Iraqi Dinar – Kuwait Comparison

Iraqi Dinar and the Kuwait Comparison
The Kuwait dinar increased in value to be worth $3.40 USD in a period of ten years. Had an investor had the foresight to invest $1,000.00 USD in 1991 they would have $3.3 million USD today. The Iraqi dinar DOES NOT have similar potential.

The comparison used is WRONG. Yes the Kuwaiti Dinar crashed as a result of the 1990 Iraqi invasion, but this ONLY applies to notes in circulation at that time. After the Kuwaiti Government was restored, they issued a new series of banknotes with the same US Dollar exchange rate that the Kuwaiti Dinar had been fixed at before the war. Kuwaitis with old notes had to hand them in to be swapped for the new money. When the notes were being handed in, they were checked against the known serial numbers of notes in stockpiles at the Central Bank of Kuwait which had been stolen during the Iraqi occupation.

Stolen notes would not be exchanged – point blank. Other notes could only be exchanged by Kuwaiti residents during a very short period of time, after which all previous banknote issues were declared worthless. And in this case worthless means WORTHLESS. Current 20 Kuwaiti Dinar notes have a face value of about 75.00USD at the exchange booth. Older ones sell on ebay for about 10.00USD to collectors – and that’s for one without any folds.

Investing in currency can sometimes be a good idea. Investing in the paper kind like the Iraqi Dinar, when you don’t live anywhere near the issuing country is a BAD idea. Unlike the USA and UK, most countries demonetize their old currency. When Iraq issues new notes, and probably lops off four zeros in doing so, they are likely to give Iraqis a short window to exchange their old money, and then declare all previous banknote issues as being worthless. Joe Schmo won’t be able to do very much with his prized 1,000,000 Iraqi Dinar cash investment once that happens.

Try finding a major reputable bank in the US or Europe that will readily exchange Iraqi Dinar at a market based rate (and not some opportunistic rip-off rate) on a day to day basis.

Moral of the story: Don’t buy Iraqi currency! Just because there’s oil there doesn’t mean the economy will boom.

If you reckon Iraq is a great investment and you really want to invest money there, wait until the next foreign-currency bond issue by the Iraqi government, and throw your hard earned money at that. There’s less chance you’ll lose all of it.

Posted in Iraqi Dinar