Rumors can be extremely important in the financial markets. Trading decisions (whether to buy, sell or hold) are made based on information. And rumors - accurate or not - are one of the oldest, most powerful means of information mass communication. A trader who is able to act early on information is in a position to gain, while others lose.

On the other hand, false or inaccurate rumors can cause traders to make wrong and costly decisions. Some market rumors have been so well coordinated and widely circulated that they have caused the downfall of major companies. Many observers believe that bogus rumors largely caused the downfall of Bear Stearns in 2008.

The Iraqi dinar, of course, is not immune to rumors. Indeed, because of the dinar's speculative nature (and limited market), rumors probably carry more weight in formulating individual's decisions whether or not to buy Iraqi dinar than in more mature financial markets. The lure of a potential quick and large profit coupled with a "sound plausible" rumor about the dinar is enough to get many people to pull the trigger and invest in dinar.

A simple search on Yahoo Finance message boards will provide enough Iraqi Dinar Rumors to keep you reading most of the night. Here's one recent example:

I've heard rumor of the IMF meeting in the next days to months with a priority topic being the revaluation of the Iraqi Dinar (IQD). Topic would include a two-tier valuation of the currency, one for the common folk that have them stashed away in shoe boxes and in their nightstands and the second for an exchange rate between governments. It is rumored that the common-folk rate may be based upon a simple $1(USD) to 1(IQD) up to the value of the Euro or even the British Pound. This would be exchanged at banks across the US for that rate. In turn, the banks would exchange it to the Federal Reserve for a mark-up rate (what that would be is TBD). The Fedeal Reserve would then exchange it with the government of Iraq for a much higher rate…similar to the beginning of the war…around $3.40ish(USD) per IQD. The exchange would not be for dollars but for oil and natural gas credits giving the governments that are exchanging the IQDs a steep ‘discount’ for future oil/natural gas. We shall see.

Generally, we don't feel that such rumors play a big role in overall dinar market valuations. As the nearby graph illustrates, the dinar has shown steady improvement vs the US Dollar in the last couple of years. But this performance is likely more attributable to general stabilization of conditions in Iraq - not singular market moving events or rumors of such events.

iqd capture Iraqi Dinar Rumors

Iraqi Dinar Historic Values

Nevertheless, it is certainly possible that a market-moving event (like currency revaluation) could occur and being "in" early in such a scenario could be profitable. But given the cost, time and effort involved in constantly tracking and evaluating Iraqi Dinar rumors, we don't allocate our resources to this pursuit. Rather, our stand is that if you view Iraqi dinar is a long term investment with considerable upside potential, getting in at today's pricing is attractive in itself. If some rumor or event occurs that causes IQD values to rise quickly, so much the better.

One more Iraqi Dinar rumor of note: the Donald Trump Dinar Rumor. This internet rumor has been around for several years. Basically, it holds that Trump invested $30 million in Iraqi dinar. The upshot being that if Donald Trump thinks Iraqi Dinar are a good investment, should the average guy think so too? Unfortunately, promoters of Donald Trump Dinar rumor can point to no concrete evidence that such a transaction actually took place.

If you are interested in following Iraqi dinar rumors, a visit to the discussion forums at Dinar Speculator is recommended.