They're buying what? U.S.
By Gertrude Chavez-Dreyfuss
NEW YORK Thu Nov 15, 2012 4:38pm EST
NEW YORK (Reuters) - The U.S. stock market almost wiped out his retirement account, but retired pilot Ronald Scarpa hasn't lost his taste for risk. Lately he has turned to one of the chanciest investments in the world - the Iraqi dinar.
"It's not a question of if, but when Iraq revalues its currency," said the Las Vegas-based Scarpa, who keeps dinars in his retirement account. "The dinar will eventually have substantial value, possibly the highest in the world."
He's not alone in risking his money on an investment that can charitably be described as a long-term turnaround project that will pay off only for the extremely patient. Thousands like Scarpa in America are buying the dinar, hoping someday the war-torn nation can revalue a currency worth just a fraction of a penny.
The fundamentals for buying the dinar are precarious. The United States invaded the country in 2003 and has only recently removed most of its troops. The country's political situation remains unstable, and destabilization in the Middle East - most recently with rockets fired between Israel and the Gaza Strip - could undermine the fledgling republic further.
U.S. retail investors' interest in Iraq's currency is part of a broad push for investment opportunities that will give some yield. Most of them cite near-zero interest on their U.S. savings and certificates of deposits as a reason for buying dinars and other exotic currencies.
The dinar, worth just a tenth of one U.S. cent, is experiencing additional downward pressure as a result of international economic sanctions imposed on neighboring Iran and Syria.
Also, buying the dinar is a task in and of itself. The currency is only traded in Iraq, so it can only be purchased by U.S. customers through a handful of dealers around the U.S. who get their dinars from Iraqi banks. If a customer wants to sell his dinars, the dealer will only buy it back at a 30 percent discount - so no quick trades here.
But Scarpa said he is prepared to wait. The country has the second-largest oil reserves in the Middle East and exports 3.4 million barrels of oil per day, making it one of the world's largest oil producers.
"If the dinar rises to just even a penny, you would have realized a profit of 900 percent," Scarpa said.
WEAK CURRENCY BRINGS IN SPECULATORS
In the last four years, the dinar has barely moved. Since 2008, it has appreciated by just 5 percent against the dollar, and at a tenth of a penny, the Iraqi dinar is the weakest currency among oil-producing Arab nations.
The Kuwaiti dinar is worth about $3.50, while Saudi Arabia's riyal is equivalent to roughly 26 U.S. cents.
The old dinar was worth $3.20 before the United Nations embargo that followed Iraq's invasion of Kuwait in 1990. By August 2002, the dinar had plummeted to a fraction of a penny.
Speculators are betting that given Iraq's potential as an oil-driven economy, the dinar could rise to a value of $1 to $3.
"I looked at the risks and I decided that this is not going to bankrupt me," said 35-year-old Ryan Williams, a former sheriff in Bakersfield, California.
"You invest a couple of hundreds or a couple of thousands of dollars and even if it just appreciated by 10 to 15 percent a year, that's still a lot better than investing in certificates of deposits here."
The Iraqi central bank sells dollars daily at a fixed price of 1,166 dinars through two state-run financial institutions and some private lenders Those institutions set the market rate through sales to customers. The current market rate is 1,215 dinars to one U.S. dollar.
Hassnain Ali Agha, founder of Las Vegas-based currency dealer Dinar Trade, is the biggest U.S. market-maker in Iraq's currency. He also sells other exotic currencies such as Afghanistan's afghani and the Libyan pound.
The United States is a huge market for Agha's firm, which has nearly 900,000 customers, 90 percent of which have purchased dinars. His customers are U.S. mom-and-pop investors - teachers, police officers, and construction workers. He also sold dinars to many U.S. soldiers coming back from Iraq.
Agha, who formerly traded at the Chicago Mercantile Exchange and New York Futures Exchange, himself holds more than $2 million in dinars, he said.
In 2011, Agha said, his firm sold about $577 million in dinars to U.S. customers, most of whom hold dinars for investment purposes.
"People in the U.S. really feel that Iraq is the next frontier market to make money on," said Agha. "There will come a time when the Iraqi government will have to adjust the dinar exchange rate given the country's oil exports. That will start fueling the fire."
Agha sells dinars in 1 million lots for $1,120. For the U.S. investor, however, it has to be a long-term holding. Dinar Trade will buy Iraqi notes at $850 per million, so the dinar would have to appreciate by about 30 percent before an investor could sell and break even.
IRAQIS WANT DOLLARS
In Iraq, prices are quoted both in dinars and dollars, but many prefer the greenback, locals interviewed by Reuters said.
Saja Majeed, a 30-year-old civil servant in Baghdad and a mother of two, said she carries dollars in her wallet because it is safer and she sees little opportunity for the dinar to rise.
"There is no industry in Iraq except oil. The dinar is linked to oil, but oil will run out one day," Majeed said.
Revaluation will only happen once the Iraqi government stabilizes. Iraq's central bank hopes to make one dinar equal to $1 at some point through redenomination and central bank-induced appreciation.
Iraq's deputy central bank governor Mudher Kasim told Reuters that process could take three years.
America investors are remaining patient.
"The big question is: where do you put your money in the U.S.? You can't get any interest in your money. Banks give you almost nothing on deposits," said Donna Simko, a real estate agent in her mid-sixties in Riverside, California.
"The gold rush into Iraq is just getting started."
(Additional reporting by Aseel Kami in Baghdad; Editing by David Gaffen and Steve Orlofsky)
http://www.reuters.com/article/2012/11/15/us-forex-investments-dinar-idUSBRE8AE1SV20121115
By Gertrude Chavez-Dreyfuss
NEW YORK Thu Nov 15, 2012 4:38pm EST
NEW YORK (Reuters) - The U.S. stock market almost wiped out his retirement account, but retired pilot Ronald Scarpa hasn't lost his taste for risk. Lately he has turned to one of the chanciest investments in the world - the Iraqi dinar.
"It's not a question of if, but when Iraq revalues its currency," said the Las Vegas-based Scarpa, who keeps dinars in his retirement account. "The dinar will eventually have substantial value, possibly the highest in the world."
He's not alone in risking his money on an investment that can charitably be described as a long-term turnaround project that will pay off only for the extremely patient. Thousands like Scarpa in America are buying the dinar, hoping someday the war-torn nation can revalue a currency worth just a fraction of a penny.
The fundamentals for buying the dinar are precarious. The United States invaded the country in 2003 and has only recently removed most of its troops. The country's political situation remains unstable, and destabilization in the Middle East - most recently with rockets fired between Israel and the Gaza Strip - could undermine the fledgling republic further.
U.S. retail investors' interest in Iraq's currency is part of a broad push for investment opportunities that will give some yield. Most of them cite near-zero interest on their U.S. savings and certificates of deposits as a reason for buying dinars and other exotic currencies.
The dinar, worth just a tenth of one U.S. cent, is experiencing additional downward pressure as a result of international economic sanctions imposed on neighboring Iran and Syria.
Also, buying the dinar is a task in and of itself. The currency is only traded in Iraq, so it can only be purchased by U.S. customers through a handful of dealers around the U.S. who get their dinars from Iraqi banks. If a customer wants to sell his dinars, the dealer will only buy it back at a 30 percent discount - so no quick trades here.
But Scarpa said he is prepared to wait. The country has the second-largest oil reserves in the Middle East and exports 3.4 million barrels of oil per day, making it one of the world's largest oil producers.
"If the dinar rises to just even a penny, you would have realized a profit of 900 percent," Scarpa said.
WEAK CURRENCY BRINGS IN SPECULATORS
In the last four years, the dinar has barely moved. Since 2008, it has appreciated by just 5 percent against the dollar, and at a tenth of a penny, the Iraqi dinar is the weakest currency among oil-producing Arab nations.
The Kuwaiti dinar is worth about $3.50, while Saudi Arabia's riyal is equivalent to roughly 26 U.S. cents.
The old dinar was worth $3.20 before the United Nations embargo that followed Iraq's invasion of Kuwait in 1990. By August 2002, the dinar had plummeted to a fraction of a penny.
Speculators are betting that given Iraq's potential as an oil-driven economy, the dinar could rise to a value of $1 to $3.
"I looked at the risks and I decided that this is not going to bankrupt me," said 35-year-old Ryan Williams, a former sheriff in Bakersfield, California.
"You invest a couple of hundreds or a couple of thousands of dollars and even if it just appreciated by 10 to 15 percent a year, that's still a lot better than investing in certificates of deposits here."
The Iraqi central bank sells dollars daily at a fixed price of 1,166 dinars through two state-run financial institutions and some private lenders Those institutions set the market rate through sales to customers. The current market rate is 1,215 dinars to one U.S. dollar.
Hassnain Ali Agha, founder of Las Vegas-based currency dealer Dinar Trade, is the biggest U.S. market-maker in Iraq's currency. He also sells other exotic currencies such as Afghanistan's afghani and the Libyan pound.
The United States is a huge market for Agha's firm, which has nearly 900,000 customers, 90 percent of which have purchased dinars. His customers are U.S. mom-and-pop investors - teachers, police officers, and construction workers. He also sold dinars to many U.S. soldiers coming back from Iraq.
Agha, who formerly traded at the Chicago Mercantile Exchange and New York Futures Exchange, himself holds more than $2 million in dinars, he said.
In 2011, Agha said, his firm sold about $577 million in dinars to U.S. customers, most of whom hold dinars for investment purposes.
"People in the U.S. really feel that Iraq is the next frontier market to make money on," said Agha. "There will come a time when the Iraqi government will have to adjust the dinar exchange rate given the country's oil exports. That will start fueling the fire."
Agha sells dinars in 1 million lots for $1,120. For the U.S. investor, however, it has to be a long-term holding. Dinar Trade will buy Iraqi notes at $850 per million, so the dinar would have to appreciate by about 30 percent before an investor could sell and break even.
IRAQIS WANT DOLLARS
In Iraq, prices are quoted both in dinars and dollars, but many prefer the greenback, locals interviewed by Reuters said.
Saja Majeed, a 30-year-old civil servant in Baghdad and a mother of two, said she carries dollars in her wallet because it is safer and she sees little opportunity for the dinar to rise.
"There is no industry in Iraq except oil. The dinar is linked to oil, but oil will run out one day," Majeed said.
Revaluation will only happen once the Iraqi government stabilizes. Iraq's central bank hopes to make one dinar equal to $1 at some point through redenomination and central bank-induced appreciation.
Iraq's deputy central bank governor Mudher Kasim told Reuters that process could take three years.
America investors are remaining patient.
"The big question is: where do you put your money in the U.S.? You can't get any interest in your money. Banks give you almost nothing on deposits," said Donna Simko, a real estate agent in her mid-sixties in Riverside, California.
"The gold rush into Iraq is just getting started."
(Additional reporting by Aseel Kami in Baghdad; Editing by David Gaffen and Steve Orlofsky)
http://www.reuters.com/article/2012/11/15/us-forex-investments-dinar-idUSBRE8AE1SV20121115
Today at 5:34 am by Rocky
» Corruption of the Ministry of Transport.. Representatives express their surprise at the minister’s s
Today at 5:32 am by Rocky
» The biggest supporter of the invasion of Iraq.. The death of former US Senator Joe Lieberman
Today at 5:31 am by Rocky
» Iraq is ranked “late.” A list of the most and least safe Arab countries for women
Today at 5:30 am by Rocky
» utube MM&C 3/26/24 Iraqi Dinar - IQD Update - Strength Dinar - Automation ASYCUDA - World Bank - D
Yesterday at 8:49 am by Rocky
» The Council of Ministers exempts the Gulf Interconnection Authority from guarantee fees: it is a gov
Yesterday at 8:48 am by Rocky
» The Iraqi government raises the size of the 2024 budget, and Parliament is “surprised”
Yesterday at 8:46 am by Rocky
» Popular Movement: We have many economic options away from American hegemony
Yesterday at 8:42 am by Rocky
» The Oil Parliament stresses the need to transfer part of the revenues to the producing governorates
Yesterday at 8:41 am by Rocky
» It will cover 14 regions in eastern Iraq.. A deputy reveals the “border electricity” project
Yesterday at 8:40 am by Rocky
» Experts Warn Mass Migration Threatens US Food Security
Yesterday at 8:37 am by Bama Diva
» Al-Fateh: America occupies Iraq through agreements
Yesterday at 8:37 am by Rocky
» Anger in Iraq over a "sudden decision"... and a reminder of a "general strike" that paralyzed the co
Yesterday at 8:34 am by Rocky
» Parliamentary Committee: Parliament is discussing today a decision that “disturbed” the Iraqis
Yesterday at 8:33 am by Rocky
» Ministry of Electricity: Our production will reach 27 thousand megawatts by May
Yesterday at 8:31 am by Rocky
» Diagnosing the “most important” problems in the oil file between Baghdad and Erbil.. What is the rel
Yesterday at 8:30 am by Rocky
» The Iraqi Fiqh Academy and the Sunni Endowment issue a fatwa to pay Zakat al-Fitr
Yesterday at 8:28 am by Rocky
» The National Bank of Iraq continues its digital transformation by launching its new banking system a
Yesterday at 8:26 am by Rocky
» Parliamentary Investment and the Central Bank are discussing the housing initiative
Yesterday at 8:25 am by Rocky
» The Prime Minister announces the restart of 500 suspended projects
Yesterday at 8:23 am by Rocky
» Al-Barti assesses the region's employees: Your salaries are insured and will be paid after resettlem
Yesterday at 8:21 am by Rocky
» Iraqi-American discussions in anticipation of the Sudanese visit
Yesterday at 8:20 am by Rocky
» Iraq and Turkey hold meetings in Ankara to discuss technical issues related to the development road
Yesterday at 8:17 am by Rocky
» A government parliamentary agreement to support budget revenues and governorate allocations for inve
Yesterday at 8:16 am by Rocky
» Oil: The gas sector is witnessing great development
Yesterday at 8:15 am by Rocky
» A Kurdish-French agreement to develop trade and economic relations
Yesterday at 8:13 am by Rocky
» Exchange companies in Mosul demand that they be entered into the currency selling window
Yesterday at 8:12 am by Rocky
» Minister of Finance to the Czech Ambassador: Iraq enjoys a more attractive business environment and
Yesterday at 8:10 am by Rocky
» Iraq and Britain sign an agreement in the field of the stock market
Yesterday at 8:08 am by Rocky
» A new parliamentary meeting with the Minister of Finance to discuss these files
Yesterday at 8:07 am by Rocky
» A parliamentary committee discusses these files with the Director of the Projects Department in the
Yesterday at 8:06 am by Rocky
» Central Bank sales exceed $257 million today
Yesterday at 8:05 am by Rocky
» Parliamentary Finance and the Minister of Planning discuss governorate allocations and investment bu
Yesterday at 8:04 am by Rocky
» Planning: We are discussing with representatives of the World Bank the work plan of the Social Fund
Yesterday at 8:02 am by Rocky
» Parliamentary meeting with the Governor of the Central Bank and the Director of the Real Estate Bank
Yesterday at 8:01 am by Rocky
» Parliamentary Finance: The 2024 budget reached 228 trillion dinars
Yesterday at 7:57 am by Rocky
» Barzani "gives good news" to Kurdistan's employees: salaries, land, and loan exemptions
Yesterday at 7:57 am by Rocky
» Parliamentary Economy: The decision to raise fuel prices targets this class
Yesterday at 7:54 am by Rocky
» The President of the Republic: Iraq is an important investment environment
Yesterday at 7:53 am by Rocky
» From the accounts of Saddam's Republican Guard... Iraq returns approximately 7 billion dinars to the
Yesterday at 7:52 am by Rocky
» Al-Abadi: Muqtada al-Sadr did not leave politics.. He reached a dead end
Yesterday at 7:49 am by Rocky
» Nassif: The leaders of the framework abandoned Al-Sudani because of his recent successes
Yesterday at 7:48 am by Rocky
» Baghdad stresses the continued danger of ISIS and the importance of Washington's efforts to combat i
Yesterday at 7:47 am by Rocky
» Parliamentary Oil: It is necessary to transfer part of the revenues to the oil-producing governorate
Yesterday at 7:45 am by Rocky
» The Sudanese government zeroes in on the legacy of its predecessors
Yesterday at 6:28 am by Rocky
» The Human Organ and Tissue Transplantation Law is ready for its second reading
Yesterday at 6:26 am by Rocky
» 1,500 active civil organizations in Iraq
Yesterday at 6:25 am by Rocky
» The position of Speaker of Parliament awaits decision
Yesterday at 6:23 am by Rocky
» Water for peace...the water crisis in Iraq
Yesterday at 6:21 am by Rocky
» Fiscal and monetary policies succeed in undermining the parallel dollar
Yesterday at 6:20 am by Rocky
» Kurdistan.. Attempts to circumvent the "Federal" decision and an invitation to the Baghdad governmen
Yesterday at 6:17 am by Rocky
» “Iraq warned the US Treasury to leave the dollar.” Parliamentary Finance: The exchange rate will con
Yesterday at 6:16 am by Rocky
» The Iraqi government issues new decisions
Yesterday at 6:14 am by Rocky
» Barzani: We will not give up our constitutional rights, and tomorrow we will take a decision that is
Yesterday at 6:12 am by Rocky
» A researcher in political and security affairs describes the decision to increase the price of gasol
Yesterday at 6:11 am by Rocky
» The Council of Ministers addresses the Finance Ministry to appoint the families of those who died du
Yesterday at 6:09 am by Rocky
» 100 thousand dinars as a “Eid gift” for retirees.. A parliamentary request before the Sudanese (docu
Yesterday at 6:08 am by Rocky
» Al-Sudani confirms that more than 490 projects have been moved and returned to work in record time
Yesterday at 6:07 am by Rocky
» Parliament reveals three facts about the decision to raise the price of fuel: It targeted “luxury” w
Yesterday at 6:05 am by Rocky
» In detail...the problems of the oil file between Baghdad and Erbil
Yesterday at 6:04 am by Rocky
» International skepticism about Iraqi agriculture... Modern irrigation succeeds, but it will not be e
Yesterday at 6:02 am by Rocky
» For those who love traveling by the Iraqi train... buy the ticket with your mobile phone and 50 new
Yesterday at 6:00 am by Rocky
» Regional and international challenges hinder the path of the Iraqi economy towards stability
Yesterday at 5:59 am by Rocky
» A severe educational crisis threatens Iraqi children with a “bleak future”
Yesterday at 5:57 am by Rocky
» Investing in Iraq's natural wealth is a step towards economic integration
Yesterday at 5:56 am by Rocky
» Revealing the advantages of the “Hasabe” project: It is safe and provides great services to employee
Yesterday at 5:55 am by Rocky
» Iraq seeks to strengthen its air defenses.. All eyes turn to South Korea
Yesterday at 5:53 am by Rocky
» Residents of Souq Al-Shuyoukh and Al-Fahd renew their demand for the dismissal of officials and hold
Yesterday at 5:52 am by Rocky
» The government's mood swings turn employees' dreams into nightmares of additional taxes and collecti
Yesterday at 5:50 am by Rocky
» Deputy: Al-Sudani will raise the issue of lifting sanctions against Iraqi banks in Washington
Yesterday at 5:49 am by Rocky
» Kurdish MP: The Shiite authority wants to restore the central system to Iraq
Yesterday at 5:47 am by Rocky
» A Kurdish leader attacks the Federal Court: it is unconstitutional and its decisions are against the
Yesterday at 5:47 am by Rocky
» Talabani Party: Al-Halbousi poses a danger to himself and not just his opponents
Yesterday at 5:45 am by Rocky
» Deputy: The rule of law is trying to return Al-Maliki to power
Yesterday at 5:45 am by Rocky
» Barzani accuses parties of trying to pave the way for the elimination of the region
Yesterday at 5:44 am by Rocky
» BRICS adopts a payment system that is not linked to the dollar
Yesterday at 5:42 am by Rocky
» Tax Authority: Fines imposed on colleges reach one billion dollars
Yesterday at 5:40 am by Rocky
» Sanad: Washington is blackmailing Baghdad with dollars, and the Sudanese government must end the san
Yesterday at 5:39 am by Rocky
» Parliamentary Finance hosts the Minister of Planning to end the crisis in disbursing governorates’ d
Yesterday at 5:38 am by Rocky
» Service effort: The housing crisis in Iraq is disastrous
Yesterday at 5:37 am by Rocky
» A deputy accuses the director of ports: He wasted 20 trillion dinars and exceeded the authorities
Yesterday at 5:35 am by Rocky
» Including raising the price of gasoline and working hours... the full decisions of the Prime Ministe
Yesterday at 5:33 am by Rocky
» Nassif reveals the files that will be presented when the Roads Director comes to Parliament
Yesterday at 5:31 am by Rocky
» Protests and suspension of work... Kurdistan employees await the completion of resettlement procedur
Yesterday at 5:30 am by Rocky
» The Iraq Recovery Fund returns approximately (7) billion dinars
Yesterday at 5:28 am by Rocky
» About 6,000 civil organizations have registered in Iraq.. What about the effectiveness on the ground
Yesterday at 5:27 am by Rocky
» Registering 80,000 private companies under the new retirement and social security law
Yesterday at 5:25 am by Rocky
» Iraq refuses to approve the construction of the Turkish Jazra Dam on the Tigris River Basin
Yesterday at 5:24 am by Rocky
» With the presence of Iraq... a list of countries most vulnerable to water shortages by 2050
Yesterday at 5:23 am by Rocky
» utube 3/25/24 MM&C IQD Update - Iraqi Dinar - Al-Sudani - Faud Hussein - Taif Sami - Iraq's Ex
Tue Mar 26, 2024 6:19 am by Rocky
» Despite Sudanese directives, government banks are continuing to adopt a “fixed rate” on loans
Tue Mar 26, 2024 6:15 am by Rocky
» Stability of dollar prices against the dinar in Baghdad and Erbil
Tue Mar 26, 2024 6:14 am by Rocky
» SWIFT is working on creating a digital currency platform for central banks
Tue Mar 26, 2024 6:13 am by Rocky
» Parliament is in the process of amending the People with Disabilities and Special Needs Law, and the
Tue Mar 26, 2024 6:12 am by Rocky
» Iraq praises Turkey's "serious" interaction with the development road project
Tue Mar 26, 2024 6:10 am by Rocky
» The Minister of Education approves the names of supervisors of the Creativity, Challenge, Peace and
Tue Mar 26, 2024 6:08 am by Rocky
» Losses for most Gulf markets with the expiration of eligibility for cash dividends
Tue Mar 26, 2024 6:06 am by Rocky
» Government source: All government banks adopted the simple decreasing interest method instead of fix
Tue Mar 26, 2024 6:05 am by Rocky
» Justice clarifies the mechanism for requesting real estate bonds via the Ur platform
Tue Mar 26, 2024 6:03 am by Rocky