreasing it. When the value is decreased, this is more typically referred to as devaluation.
In fact, revaluation is a common occurrence, even among major world currencies like the U.S. dollar, the euro, the yen and the British pound. It usually happens on an informal basis. For example, the central bank may increase the value of a currency, usually by increasing interest rates, to attract foreign capital. On the opposite end of the spectrum, they might weaken the currency to increase exports and decrease imports, improving capital inflows into the country.
But there are more formal revaluations. These happen in the event of a major change in a country’s circumstances. For example, the U.S. dollar was devaluated in 1933. The U.S. government raised the exchange rate from $20.67 per one ounce of gold to $35 per one ounce of gold. This is an example of a devaluation since the price for one ounce of gold increased. The dollar was devalued in an attempt to increase currency during the Great Depression.
What is Iraqi Dinar revaluation?
The overwhelming consensus is that an Iraqi Dinar revaluation will be an upward move in valuation, and will more than likely be dramatic at that. This optimism is based on the fact that the Iraqi Dinar is currently classified as an exotic currency. That is, it’s a currency that trades only within the borders of that country and has little value as an international medium of exchange.
Put another way, the Iraqi Dinar is already as low as it can get. The only meaningful direction from this point will be a higher valuation.
At some point, as the political, social and economic factors within Iraq improve, the country will have no choice but to engage in revaluation.
What Will the Iraqi Dinar Revalue at?
The greatest likelihood is that the Iraqi Dinar will revalue in a series of steps, each in response to a change in affairs within the country and/or worldwide. Once again, we can look back to the 1980s for guidance. That’s when one Iraqi Dinar was worth more than one U.S. dollar and sometimes considerably more.
A return to parity alone could cause a 1,200-fold increase from its current level. But even a 100-fold increase means that an investment of $1,000 could turn into $100,000.
Is that scenario possible? It would only require Iraq to return to circumstances similar to the 1980s. At that time, as they are now, Iraq was a major source and supply of global oil. The major difference is that the country was more politically cohesive back then.
That is not the case right now. However, a major increase in the price of oil – which historically happens in a matter of months – could well be the catalyst that unites the country once again. The dominoes are already lining up in favor of that scenario. Alternative energy sources are increasing very slowly and are not as reliable as originally expected. At the same time, the supply of free-flow oil from much of the world is gradually declining.
Current State of the Iraqi Dinar and the Iraqi Dinar Revaluation
As far as Iraqi Dinar revlauation news, nothing official has been announced for this year. But the Iraqi Central Bank has been running successful auctions of Iraqi Dinar nearly every day, ranging in size between $100 million and $200 million. Clearly, there is strong acceptance of the currency among investors, even at its current low valuation rate.
Why hasn’t the Iraqi Dinar Revalued Yet?
The economic, social and political situations in Iraq largely remain what they have been at since 2003, and while there has been some stabilization in that time, a formal revaluation isn’t likely to happen before the country begins making more measurable progress. We’ll have to keep a close eye out for an update to the country’s gross domestic product and labor market. As they show significant improvement – which will likely happen when the price of oil begins to increase– revaluation may come into clearer focus.
But the absence of any pending information on the revaluation front must also serve as a warning. At this stage of Iraq’s redevelopment as a nation, investment in the Iraqi Dinar is pure speculation.
It’s an investment that could produce spectacular results for all the reasons discussed so far. The risk is also minimal, given that the currency is nearly worthless on international markets.
As a pure speculation, investment in the currency should be limited to only a small portion of your investment portfolio. That will not only minimize any potential loss, but will also give you incredible leverage. For example, if a $1,000 investment can turn into a $100,000 over the next 10 years, it only takes a very small investment to get a very big return.
In the meantime, it’s also important to realize that, given the status quo of the currency over the past decade and a half, any money invested in Iraqi Dinar is likely to produce little if any return in the near term. So it is definitely a long-term investment.
Iraqi Dinar RV News as of Today
The latest related Iraqi Dinar news is that Iraq has submitted a formal request to become a member of the European Bank for Reconstruction and Development. The European Bank was established in 1991 and made the transition easier for former Soviet Union countries to convert into capitalist economies with free markets. This is a positive development and shows that the country is gradually taking steps in the right direction.
One factor we are keeping a close eye on is the current exchange rate of the currency. It is highly likely that an Iraqi dinar revaluation will be preceded by a rise in its market value. For example, if the Iraqi Dinar ever reaches 1,000 per one U.S. dollar, it could start kick-start a formal revaluation. We must follow the price of oil and its impact =on the exchange rate of the currency.
Another factor to consider geopolitical. Though the current political situation within Iraq itself is best described as guardedly stable, the situation is much different in surrounding countries, including oil-producing ones.
Iran is one country receiving a lot of attention right now. President Donald Trump recently pulled the U.S. out of the nuclear deal with Iran, which has created geopolitical uncertainty and opens the potential for a continued rise in tensions between the two countries.
This not only affects the military situation in the Middle East, but also the global oil supply. Iran has oil reserves comparable in size to Iraq. Should those supplies be withdrawn or cut off from the world supply, it could trigger a dramatic rise in the price of oil.
Why Now is a Great Time to Invest in Iraqi Dinar
It’s ironic, but it’s always best to invest in something when nothing is happening. That’s when you can “buy on the cheap”. That’s true of stocks, bonds, real estate and other foreign currencies.
The main consideration with the Iraqi Dinar is the fact that it’s a near worthless currency issued by a country that’s sitting on one of the largest oil fields in the world. It would be like buying stock in Apple back when it was only $7 in 2002. Sooner or later the market will balance out and reflect the investment’s true worth.
This is frequently referred to as “value investing” – which is buying investments that are “out of favor”. The Iraqi Dinar, or any currency for that matter, isn’t just an investment in the strict sense. A currency reflects the state of its nation. And with Iraq’s economy at rock bottom, it has nowhere to go but up. This means that now is the time to take a small position in the Iraqi Dinar.
Why Will the Iraqi Dinar Revalue?
The value of a nation’s currency is a reflection of the health of the country itself. This is certainly true in the case of Iraq right now. The country is still dealing with the lingering effects of both the Gulf War in 1991 and the U.S. invasion in 2003 and has been in a political power vacuum ever since.
Even with the country’s massive oil reserves and production, the economy hasn’t had much improvement. Even the borders of this once proud nation are seen as largely imaginary, as both domestic factions and foreign powers have sought to exploit the country’s current weaknesses.
But as the country’s fortunes improve, the Iraqi Dinar revaluation will become absolutely necessary. The central bank will need to revalue the currency at a much higher level in order to improve stability in the domestic economy and enhance the country’s international standing. It’s less a question of will the Iraqi Dinar revalue and more when will the Iraqi Dinar revalue?
This will be particularly important in drawing foreign currency into Iraq. While international corporations look to exploit price imbalances between countries, they nonetheless prefer a certain level of stability. This is reflected in the currency, which will force an upward revaluation.
It’s likely that the Iraqi Dinar is completely undervalued, even against the backdrop of the country’s current troubles. Much of this is public perception. Both the country and the currency have been under siege for the past 15 years, leading to the belief that the currency is worthless, and will always be so.
But perceptions can change in a matter of months. A spectacular increase in the price of oil – which is now a fully predicted event (see below) – could provide just such a trigger. The Iraqi government, suddenly flush with increased oil revenues, would command greater respect both at home and abroad. That would virtually require an Iraqi Dinar revaluation.
Factors that May Influence an Iraqi Dinar Revaluation in 2018
It has recently been predicted that the price of oil could go up to $300 per barrel in the next few years. This isn’t a speculative projection either. It’s based on the realization that low oil prices in recent years have led to a lack of investment in new oil production, particularly outside the United States.
Oil production is a long-term process. It takes many years to get a known oilfield into production. Exploration for new oil fields takes even longer since it’s often a hit or miss process.
With oil floating between $30 and $60 per barrel over past several years, both exploration and new production have been lagging. Consumption, however, has not. Oil use has been growing steadily over the past few years. This has led to a gap between production and consumption that has been steadily narrowing, creating tighter supplies.
While the U.S. has been expanding its production of oil through fracking, other types of oil production, such as drilling for free-flow sources, has slowed down. The depressed price of oil simply hasn’t permitted heavy investment in oil production.
Meanwhile, oil reserves in several major producing countries, including Britain and Mexico, have further reduced the production of free-flowing oil.
In recent months, the price of oil has reflected these fundamental changes. It is now hovering near $70 per barrel, the highest price it’s been in several years. It’s not inconceivable that it will rise to $100 and beyond sometime during 2018 or 2019. In fact, production cuts by OPEC are aimed at achieving that exact result. Since OPEC is the primary source of free-flowing oil, production caps have the potential to cause oil prices to rise rapidly.
All of this is very bullish for both the nation of Iraq and the revaluation of the Dinar.
When Will Iraqi Dinar Revalue?
While it’s not possible to know the exact timetable of an Iraqi Dinar revaluation, key factors are already lining up in that direction. If the price of oil rises in the general direction of current predictions, Iraq obviously stands to benefit. Iraq has an estimated 143 billion barrels in oil reserves, giving it the fifth largest such reserves in the world. Meanwhile, production has been running at about 4.5 million barrels per day, placing Iraq behind only Russia, Saudi Arabia, and the United States in terms of world oil production. It is also one of the principal oil exporters in the world.
The rise in the price of oil to more than $100 per barrel – let alone $300 – would have an obvious positive impact on virtually everything happening within the country. Its economic fortunes will improve and as they do, both social and political stability are certain to follow.
With those factors in place, the Iraqi Dinar revaluation will become a reality. As remote as that possibility seems at this point in time, circumstances will accelerate with the price of oil. It will produce greater revenue for the government, giving it more power and credibility both domestically and internationally.
There’s yet another factor that may trigger an Iraqi Dinar revaluation, also tied to a dramatic rise in the price of oil. Since an increase in oil prices will weaken western economies, their currencies may experience significant devaluations. That alone could cause the value of Iraqi Dinar to rise when priced against western currencies, particularly the U.S. dollar.
In this way, conditions within Iraq don’t necessarily even have to improve for the value of the currency to increase. It could take place on the heels of a decline in major world currency values.
How Much will the Iraqi dinar Revalue for?
It’s impossible to make a future prediction about the Iraqi Dinar with any accuracy, particularly as to what it will revalue at. Depending on economic and political factors, the currency could move up incrementally over the next several years, or take a few, small dramatic increases.
The real attraction of a currency like the Iraqi Dinar is that it currently has something equivalent to near zero value on the international currency exchanges. The Iraqi Dinar is a true alternative investment in the current environment, but an increase to something resembling its previous value would be dramatic. An investment of just a few dollars could easily turn into a few thousand dollars in a matter of a few months or years.
Given that Iraq is a major world oil supplier, there’s every possibility that an Iraqi Dinar revaluation will somehow be based on the price of oil. This could lead not only to an increase in the value of Iraqi Dinar, but quite a dramatic one at that. Given the very low current status of the currency and the strategic importance of oil that Iraq possesses, it’s not inconceivable the currency could rise by a factor of 10 percent or more.
Closing Thoughts on the Iraqi Dinar Revaluation Update for 2018
It’s nearly impossible to make an exact prediction on whether the Iraqi Dinar will revalue, but there are a few factors on the horizon that could dramatically change things quickly. We always like to remind our readers that everything is speculation when you buy a position in a foreign currency. The Iraqi Dinar, in particular, had had a very low value over the past 15 years, and there’s no way to say with any certainty when that situation will change in the near future. But if history is any guide, it will eventually go up.
You can invest in the Iraqi Dinar through Treasury Vault, buying in 500 or 25,000 note increments. We specialize in the currencies of more than a dozen countries, as well as gold and silver. We even offer self-directed IRAs for your investments.
We will never recommend that you put anything more than a small percentage of your portfolio into any one currency or investment strategy. You should always consult with a professional for specific investment advice, but you should strive to diversify your portfolio and include investments like stocks, bonds, and cash equivalents.
A speculative portfolio allocation, spread between gold, silver, Iraqi Dinar and other currencies, can give your portfolio both greater diversification as well as increased profit potential. This is especially true since 2018 has seen declines in bond prices as well as greater volatility in the stock market.
If you want to stay up to date on Iraqi Dinar revaluation news, check back with our site regularly. As stated earlier, revaluation events take a long time to happen but move at a very fast pace once they do. We’ll keep updating as events unfold, so be sure to check back often.