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When will the Iraqi Dinar be revalued?
How will the Iraqi Dinar be revalued?
By James A Smith Senior Financial Officer
When will the Iraqi Dinar be revalued?
Historically, the Iraqi Dinar has been worth over 3 US dollars for
every Iraqi Dinar (Over $3,000,000 US dollars purchased 1 million
Iraqi Dinar). Put another way, Dinar has been worth well over
$3,000,000.00 US dollars. So, the question is: Will the Iraqi Dinar
increase in value?
James A Smith Senior Financial Officer
JAS Financial
The facts are:
Iraq is an extremely wealthy country when you look at their natural
resources and potential GDP. The expert consensus is that Iraq has at
least the second largest oil reserves and natural gas reserves in the
world. There is strong speculation that Iraq actually has the largest
oil and natural gas reserves in the world. Additionally, many people
don’t realize that oil from Iraq is some of the world’s cheapest oil
to drill and refine—the oil is very “rich” and close to the surface
with few impurities or hindrances to drilling. Iraq’s cost of
production per barrel of oil is minimal compared to other world oil
producers. This all means that Iraq’s profit margins on their oil
production are some of the highest in the world. Additionally, Iraq
has a vast agricultural system and abundant fresh water supplies from
the Tigris and Euphrates rivers—Iraq is known as the “Bread Basket
of the Middle East.” Moreover, Iraq has a large and traditionally
hardworking productive population. The bottom line is that Iraq has
staggering wealth in natural resources and tremendous GNP and GDP.
There is NO WAY the country of Iraq is going to be allowed to decay
into a state of instability. Iraq is not Somalia, Vietnam or Rwanda –
It is a strategic Middle Eastern country with tremendous potential
wealth. It is in the best interest of every Western country and most
Middle Eastern countries for Iraq to succeed as an independent stable
economy and country. No Western or Middle Eastern country is going to
stand by while Iraqi’s vast oil reserves and wealth fall under the
control of a neighboring rouge country or insurgency—it just won’t
happen.
The political and economic powers of the world are doing everything
possible to stabilize Iraq and bring their economy in line with the
rest of the world as soon as possible—this is in the best interest
of all nations. World leaders understand that wealth and prosperity in
a country lead to stability and increased productivity—people don’t
revolt when their needs are being met and their quality of life is
improving. One of the fastest ways to stabilize a country is to
increase its wealth and the quality of life for the population as soon
as possible. The cost of increasing an entire population’s wealth is
much less than the cost of war and widespread instability in the oil-
rich nations of the Middle East.
The history of the Iraqi Dinar demonstrates strong potential for
growth. At one time, the Iraqi Dinar was worth over 3000 times what it
is currently worth, while at the same time oil was selling for
approximately $15 per barrel — less than 1/5th of today’s price.
When will the Iraqi Dinar be revalued?
If the value of the Iraqi Dinar increased in value to just the lowest
valued currency of the mainstream Middle Eastern countries, it would
result in a 260 times increase in value. More simply stated, 1 million
Iraqi Dinar purchased for approximately $1200 US dollars today would
be worth $260,000 US dollars if the Iraqi Dinar were valued at $.26 US
Dollars—the lowest current valuation for a mainstream Middle Eastern
country. If the Iraqi Dinar were to reach a value equivalent to its
historical rate of $3.20 US dollars per Iraqi Dinar, the value of an
approximate $1200 US dollar Iraqi Dinar investment for 1 million Iraqi
Dinar would be worth $3,200,000 US Dollars. As a note, the current
exchange rate for the Kuwaiti Dinar is $3.44 US dollars for 1 Kuwait
Dinar—it would take $3,440,000.00 US Dollars to purchase 1 million
Kuwaiti Dinar.
Since its inception in late 2003, the Iraqi Dinar has steadily
increased in value—indicating a recovering economy and increase in
conversion of natural wealth resources.
The bottom line is that the Iraqi Dinar is currently at an extremely
low valuation compared to the US Dollar. The currency has steadily
increased in value since inception in late 2003. Iraq is a country
with phenomenal wealth potential; and additionally, has the backing
and support of the major political and economic powers of the world.
There currently seems to be minimal risk that the Iraqi Dinar will
decrease in value. The tremendous potential upside return compared to
the minimal downside risk seems to make the Iraqi Dinar a compelling
investment opportunity worth investigating.
One compelling speculation that may relate to the value increase of
the Iraqi Dinar is the actual amount of Iraqi Dinar being held by the
United States Treasury Department. A significant increase in the value
of the Iraqi Dinar would more than pay for cost of recent US war
efforts in the Middle East and greatly alleviate the tremendous debt
recently initiated by the US Government. The US Government’s current
runaway spending seems to suggest that the US Treasury Department is
expecting a massive windfall in the near future that will cover debt.
Although this theory seems logical and despite the fact that this
theory is parroted by many, this speculation can not be confirmed.
In determining when the Iraqi Dinar will increase in value, all
indicators point toward something happening in the near future (next
12 months) if not the very near future (next 3 months). The
appreciation of the Iraqi Dinar has been unprecedentedly flat over the
past 8 months despite low Iraqi inflation and a weakening US economy
and US dollar. The Iraqi economy has been on a continual surge of
economic growth for the past couple of years as Iraq has continued to
stabilize and rebuild. The news coming out of Iraq from numerous
returning military members with various reliable sources indicates a
rapid move and increase in valuation occurring prior to, or in
conjunction with US troop reductions. Indicators also point to an
increase in the Iraqi Dinar exchange rate occurring prior to, or
shortly after Iraqi elections. It appears that administratively, the
IMF, WTO, and other world financial entities are working in close
conjunction with the Iraqi Government to bring Iraq’s financial system
online with the rest of the world. The expectation is that the Iraqi
Dinar will soon be freely traded through banks worldwide—further
accelerating their recovery and economy, and adding to overall
stability.
When will the Iraqi Dinar be revalued?
To answer the question of “How” and “How high?” the Iraqi Dinar will
revaluate, some speculation is in order. Based on historical
precedents, an initial sudden significantly (overnight/over weekend)
high revaluation seems very possible. This initial move could be
anywhere along the entire spectrum of rumored possibilities from $.10
to $1.49. After this initial revaluation, it seems likely there will
be numerous significant incremental increases in valuation over a
period of time. This continual increase in value after an initial base
valuation will prevent an overwhelming surge on the world financial
system. By incrementally increasing the value of the dinar, it will
limit the number and amount of Iraqi Dinar exchanges as many investors
and currency traders will choose to hold their Iraqi Dinar or purchase
more as they anticipate further valuation increases. In other words, a
steady increase in the value of the Iraqi Dinar will create a free
flowing market as some investors cash-out, others hold on, and others
purchase Iraqi Dinar for the first time.
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