Custom Search

By Guest Blogger. Any opinions expressed are those of the author(s), and do not necessarily reflect the views of Iraq Business News.

Trump's Policies and Cryptocurrency: Will Bitcoin's Success Translate to the Iraqi Dinar?

The relationship between political leadership and financial markets has rarely been as pronounced as it is today with cryptocurrency. Since Donald Trump's return to the presidency in January 2025, Bitcoin has experienced remarkable gains, prompting investors to wonder whether this success might extend to other alternative investments like the Iraqi Dinar, where some people expect a significant dinar revaluation. However, the fundamental differences between these assets reveal why Bitcoin's trajectory under Trump's administration is unlikely to be replicated by the Iraqi Dinar.

Bitcoin's Meteoric Rise Under Trump's Pro-Crypto Policies

Bitcoin has demonstrated extraordinary performance since Trump's re-election, with the cryptocurrency surging approximately 60% since November 2024 and reaching heights of $111,000. This dramatic increase can be attributed to several specific policy initiatives and strategic decisions by the Trump administration.

The foundation of Bitcoin's success lies in Trump's complete reversal from his previous skeptical stance toward cryptocurrency. During his campaign, Trump promised to make America "the crypto capital of the planet," and his administration has delivered on this promise through concrete legislative and regulatory actions. In March 2025, Trump signed an executive order establishing a Strategic Bitcoin Reserve and U.S. Digital Asset Stockpile, signaling the federal government's commitment to cryptocurrency adoption.

The administration's approach has been systematically supportive of the cryptocurrency industry. Congress recently passed the first major crypto legislation in U.S. history, providing regulatory clarity that has been long sought by the industry. This regulatory framework has reduced uncertainty and encouraged institutional investment, contributing to Bitcoin's price appreciation.

Trump's appointees reflect this pro-crypto stance, with one in five top administration picks holding cryptocurrency assets, some worth millions of dollars. This alignment between policy and personal investment demonstrates the administration's genuine commitment to cryptocurrency adoption rather than mere political rhetoric.

The Iraqi Dinar: A Fundamentally Different Asset

The Iraqi Dinar operates in an entirely different economic and political ecosystem from Bitcoin. While Bitcoin is a decentralized digital asset that responds to global market forces and regulatory changes, the Iraqi Dinar is a sovereign currency tied to Iraq's economic fundamentals and monetary policy decisions.

Current exchange rate data shows the Iraqi Dinar trading at approximately 1,310 dinars per U.S. dollar as of July 2025, representing minimal fluctuation over the past year. The International Monetary Fund projects an average exchange rate of 1,300 dinars per dollar for both 2025 and 2026, indicating expectations of stability rather than dramatic appreciation.

The Central Bank of Iraq has successfully transitioned to a new trade finance system managed by commercial banks, which has contributed to exchange rate stability. However, this stability is precisely what differentiates the Dinar from Bitcoin-the Iraqi currency is managed to maintain purchasing power rather than to serve as a speculative investment vehicle.

Why Trump's Crypto Policies Won't Impact the Dinar

Several fundamental factors explain why Trump's cryptocurrency-friendly policies cannot replicate Bitcoin's success with the Iraqi Dinar:

• Regulatory Jurisdiction: Trump's policies directly impact assets under U.S. regulatory authority. Bitcoin, as a global digital asset traded on U.S. exchanges and held by U.S. institutions, falls within this sphere of influence. The Iraqi Dinar, however, is governed by Iraq's Central Bank and monetary policy, which operates independently of U.S. cryptocurrency regulations.
• Asset Classification: Bitcoin is treated as a digital commodity and investment vehicle, making it responsive to regulatory changes that affect investor sentiment and institutional adoption. The Iraqi Dinar functions as a national currency with exchange rates determined by economic fundamentals such as oil revenues, trade balances, and monetary policy decisions.
• Market Dynamics: Bitcoin's price appreciation stems from increased institutional adoption, regulatory clarity, and speculative investment driven by Trump's supportive policies. The Iraqi Dinar's value is tied to Iraq's economic performance, oil exports, and regional stability-factors largely unrelated to U.S. cryptocurrency policy.
• Investment Infrastructure: The cryptocurrency ecosystem has developed sophisticated trading platforms, custody solutions, and financial products that respond rapidly to policy changes. The Iraqi Dinar lacks this infrastructure for speculative investment, with most transactions occurring through traditional foreign exchange channels focused on trade and remittances rather than investment.

Economic Realities and Market Projections

Financial forecasts for the Iraqi Dinar suggest continued stability rather than dramatic appreciation. Market projections indicate potential slight depreciation, with the exchange rate possibly reaching around 1,318 IQD per USD by the end of 2025. These projections reflect expectations of gradual economic adjustments rather than the explosive growth seen in Bitcoin.

Iraq's economy remains heavily dependent on oil revenues, which are calculated based on the exchange rate of 1,300 dinars to one dollar in the federal budget. This dependency on commodity prices and the government's fiscal management creates a fundamentally different value proposition from Bitcoin's technology-driven and adoption-based appreciation.

The Broader Investment Landscape

The contrast between Bitcoin and the Iraqi Dinar illustrates a broader principle about how different asset classes respond to political and regulatory changes. Bitcoin's success under Trump's administration demonstrates the power of regulatory clarity and institutional support for emerging asset classes. The cryptocurrency's decentralized nature and global trading infrastructure make it particularly responsive to positive policy developments.

Traditional currencies, even those from developing economies, operate within established monetary systems designed for stability rather than speculation. The Iraqi Dinar's role as a medium of exchange and store of value for Iraq's economy necessitates careful management to prevent the volatility that investors seek in alternative assets.

Conclusion

While Trump's pro-cryptocurrency policies have created a favorable environment for Bitcoin's remarkable performance, these same policies cannot produce similar results for the Iraqi Dinar. The fundamental differences between a decentralized digital asset and a sovereign currency mean that each responds to entirely different sets of economic and political factors.

Bitcoin's success under Trump's administration reflects the power of regulatory support and institutional adoption in driving speculative asset prices. The Iraqi Dinar's stability reflects the careful monetary management required to maintain a functioning national currency. Investors considering whether Trump's policies might benefit the Iraqi Dinar should recognize that the two assets exist in fundamentally different economic ecosystems, with success metrics that are not only different but often contradictory.

The lesson for investors is clear: while political leadership can significantly impact certain asset classes, the specific characteristics of each investment determine how it responds to policy changes. Bitcoin's technological foundation and speculative nature make it responsive to regulatory developments, while the Iraqi Dinar's role as a national currency requires it to prioritize stability over explosive growth.

For more information on the Iraqi dinar, check out IBN's Dinar Page here: https://www.iraq-businessnews.com/the-dinar-page/?swcfpc=1 

By Guest Blogger. Any opinions expressed are those of the author(s), and do not necessarily reflect the views of Iraq Business News.

Q: Following your recent article on the Dinar Revaluation (RV) and Israeli Airstrikes on Iran, the situation in the region has progressed. What is your current assessment as it relates to the dinar (IQD)?

A: It has now been two weeks since the initial Israeli airstrikes on Iran, and the situation has continued to evolve. While a US-brokered ceasefire was announced on 23rd June, following a 12-day conflict that saw exchanges of missile and drone attacks, the broader implications for Iraq and the Iraqi Dinar's potential revaluation remain complex and largely negative.

Here's a follow-up based on the latest developments:

Lingering Instability and Uncertainty

Despite the ceasefire, the underlying tensions between Israel and Iran persist, and this continued regional instability is a significant factor for Iraq. While Iraq itself largely avoided direct involvement in the recent fighting, its geographic proximity means it remains highly susceptible to any fallout.

• Political and Security Concerns: The conflict highlighted the potential for regional power struggles to spill into Iraq, impacting its already fragile domestic stability. There have been reports of continued efforts to manage the influence of Iran-aligned Iraqi groups, and the risk of renewed hostilities involving these groups remains.
• Economic Vulnerability: Iraq's economy, heavily reliant on oil exports, is particularly vulnerable. While there was a short-term rise in oil prices during the conflict, which generated some additional revenue, this was largely offset by increased import costs due to disruptions in maritime insurance markets, global price fluctuations, higher shipping expenses, and a decline in air transport and religious tourism. An Iraqi government adviser described the conflict's impact as a "double-edged shock," leaving the Iraqi economy in a state of "neutral uncertainty."

Dinar Under Pressure

The Iraqi Dinar has continued to face headwinds, largely due to the pervasive uncertainty and ongoing economic challenges.

• Dollarisation and Parallel Market: The increased regional tension has reinforced the demand for the US dollar as a safe haven. While the official Central Bank of Iraq (CBI) rate remains stable at 1,320 IQD to $1, the parallel market has seen fluctuations. Recent reports indicate that USD/IQD exchange rates have edged lower in Baghdad and Erbil, with selling prices for $100 ranging from 141,750 IQD to 142,250 IQD, still significantly above the official rate. This persistent gap is a clear indicator of market pressure and a lack of confidence in the Dinar.
• Smuggling Concerns: The issue of dollar smuggling to Iran, aimed at circumventing US sanctions, continues to plague Iraq's financial system. This illicit flow of currency further limits the CBI's ability to effectively manage the Dinar's value and build confidence for a revaluation.
• Budgetary Challenges: Iraq is facing significant fiscal strains, with the 2025 federal budget unlikely to be submitted to Parliament anytime soon. This delay is attributed to "severe financial deficits, unstable revenue streams, the absence of a coherent economic vision, and the looming legislative elections." A parliamentary finance committee member noted a budget deficit of nearly 80 trillion IQD (approximately $61 billion), which puts immense pressure on government spending and the overall economic outlook. Delays in the budget can directly impact public salaries and infrastructure projects, further dampening economic sentiment.

Outlook for Revaluation

Given these ongoing developments, the prospect of an Iraqi Dinar revaluation in the near future appears highly improbable. The confluence of factors including:

• Continued regional instability and potential for escalation.
• Persistent demand for the US dollar and challenges in the parallel market.
• Ongoing issues with dollar smuggling and US sanctions.
• Significant internal budgetary deficits and political uncertainty within Iraq.

all contribute to an environment that is not conducive to a revaluation. While Iraq's vast oil reserves are a long-term asset, the immediate economic and geopolitical landscape presents too many hurdles. The Iraqi government's focus is currently on managing the existing economic challenges and navigating the complex regional dynamics, rather than pursuing a revaluation.

For more information on the Iraqi dinar, check out IBN's Dinar Page here: https://www.iraq-businessnews.com/the-dinar-page/?swcfpc=1 

By Guest Blogger. Any opinions expressed are those of the author(s), and do not necessarily reflect the views of Iraq Business News.

Q: What effect will Israel's airstrikes on Iran have on any potential revaluation of the Iraqi dinar?

A: This week's Israeli airstrikes on Iran, targeting nuclear and military sites, will likely have a negative effect on any potential revaluation of the Iraqi Dinar, at least in the short term. Here's why:

Increased Regional Instability

The conflict between Israel and Iran is a major source of instability in the Middle East. Iraq, being a direct neighbour to Iran and having complex political and economic ties with both countries, is highly susceptible to the fallout from such tensions. Increased regional conflict generally leads to capital flight and a preference for safer currencies like the US dollar, which puts downward pressure on local currencies like the Iraqi Dinar.

Safe-Haven Demand for USD

As investors and even ordinary citizens become more apprehensive about the future, they tend to move their assets into more stable and liquid currencies. The US dollar is traditionally seen as a global safe-haven currency. This increased demand for USD in Iraq would further weaken the Dinar against the dollar in the parallel markets, making any revaluation less likely.
Impact on Oil Prices

While a spike in oil prices due to regional conflict might seem beneficial for an oil-dependent economy like Iraq's, the immediate effect on the Dinar is often outweighed by the increased instability. Furthermore, if the conflict were to escalate and impact shipping routes like the Strait of Hormuz, Iraq's oil export revenues could be severely affected, which would be detrimental to the Dinar.

Smuggling and Sanctions Concerns

Iraq has faced challenges with dollar smuggling to Iran, partly due to US sanctions on Iran. Escalated tensions and potential new sanctions could exacerbate these issues, further disrupting Iraq's financial system and the Dinar's stability.

Political and Economic Uncertainty in Iraq

The Iraqi Dinar's value is already influenced by a range of internal factors, including political stability, government spending, and efforts to control corruption. Regional conflicts add another layer of uncertainty, making it harder for the Central Bank of Iraq to manage the exchange rate and implement policies that could lead to a revaluation.

[See follow-up article here.]

For more information on the Iraqi dinar, check out IBN's Dinar Page here: https://www.iraq-businessnews.com/the-dinar-page/?swcfpc=1 

By Padraig O'Hannelly.

As Donald Trump completes his first 100 days in as US President, what effect have his policies had on the Iraqi economy?

Firstly, it's worth noting that the main implications of Trump's policies for Iraq have been the indirect results of decisions not directly targeted at Iraq. Increased tariffs and the resultant drop in oil prices, the slashing of foreign aid across the board, and Trump's 'maximum pressure' policy towards Iran have been the three biggest consequences for Iraq since the change of regime in Washington on 20th January.

Tariffs and Oil Prices

While the United States applied an additional duty rate of 39 percent to imports from Iraq from 5th April, as part of its wider 'reciprocal tariffs' (sic) policy, the new rate does not apply to US imports of oil, which account for almost all of Iraq's exports to the US.

However, Trump's approach to tariffs in general, combined with his unpredictable nature, has led to fears of a significant slow-down in international trade, and undermined the confidence of investors and consumers worldwide. As a result, the price of Brent crude has fallen from around $75 at the start of the month to $65 today; in mid-2024 it was as high as $85.

These drops imply reduced oil revenue for Iraq. Iraq's National Development Plan 2024-2028, launched last summer, but withheld from the public until late December, assumes a price of $74 this year, for example.

(Source: National Development Plan 2024-2028)

But as our Expert Blogger Ahmed Tabaqchali notes, Iraq has the capacity to support its spending plans by selling government debt, and this in turn can help develop the country's bond market, contributing to the evolution of the capital markets in Iraq. So while reduced oil revenue is a negative for Iraq, many expect short-to-medium-term development to continue as planned.

Foreign Aid

By some estimates, more than half of the humanitarian plans in Iraq were funded by the United States, so it should be no surprise that Trump's freezing of foreign aid and shutting down of the United States Agency for International Development (USAID) would have a major impact on a wide range of valuable initiatives throughout the country.

According to the Washington-based Enabling Peace in Iraq Center (EPIC), "in fiscal year 2023, U.S. assistance to Iraq amounted to $592.7 million." It says the halt in funding and the stop-work order for USAID has already disrupted lifesaving programs in Iraq.

Our Tenders page on Iraq Business News has seen only a small drop in activity, as many international NGOs have been able to continue with their work, but many programs have been cancelled or scaled back.

Sanctions on Iran

The removal of Iraq's waiver from US sanctions on Iranian energy imports has created immediate economic strain, but it has also accelerated efforts to reduce dependence on Iran. The sudden change of policy risks widespread blackouts, particularly during the extremely hot summer months, but it should also be noted that Iran was already expected to have difficulty supplying Iraq this summer, as it struggles to meet domestic energy demand.

To mitigate the effects of this decision, Iraq has prioritised alternative supply projects, including a gas deal with Turkmenistan, increased electricity imports from Turkiye, and the creation of a floating platform for LNG imports. Iraq also plans to have completely stopped the flaring of associated gas by early-2028.

While the cancellation of the waiver will undoubtedly cause hardship over the coming months, the import of gas and electricity from Iran was always regarded as a temporary solution, and pulling forward projects to replace Iranian supply could be considered a worthwhile investment.

Trump withdrew the US from the Joint Comprehensive Plan of Action (JCPOA) in 2018. Discussions continue regarding a possible new deal between US and Iran, and the final shape of any such deal will have implications for Iraq's economy and politics.

Iraqi dinar

Finally, for the benefit of those who've bought Iraqi dinars (IQD) in the hope of stratospheric upward revaluations, it should be mentioned that has, of course, not happened.

There has been a noticeable increase in interest in this "dinar RV" theory since Trump was elected in November, but not a shred of evidence to support the idea, and no indication from the President that he has any interest in the topic.

In an entirely unscientific online survey we ran in January, more than half of respondents said they expected the Iraqi dinar to revalue by at least 1,000x in the first 100 days of Trump's term, as if this was something that the President could magically bring about, even if he wanted to.

Doubtless the adherents to this theory will find a way to explain why it has not happened as they hoped, consider it a 'delay', and focus on some future timeframe when their faith will be rewarded.

© Iraq Business News

By John Lee.

Back in January, Iraq Business News ran an online survey asking opinions on a revaluation of the Iraqi dinar following the inauguration of US President Donald Trump.

This survey did not pretend to be scientific, as respondents were self-selecting, leading to a high risk of sampling bias, but it served to show that among dinar speculators there was some currency (pun intended) to the idea that the re-election of Trump to the White House would have a bearing on developments.

Astonishingly, more than half of respondents expected the Iraqi dinar to revalue by at least 1,000x in the first 100 days of Trump's term. You can see a graph of the responses below.

More than two months into that period, Trump has not done or said anything to support this theory, despite false claims to the contrary on the internet.

But rather than finally accepting that they have paid good money for the false hope of ludicrous returns, dinar speculators (or 'dinarians', as they sometimes like to call themselves) continue to reinforce each other's beliefs on online message boards and dismiss all logical arguments against their position.

Please let us know your thoughts in the Comments Section below.

For more information on the Iraqi dinar, check out IBN's Dinar Page here: https://www.iraq-businessnews.com/the-dinar-page/?swcfpc=1 

See also: The Iraqi Dinar Revaluation Scam: False Hope, Financial Deception

To learn what's really happening in Iraq, check out our news here, and our library of reports here.

By John Lee.

Just a month ago, Iraq Business News ran an article examining the possible connection between support for Donald Trump and a belief in the Iraqi Dinar revaluation theory -- the idea that the Iraqi Dinar (IQD) will revalue ("RV") to as much as 1000 times its current value.

You can read the full article here:

https://www.iraq-businessnews.com/2024/12/21/donald-trump-and-the-great-iraqi-dinar-revaluation/?swcfpc=1

With the swearing-in yesterday of Donald Trump as 47th President of the United States, some have high hopes of an imminent revaluation of the Iraqi Dinar.

Let us know your thoughts on the likelihood of an unprecedented revaluation using the poll below:

This survey is now closed.

The results were as follows:

You can also let us know your thoughts in the Comments Section below.

For more information on the Iraqi dinar, check out IBN's Dinar Page here: https://www.iraq-businessnews.com/the-dinar-page/?swcfpc=1 

See also: The Iraqi Dinar Revaluation Scam: False Hope, Financial Deception

By a Guest Blogger. Any opinions expressed are those of the author(s), and do not necessarily reflect the views of Iraq Business News.

Anecdotal evidence, including inquiries to Iraq Business News, seems to suggest that supporters of US President-elect Donald Trump are more likely to believe that the Iraqi currency, the Dinar (IQD), will increase in value by an unprecedented multiple, some saying by as much as 1,000-fold!

The correlation between being a Trump voter and believing in a significant revaluation of the Iraqi dinar (often called the "dinar RV" theory) is not rigorously studied, but there are social and cultural dynamics that might help explain the connection between the two groups.

The Dinar revaluation theory emerged after the 2003 Iraq War: The basic premise is that the Iraqi Dinar, which traded at around 3 IQD per USD before the 1991 Gulf War but crashed to roughly 1,310 IQD per USD, would suddenly revalue back to its previous rate or even higher. Believers often hold large quantities of physical Dinar notes, sometimes investing tens of thousands of dollars.

The theory's spread among Trump supporters was facilitated by several factors:

The "Global Reset" Narrative:

• Many believers connected the Dinar revaluation to a broader theory about Trump leading a massive reorganization of the global financial system
• This often tied into QAnon-adjacent beliefs about Trump secretly fighting a "deep state" that was suppressing the Dinar's true value
• Some proponents claimed Trump and his team were directly involved in orchestrating a coming revaluation

Social Media Dynamics:

• The theory spread rapidly through Facebook groups, YouTube channels, and forums that also shared pro-Trump content
• Many of these platforms used similar language about "mainstream media suppression" of both Trump and the "truth" about the Dinar
• Currency speculators and scammers actively targeted these communities, recognizing their receptiveness to anti-establishment financial narratives

Political Context:

• The theory appealed to a desire for both financial windfall and validation of political beliefs
• Some promoters claimed Trump's Middle East policies, particularly regarding Iraq and Saudi Arabia, would trigger the revaluation
• The belief often aligned with broader skepticism of traditional financial institutions and expertise

Psychological Factors:

• The combination of potential financial reward and political validation created a powerful motivational force
• Believers often interpreted skepticism from financial experts as further evidence of a cover-up
• The complexity of international currency markets made it easier for promoters to make plausible-sounding but false claims
• Investment in the theory often strengthened social bonds within these communities, making it harder to abandon the belief

Despite years of failed predictions, the theory continues to circulate; some believers have modified the timeline but maintain their basic conviction. The persistence of this belief system despite contrary evidence and expert warnings illustrates how financial conspiracy theories can become deeply intertwined with political identity and resistant to contrary evidence. Both Trump supporters and proponents of the dinar revaluation theory often demonstrate a tendency toward belief in conspiracy theories or "hidden truths" that challenge mainstream narratives.

For more information on the Iraqi dinar, check out IBN's Dinar Page here: https://www.iraq-businessnews.com/the-dinar-page/?swcfpc=1 

The Iraqi Dinar Revaluation Scam: False Hope, Financial Deception

Have you seen a connection between support for Trump and a belief in the revaluation theory? Please let us know in the comments below.

[UPDATE, January 21st 2025: Following Donald Trump's inauguration, let us know your thoughts on Dinar RV in our survey here: https://www.iraq-businessnews.com/2025/01/21/survey-trump-and-the-iraqi-dinar/?swcfpc=1]

See also:

"Tired of Dinars", Iraq flocks to Dogecoin

By a Guest Blogger. Any opinions expressed are those of the author(s), and do not necessarily reflect the views of Iraq Business News.

The Iraqi Dinar Revaluation Scam: An Examination of False Hope and Financial Deception

Introduction

The notion that the Iraqi Dinar (IQD) will appreciate in value by an unprecedented multiple has circulated in certain investment circles for many years.

This idea, often presented as an insider tip or a once-in-a-lifetime opportunity, is in reality a long-standing scam. Promoters of this scheme suggest that the Iraqi Dinar, which has been significantly devalued since the fall of Saddam Hussein's regime, is poised for a dramatic revaluation (or "RV" as proponents call it - a term that also calls to mind the recreational vehicles that people dream of buying with there newfound wealth) that will multiply its worth many times over, making early investors incredibly wealthy.

However, the likelihood of such an event occurring is virtually non-existent. This essay will explore the history of the Iraqi Dinar revaluation scam, the demographics it targets, and the improbability of the currency's value ever increasing as advertised.

The History of the Iraqi Dinar Scam

The origins of the Iraqi Dinar scam can be traced back to the early 2000s, following the U.S.-led invasion of Iraq in 2003. After the overthrow of Saddam Hussein, the Iraqi economy was in turmoil, and the new government introduced a series of new banknotes to replace the old currency, which had become virtually worthless. The new Dinar, while more stable than its predecessor, was still valued at a fraction of a U.S. cent.

Around this time, rumours began to spread that Iraq's abundant oil reserves and the eventual recovery of its economy would lead to a significant revaluation of the Dinar. Promoters of this idea claimed that the currency, which was trading at a rate of thousands of Dinar to one U.S. dollar, would soon be revalued to something much closer to the U.S. dollar's value. Some extreme predictions suggested that a single Dinar might one day be worth several U.S. dollars, representing a profit potential of several hundred thousand per cent for those who bought in early.

The scam gained momentum over the years, particularly through online forums, social media, and even in-person seminars. It preyed on people's desire for quick and easy wealth, often using pseudo-economic arguments and speculative analysis to lend credibility to the claim. However, despite the persistence of these rumours, the Dinar's value has remained relatively stable at its low level, with no indication that a revaluation is on the horizon.

Targeting the Vulnerable: Who Falls for the Dinar Scam?

The Iraqi Dinar scam targets a broad range of individuals, but certain demographics are particularly susceptible. The scam is especially appealing to those who are financially insecure, such as retirees, low-income earners, or individuals facing economic hardship. These people are often attracted to the idea of a small investment potentially yielding a life-changing return. The promise of a Dinar revaluation can appear as a beacon of hope in an otherwise bleak financial landscape.

Moreover, the scam often targets those who lack sophisticated financial literacy. Many victims do not have a deep understanding of how currency markets work and are easily swayed by the seemingly logical but fundamentally flawed arguments presented by promoters. These arguments often include references to historical revaluations of other currencies, misleading comparisons to post-war Germany or Japan, and exaggerated claims about Iraq's economic potential due to its oil reserves.

In addition, the scam tends to attract individuals with a distrust of conventional financial institutions. Promoters often paint the Dinar investment as a way to circumvent traditional investment vehicles, appealing to those who believe that mainstream finance is rigged against the average person. This conspiratorial mindset is further fuelled by the online echo chambers where these ideas are shared and reinforced.

The scam has also found a foothold in certain social and religious communities, where trust in fellow members can be exploited by promoters of the scheme.

Scammers sometimes exploit patriotic sentiments, suggesting that purchasing dinars somehow supports Iraq's reconstruction while promising enormous returns.

The Improbability of a Dinar Revaluation

Despite the persistence of these rumours, the likelihood of a substantial revaluation of the Iraqi Dinar is exceedingly slim. Several fundamental economic and geopolitical factors contribute to this conclusion.

1. Firstly, the vast quantity of Iraqi Dinars in circulation significantly hampers the possibility of the currency appreciating massively in value. For the dinar to experience a dramatic increase in value, Iraq would need to undergo an extraordinary economic transformation, which is highly improbable given the current economic conditions. The large money supply means that any attempt to revalue the currency would require a substantial reduction in the number of dinars in circulation, which is logistically and economically unfeasible. Additionally, a sudden and massive appreciation would disrupt the economy, leading to inflation and other financial instabilities. Therefore, the sheer volume of dinars makes a significant revaluation highly unlikely.
2. Iraq's economy, while possessing significant oil reserves, remains fragile and heavily reliant on oil exports. The country faces ongoing challenges such as political instability, corruption, and security concerns, which undermine investor confidence and deter foreign investment. Additionally, the Central Bank of Iraq has implemented a monetary policy aimed at maintaining stability rather than pursuing aggressive revaluation strategies. Any significant increase in the Dinar's value would likely harm Iraq's economy by making its exports more expensive and less competitive on the global market.
3. Currency revaluations of the magnitude suggested by Dinar promoters are unprecedented. Historical examples of revaluations often involve countries emerging from periods of hyperinflation or war, where the value of the currency had been artificially suppressed. Even in such cases, the revaluation process is controlled, gradual, and does not result in the kind of massive windfalls that Dinar promoters suggest.
4. Lastly, the Iraqi government and the Central Bank have consistently denied any plans for a major revaluation. Official statements have reiterated that the Dinar's value will continue to be determined by market forces and that there are no plans to peg the currency to the U.S. dollar or any other foreign currency at a dramatically different rate.

Conclusion

The idea that the Iraqi Dinar will appreciate in value by an unprecedented multiple is nothing more than a persistent scam, preying on the hopes and fears of the financially vulnerable. Despite the seductive promise of enormous returns, the economic realities of Iraq and the dynamics of currency markets make such a revaluation virtually impossible.

Those who have fallen for the Dinar scam have often lost money, time, and hope, while the promoters of this scheme continue to profit from spreading falsehoods. It is crucial for potential investors to exercise scepticism and to seek out reliable financial advice before engaging in any such speculative investments.

Click here to read more.

The Currency of Iraq: A Comprehensive Guide

By John Lee.

On a recent webinar organised by the Iraq Britain Business Council (IBBC), Professor Frank Gunter of Lehigh University outlined the key changes in the dinar exchange rate over the years, as well as the consequences of having two exchange rates. (For more on the reasons why Iraq has two exchange rates, click here).

Current Exchange Rates

There are two exchange rates in Iraq: the official exchange rate and the market rate.

• The official exchange rate is approximately 1,310 Iraqi dinars per US dollar.
• The market rate is higher, at around 1,460 Iraqi dinars per US dollar, which represents a 12% gap between the two rates.

Impact of Dual Exchange Rates

The existence of dual exchange rates has several negative effects on Iraq's economy:

• It slows economic growth by disrupting existing contracts and discouraging trade and investment both domestically and internationally.
• It encourages corruption, as individuals and entities can profit from the difference between the official and market rates by being paid in dollars and making payments in dinars.
• It complicates fiscal policy, making it harder for the government to manage the economy effectively.

Historical Changes in Exchange Rates

• December 2020: The dinar was devalued by 23%, primarily due to the fiscal crisis of 2020 and the drop in oil prices. This devaluation was intended to allow the Ministry of Finance to obtain more dinars for each dollar of oil revenue.
• February 2023: There was a revaluation, increasing the value of the dinar from 1,450 to 1,310 per dollar. This revaluation was beneficial for importers, as it made imports cheaper, but it negatively impacted exporters of non-oil goods, making their products more expensive abroad.

Effect of Dollar Appreciation

Since the revaluation in February 2023, the US dollar has appreciated by about 3.3%. This further makes imports cheaper in Iraq but makes exports more expensive, affecting the balance of trade.

Challenges of Dual Exchange Rates

The dual exchange rates have contributed to economic disruption by making it difficult to conduct business with predictable costs and revenues. The gap between the rates incentivizes corrupt practices and complicates governmental fiscal management, ultimately leading to slower economic growth.

In summary, the official and market exchange rates in Iraq have undergone significant changes in recent years, driven by economic crises and fiscal policy decisions. The dual rates present ongoing challenges for economic stability, growth, and governance.

The consequences of having two exchange rates in Iraq can be summarised as:

1. Slowing Economic Growth
   • The dual exchange rate system disrupts existing contracts and discourages both domestic and international trade and investment. This disruption hinders economic stability and growth.
2. Encouraging Corruption
   • The gap between the official and market exchange rates creates opportunities for corrupt practices. Individuals and entities can profit from the difference by being paid in dollars and making payments in dinars, exploiting the discrepancy for financial gain.
3. Complicating Fiscal Policy
   • Managing the economy becomes more challenging with dual exchange rates. The existence of two rates complicates fiscal policy, making it difficult for the government to implement effective economic measures and maintain financial stability.

For more on the reasons why Iraq has two exchange rates, click here.

The full IBBC webinar can be viewed here.

To register for IBBC's Tech Forum discussion on AI, click here (free).

Attend IBBC's Spring Conference.

IBBC's new white paper on de-dollarisation of Iraqi economy can be downloaded here.

By John Lee.

The International Monetary Fund (IMF) has issued a detailed report on the Iraqi economy.

The following key points were highlighted:

1. Improved Domestic Stability: Since the new government took office in October 2022, Iraq has experienced improved domestic stability. This facilitated the passage of its first three-year budget, which led to a large fiscal expansion starting in 2023.
2. Economic Recovery: The fiscal expansion supported a strong recovery in Iraq's non-oil economy after a contraction in 2022. Despite regional conflicts, Iraq remained largely unaffected.
3. Inflation Decline: Domestic inflation decreased to 4 percent by the end of 2023. This decline was attributed to lower international food prices, currency revaluation as of February 2023, and normalization in trade finance.
4. Imbalances Worsened: Despite the positive aspects, imbalances worsened due to the large fiscal expansion and lower oil prices.
5. Expected Growth in 2024: The ongoing fiscal expansion is anticipated to further boost growth in 2024. However, this expansion comes at the expense of a further deterioration of fiscal and external accounts, increasing Iraq's vulnerability to oil price fluctuations.
6. Medium-Term Sovereign Debt Stress: Without policy adjustment, there's a high risk of medium-term sovereign debt stress, indicating potential fiscal challenges ahead.
7. External Stability Risks: Iraq faces external stability risks, particularly concerning its vulnerability to fluctuations in oil prices. The ongoing conflict in Gaza and Israel also presents a potential downside risk.

In summary, while Iraq has experienced improvements in domestic stability and economic recovery, challenges remain regarding fiscal imbalances, external stability risks, and the potential impact of regional conflicts on its economy.

Click here to download the full 68-page report

Press release from IMF:

On May 13, 2024, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation[1] with Iraq and considered and endorsed the staff appraisal.

Domestic stability has improved since the new government took office in October 2022, facilitating the passage of Iraq's first three-year budget, which entailed a large fiscal expansion starting in 2023. This supported the strong recovery in Iraq's non-oil economy after a contraction in 2022, while Iraq was largely unaffected by the ongoing conflict in the region. Domestic inflation declined to 4 percent by end-2023, reflecting lower international food prices, the currency revaluation as of February 2023, and the normalization in trade finance. However, imbalances have worsened due to the large fiscal expansion and lower oil prices.

The ongoing fiscal expansion is expected to boost growth in 2024, at the expense of a further deterioration of fiscal and external accounts and Iraq's vulnerability to oil price fluctuations. Without policy adjustment, the risk of medium-term sovereign debt stress is high and external stability risks could emerge. Key downside risks include much lower oil prices or a spread of the conflict in Gaza and Israel.

Executive Board Assessment[2]

Executive Directors agreed with the thrust of the staff appraisal. They welcomed the strong economic rebound, declining inflation, and the improved domestic conditions which have resulted in the implementation of the first-ever three-year budget. Noting that risks are tilted to the downside, given regional conflicts and large dependence on volatile oil prices, and that the large fiscal expansion could result in fiscal and external imbalances, Directors underscored the need for sound macroeconomic policies and structural reforms to secure fiscal and debt sustainability, advance economic diversification, and achieve sustainable, inclusive, and private sector-led growth.

Directors emphasized that a gradual, yet sizeable fiscal adjustment is needed to stabilize debt in the medium term and rebuild fiscal buffers. They encouraged the authorities to focus on controlling the public wage bill, phasing out mandatory hiring policies, and mobilizing non-oil revenues, while better targeting social assistance. Directors agreed that prompt implementation of customs and revenue administration reforms, a full implementation of the Treasury Single Account, and a strict control and limit of the use of extrabudgetary funds and government guarantees are key to support fiscal consolidation. Limiting monetary financing and reforming the pension system are also important.

Directors commended the central bank's efforts to tighten monetary policy and enhance its liquidity management framework. Improving coordination between fiscal and monetary operations would help absorb excess liquidity and enhance monetary policy transmission. Directors concurred that accelerating the restructuring of the large state-owned banks is also essential. They encouraged further modernizing the private banking sector, including by facilitating the establishment of correspondent banking relationships, reducing regulatory uncertainties, and promoting efficiency and competitiveness of private banks.

Directors emphasized the need for structural reforms to unlock private sector development. They encouraged leveling the playing field between public and private jobs, boosting female labor force participation, and reforming education and labor laws. Directors agreed that improving governance and combatting corruption are also key and encouraged further strengthening the AML-CFT framework, enhancing public procurement and business regulations, and addressing electricity sector inefficiencies. Directors welcomed the renewed efforts toward WTO accession. They also encouraged the authorities to improve the coverage and timeliness of statistics.

Directors concurred that close engagement with the Fund, including through continued technical assistance, would be useful, and welcomed the authorities' request for a Policy Coordination Instrument.

It is expected that the next Article IV consultation with Iraq will be held on the standard 12-month cycle.

[1] Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

[2] At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm.

To browse our comprehensive library of reports on Iraq, click here.