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If you've been considering buying Iraqi Dinar as an investment and have done even a little basic research, you've likely heard about the Iraqi Dinar revalue (often referred to as "RV"). Here are three key points about the Iraq Dinar RV that you'll want to keep in mind as you will want to remember as you cut your way through sales pitches from sellers of Iraqi Dinar currency:
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The Iraqi dinar revalue is the cornerstone of Iraqi Dinar speculation.
It is discussed ad nauseum on the internet is because it is the lynchpin to the hopes of dinar speculators. It is also the cornerstone of most Iraqi dinar sellers sales pitches. Think of the Iraqi dinar revalue as the grand-slam home run of dinar speculation. The thinking goes like this:
- Because of years of war and turmoil, the current valuation of the Iraqi dinar currency is unrealistically low in relation to the vast natural and social assets of Iraq. So low, in fact ($1.00 USD equals more than 1,000 IQD), as to present a once-in-a-lifetime opportunity.
- Those who are shrewd enough to get in now will benefit immensely when Iraqi oil production increases and money flowing in from other countries forces government leaders to revalue the Iraqi Dinar currency to bring it more on par with other currencies. Often, the pre-Kuwait War value ($3.2169 USD equaled just 1.00 IQD) is mentioned as the hoped for target.
- Someone smart enough to put in, say, $2,799.95 would receive 2,500,000 IQD in return (figures from an actual deal recently available through eBay). When the Iraqi Dinar revalue occurs, this currency would suddenly be worth over $8 million - perhaps even overnight!
The Iraqi Dinar revalue argument really is what drives interest in buying Iraqi Dinar currency. Without it, Iraqi Dinar become just another investment that has a chance to produce profits over a long-term investment timeframe. The revalue argument makes the case for get-rich-quick scenario that everyone loves.
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The Iraqi Dinar "revalue" is not the same as the Iraqi Dinar "redenomination".
For several years there has been official Iraqi government discussion about removing "three zeros" from the Iraq Dinar so that 1,000 dinar would become 1 dinar. This type of transition is sometimes made by governments having very low-value currencies (such as the Iraqi Dinar) as an efficiency move to simplify cash transactions and allow citizens to carry less money around. Often, new currency is printed and citizens would exchange 1,000 of their old notes for a new 1 dinar note. The change does and is not intended to have an impact on the purchasing power (i.e. value) of Iraqi Dinar.
Currency revaluation, on the other hand, does change a currency's purchasing power. According to Investopedia:
In a fixed exchange rate regime (like Iraq), only a decision by a country's government (i.e. central bank) can alter the official value of the currency. (S)uppose a government has set 10 units of its currency equal to one U.S. dollar. To revalue, the government might change the rate to five units per dollar. This would result in that currency being twice as expensive to people buying that currency with U.S. dollars than previously and the U.S. dollar costing half as much to those buying it with foreign currency.
Unfortunately, many dinar speculators and peddlers are deliberately characterizing Iraq's proposed redenomination step as a currency revaluation that would, in fact, change the dinar's purchasing power.
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The Iraqi Dinar revalue can happen gradually over time.
As the Iraqi economy stabilizes and strengthens, oil exports grow and the country's future outlook brightens, it is to be expected that the value of the Iraqi Dinar will increase in value against the dollar. The U.S. dollar could certainly lose value as well as the U.S. finally begins to confront its towering debt problems. Buying and holding onto some Iraqi Dinar on this basis may not be an imprudent gamble. This slower revaluation process may take a decade or more to pay off.
