The modern history of Iraq has not been a pretty one: in between a violent revolution that deposed the Hashemite monarchy to the two Gulf Wars, there are entire generations of Iraqis who have yet to experience peace and stability.
Despite their struggles, the country marches on, and even with all the violence and the wars, Iraq persists, with the most recent iteration of their government trying desperately to keep the institutions of democracy working, from law and order, and most importantly, the economy.
The government is constantly trying to revive the Iraqi dinar, but unfortunately, this has opened up the economy to unscrupulous traders who feel like the market is ripe for taking advantage of.
And the best way to take advantage of an unstable economy is to entice people into ‘investing’ in the Iraqi Dinar (IQD) with the promise that it will eventually recover and be worth more than what they bought it for.
Most of these scams are perpetrated by “Dinar Gurus”: self-proclaimed forex experts who convince people that investing in the Iraqi Dinar is a lucrative investment. Here’s why you shouldn’t fall for it.
Investing in the Iraqi Dinar
But what does it actually mean when we say “investing in the Iraqi Dinar”? At its most basic, Iraqi dinar investments work exactly like other currency investments: you buy an X amount of Iraqi dinars using a certain amount of U.S. dollars and then wait for the value of the IQD to go up. This works exactly like buying stocks or bonds in that you invest in something in the hopes that its future value will be worth more than what you paid for.
While it’s definitely not illegal to invest in the Iraqi dinar, or indeed any currency, it’s the way scammers like “Dinar Gurus” try to convince people that it’s a sure-fire investment. Is what they’re doing illegal? Again, not exactly: convincing someone to invest in something and them doing so willfully isn’t against the law. Unscrupulous, unethical, and irresponsible, yes, but illegal? Not quite.
Are Dinar Gurus Scamming Us?
In short, yes, they are, and here’s why:
As with most types of financial scams, the Dinar Gurus use certain techniques to scam people out of their hard-earned money for an investment that is neither sure nor lucrative. In fact, some Dinar Gurus don’t even bother investing: they’ll just straight-up get your money.
Fortunately, there are some red flags that you can look out for:
- If the “Dinar Guru” works or is run by an individual agent rather than from a known trader, business brokerage, established financial institution, or banks, then it’s most likely a scam.
- If the “Dinar Guru” is promoting their agent or their firm via unofficial telephone marketing or internet banner ads, rather than through established communication media, then it’s most likely a scam.
- If the “Dinar Guru” promises exaggerated or astronomical returns for measly investments, it’s most definitely a scam.
It helps, however, that established financial institutions, like the Bank of America, don’t offer forex trading in Iraqi dinars, specifically because the Iraqi economy is so volatile. Various states like Alabama, Utah, and Oklahoma even issue investor warnings against investing in the Iraqi dinar specifically because it’s an unsure market.
How Do Dinar Gurus Scam People?
Dinar Gurus scam people by using the Forex (foreign exchange) market as a cover for their shady deals. Forex refers to currency trading, and again, simply refers to buying foreign currency –in this case, the Iraqi Dinar –using U.S. dollars and then later trading the foreign currency for a higher value.
Forex is a legitimate form of investment in and of itself and can be safer than investing in the stock market. This is because, barring severe Acts of God (like weather conditions or other natural disasters) and/or military conflicts, investing in currency is pretty steady. The returns, however, are not the best, but it’s mostly stable. In fact, foreign currency exchange is a great post-retirement way to make money and is even considered a career and business opportunity for older adults.
With the Iraqi Dinar investment scam, however, the ‘scam’ happens when Dinar gurus overpromise returns just so people will invest more money.
For example, a typical Dinar Guru scam will involve a Dinar Guru agent or marketer giving you plenty of hypothetical values: they’ll provide the potential investor with the current exchange rate between the IQD and the USD, and then postulate on the future value of the IQD.
This means that, if a person were to invest $1,000 at an exchange rate of US$1 = IQD 1,160, then the investor would have 1.16 million IQD on hand.
Dinar gurus will then convince you that, over the next few months (already a red flag), you can expect (again, another red flag) the IQD’s value to grow: if the IQD/USD exchange rate goes to 1:1, then your 1.16 million IQD becomes US$1.16 million, all at a low investment of $1,000.
Literally every step of this process is a scam: first, there is no currency in the world that can grow to match the U.S. dollar in such a short amount of time. Secondly, there are no investments –whether bonds, stocks, or currencies –that are a “sure shot”. There is never an assurance when it comes to investments, and anyone who says otherwise is willfully scamming you.
The Iraqi Dinar: A Hidden Opportunity?
This isn’t to say that the Iraqi Dinar isn’t an investment worth putting money in: back in 2007, after the fall of Saddam Hussein, speculation about the Iraqi Dinar pushed its value up, leading many investors and brokers to consider the IQD as a solid financial investment.
The Iraqi transitional government jumped on these speculations and set forth financial programs to help continue the IQD’s growth, including the gradual increase of domestic fuel prices, eliminating direct budgetary fuel subsidies, and even establishing a highly-ambitious structural reform program in the hopes of transitioning further into a market-based economy.
At the time, the Iraqi government tried its best to combat inflation, with the Central Bank of Iraq sharply raising policy interest rates to allow the IQD to appreciate gradually. This had two intended effects: first, it will de-dollarize (i.e., shift reliance away from the U.S. dollar) the economy and two, reduce imported inflation.
And it worked: the IQD/USD exchange rate at the start of these reforms in April of 2007 was at US$1 = 1,270 IQD, and by August of 2020, had gone up to US$1 = 1,190 IQD, a 6.5% positive return. This trend is speculated to go up if (and it’s a big if) the region stabilizes, both militarily and economically.
If anything, the Iraqi Dinar is less ‘get rich quick’ and more ‘long-term investment’. But always remember: there is no way to predict the growth of a country’s economy, not even historical bases like the revaluation of the Kuwaiti Dinar after the Invasion of Kuwait, nor is its upward trend, fueled by the global increase of the demand for oil and the quasi-stabilization of the Iraqi market. There is no way to predict the future.
One thing’s for sure: investing in either the stock market, in bonds, or on foreign currency is a good step towards creating wealth and retiring rich, but you need to be smart about it. The Dinar Gurus are a scam, every single one of them. If you want to invest in the Iraqi dinar, always course it to established financial institutions or brokers, and never trust any broker or marketer that claims to be a “dinar guru” over the internet.