Iraqi Dinar Revaluation Enthusiasts are Unaware of Bernie Madoff’s Fame

Consequently, nothing can happen to the value of the currency without government sanction, but the “rumor” has spread due to previous government announcements. One popular currency website summarizes the government’s position as follows:

In 2010, the Central Bank of Iraq announced their plans to redenominate the Iraqi Dinar to ease cash transactions. The intention would be to drop three zeros from the nominal value of bank notes; but the actual value of the dinar would remain unchanged. That would mean that 1,000 IQD (pre-redenomination) and 1 dinar (post-redenomination) would both be worth the same amount in US Dollars. Although the announcement stated that the change would take place by the end of 2010, there has been no redenomination as of January 2011.

The government actually announced this “Drop Three Zeroes” project back in 2007, and at the time, the study was given the name of “Iraqi Currency Revaluation”. Therein lies the source of the confusion, perhaps from translation or from a loose usage of forex vernacular. A “redenomination” is not a “revaluation” under the strictest of interpretations of the terms. The former term implies that “two” currencies will exist with a “peg” between them, but the old currency will expire over a given time period and must be exchanged for the new currency.

Under a “redenomination” scenario, there is no “get rich quick” opportunity. However, when something as complex as foreign exchange rates are involved, the situation is ripe for a fraudster’s scheme. Con artists wasted no time devising clever “Dinar” deception scams that have been perpetrated as far away as Japan. Recently, over 200 unsuspecting Japanese investors, hoping for an immediate revaluation by the Iraqi Central Bank, bought millions of Dinars at inflated exchange rates. The sellers quickly disappeared.

The “Dinar story” sounds so plausible because much of it is based on fact. The Iraqi people and their government have made great strides in resurrecting a burgeoning economy, based to a large degree on a revitalized oil industry. The potential size of Iraqi oil and gas reserves has yet to be accurately determined, but most agree that the potential is enormous. There have been similar occurrences in other countries that suggest a few history lessons might provide clues to the future. Examples can be found in Venezuela, Iran, and Russia, but in each case, as oil exports increased, so did the need for imports of other goods and services. Currencies did appreciate, but slowly and in a measured way over decades.

Contrary to common sense, the rumors persist. Investment experts have denounced the purported gains as just another Ponzi scheme, yet Internet blogs are abundant with comments by hopeful investors that their day is coming. Many refer to an ambiguous claim that Kuwaitis became wealthy in 2003 under very similar conditions.

However, the Kuwaiti exchange rate remained generally level during the Gulf War. The local populace lost faith in the currency, driving “black market” exchange rates that did change radically. Bernie Madoff may be in prison, but his emulators have gone global.


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702 Responses to Iraqi Dinar Revaluation Enthusiasts are Unaware of Bernie Madoff’s Fame


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    candice mackey
    2nd May 2014 at 20:09 #

    by faith it will happen!


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    Max
    10th May 2014 at 22:31 #

    Everyone that purchased Dinar currency does not indicate they are ALL wrong! In the same way, everyone refuting or providing their own negative feedback does not mean they are correct. I believe you should do whatever you want to do with your own money regardless of what money guru geniuses, poorly informed folks, or just plain out bias careless people think. I've seen many smart and above average people be wrong many times around, and then you hear them explaining why they were wrong trying to save face as they always do. On the other hand people that are always wrong have nothing to worry about, jus sit and wait see what happens like you do with everything else, at least you don't have to worry what others may say.