Iraqi Dinar Increasing However Many Challenges Ahead

There has been an update to this post.

In 2003 the Iraq war threw the already troubled nation of Iraq into complete chaos. The government was overthrown and there was a complete shutdown of all economic activity. The nation was divided and there was fighting that began against the U.S. forces and fighting that began against each other as different factions could not agree which path the nation should take. As a result the currency was completely removed and became worthless.

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When the rebuilding of Iraq began the first step that was taken was to build the Central Bank of Iraq in 2004. The New Iraqi Dinar Bank Note was also issued. The purpose of this was to give the country support to begin rebuilding and every country needs a currency to do international trading. They also were attempting to control inflation stability and implementing the nations reserves. As well as managing the Iraqi Dinar and regulating the private banks.

As time has gone on and the difficult periods of fighting have finally began to subside the nation of Iraq is beginning to show signs of life. The security is still uncertain but there is substantial improvement. The economy is starting to grow in several key areas such as real estate, jobs, oil exports, and agriculture. The Iraqi stock market has gained over 30% in the past year and the future is looking bright. The GDP is expected to grow by 7% in 2009 despite continued security problems. The nation has excellent natural resources which if used properly could stimulate more economic growth. The leading resources are oil, natural gas and agriculture.

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Even though there are signs that there is upcoming improvement there is also many large challenges facing the Iraqi Economy. The recent drop in oil prices has hurt the economy, however now that oil prices have recovered that is not as much of a concern as before. Another big challenge is imports from neighboring Iran, Iran is importing products much cheaper than the Iraqi businesses are able and as a result companies are going out of business and the unemployment rate is rising.

Other future challenges are the withdrawal of U.S. Troops and the control handed to the Iraqi Security Forces(ISF). There will be a test of ISF when control is handed over. That test could prove to be the turning point for the Iraqi economy. If the security environment continues to improve look for a large increase in the Iraqi Dinar.

If you are considering in speculating on the Iraqi Dinar in the future it is a high risk investment. However it could pay off big with a small investment. The current exchange rate is .0009 to one U.S Dollar. In 2003 it was .00027 and in 2006 it was .00068 so there has been continued increase in the Dinar verses the Dollar in the past 6 years and it should continue to gain.

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