Current condition of the Iraqi Dinar and the effect of ending US occupation
Iraq used to be one of the strongest economies in the world. There was a time when the US dollar was almost at parity with the Iraqi Dinar. Unfortunately, a number of factors have affected the health of the Iraqi Dinar. In fact, it has fallen to a point where you would need 117 Iraqi dinars to buy a single US dollar. Inflation has increased to a point where you need 1000 Iraqi Dinars to buy a loaf of bread. Now a days, you will find many people who are saying that you should buy Iraqi dinars as they used to be almost equal to the US dollar. In order to understand whether you should buy Iraqi dinars or not you have to understand the factors that are going to be affecting the price of the Iraqi dinar in the future.
Whenever you are making a decision to buy any kind of currency, you should be making that decision either in the long term or the short term. In order to make an informed decision you need to understand that there are no short-term chances of the Iraqi dinar picking up significantly in the near future. As Americans troops are going to leave Iraq shortly, there is a real shortage of investor confidence in Iraq's ability to handle the security situation, which will arise from Americans leaving Iraq. The fact that not many American oil companies are willing to invest in Iraq's oil is not helping the cause of the Iraqi dinar either. Another very important factor is that with the American economy in bad shape and an increasing call for isolation in American domestic politics. It is making investors nervous; they are not sure if it is a wise decision to invest in the Iraqi dinar currently.
You see that the American government has serious commitments in Iraq. Not only the military but in the financial sector as well, it is increasingly unclear whether the US will honor their financial commitments. All of these factors are making the Iraqi dinar an unattractive proposition for short term buying. As for medium term prospects, the recent fall in oil prices make it unlikely that there is going to be any major buying activity in the Iraqi dinar in the near to middle future. You also have to understand that rebuilding a country after the kind of devastation Iraq has gone through is a very expensive proposition. Especially, with the withdrawal of American forces, which is also going to reduce the trade that was taking place due to the presence of these soldiers. As foreign soldiers always tend to be big spenders, the Iraqi economy is also going to suffer from the loss of these dollars. Another factor is the impending economic recession that is staring the entire world in the face.
The only bright side is that the long-term prospects do not look so bleak. With the Iraqi government getting a second term in office, it is going to promote stability and it will help reduce widespread corruption. Iraq still has one of the largest deposits of crude oil in the world. Which means that eventually the Iraqi dinar is going to climb back up, but if you are thinking that it is going to make you rich quickly. You will be much better off not investing in the Iraqi dinar.