New Iraqi Dinar: Two-Year Review

With any investment, it is important to periodically review performance. This provides a basis for assessing whether the investment is as worthwhile as originally perceived and, also, for making "buy, hold, sell" decisions. [tag]Iraqi dinar[/tag] is unique in that it is not an investment security or currency with a price determined through organized trading. Buying and holding dinar is easy (though dealer pricing varies widely), but selling (for individuals, at least) is presently done through mechanisms like [tag]e-Bay[/tag] rather than a developed exchange market.

Nonetheless, there is [tag]exchange rate[/tag] pricing data available which provides some guidance as to how well the dinar is doing. It also provides rough indication for assessing [tag]investment performance[/tag] if the new Iraqi dinar was traded and exchanged actively.

The following chart was prepared using the average [tag]Interbank[/tag] "ask" price as reported by Oanda.com. The "ask" price is the price at which sellers are willing to sell a currency. The "bid" price is the price at which buyers want to buy a currency. The ask price is always higher than the bid.

According to this data:

• the 6/30/06 price ($1540.70) is 5.52% higher than the price on 7/1/04 ($1460.00). This represents a 2.8% annual rate of gain if the dinar could have been freely exchanged in a market environment at these rates.
• As comparison, the S&P 500 stock index increased from 1128.94 to 1270.20 (12.5%) for the same period.
• the average "ask" price over this 730-day period was 1493.06925
• the highest "bid" price during this same period was1473.8000
• the lowest "bid" price during this same period was1384.7000

Of course, most people who buy Iraqi dinar realize it is long-term (5+ years) prospect. Still, a two-year review provides useful information for buyers (and prospective buyers) to consider.