Iraqi Dinar Revaluation: Cold Truth About The Dinar Increasing to $3 USD

Information Only. Not Financial Advice

A friend of mine asked for my help to manage a windfall of money she was going to be receiving soon, based on the revaluation of the Iraqi Dinar.

I had not heard of this, so I did some research. Below is a summary of my findings and I’m sharing this so those considering speculating in exotic currencies can do so with full understanding of the risk and with realistic expectations. 

Key Words

There are several key words that must be understood before a grasp of the subject of “Currency Exchange” is possible:


  1. Currency - A currency's value is determined primarily by supply and demand in the foreign exchange market, meaning its price fluctuates based on how much people want to buy or sell it, with key factors like a country's interest rates, inflation, economic stability influencing the demand for that currency; essentially, when demand is high, the currency value increases, and vice versa.

  2. Closed Currency - A closed currency is a type of currency that is not easily exchanged outside of the country where it is issued. Closed currencies are restricted by local governments and financial systems. In contrast an Open Currency is easily exchanged such as the Euro, British Pound, US Dollars.

  3. IQD - The code of the Iraqi dinar, is the currency of Iraq is a Closed Currency.

  4. Floating vs. fixed rates: Most currencies today operate on a floating exchange rate system, where the value fluctuates freely based on supply and demand, while some countries may peg their currency to another, maintaining a fixed exchange rate. The IQD exchange rate is fixed by the Central Bank of Iraq, and the currency does not freely float on the market.

  5. Money Supply - The money supply is the total amount of money in circulation in an economy, including cash, coins, and bank balances. 

  6. Foreign Exchange Market - The foreign exchange market, also known as forex or FX, is a global marketplace for exchanging currencies. It has a trading volume of about $7 Trillion USD per day.

  7. Spread - the difference between what a buyer is willing to pay for a currency and what the seller is willing to sell it for. 

  8. Tight Spread - The Euro / USD spread averages about $0.02 USD. This is called a “tight spread.”

  9. Wide Spread - The Iraqi Dina spread is about $300 (at the date of this post), much bigger than the Euro spread and is called a “wide spread.” Wide spreads are an indication of an illiquid asset, that is, an asset that is hard to sell.

  10. Speculate - invest in stocks, property, or other ventures in the hope of gain but with the risk of loss.

  11. Speculator - a person who invests in stocks, property, or other ventures in the hope of making a profit.

Current Scene


  1. The IQD money supply is approximately 173 Trillion which is about $130 Billion USD. Source

  2. In contrast the USA has a money supply of about $21 Trillion. source

  3. Iraq's national debt was $112 billion in 2023. Source

  4. For 2023, Iraq recorded an actual deficit of 6.7 trillion IQD (around $5.1 billion USD) which means they spend more than they make as a country. Source

  5. Speculators believe the IQD will return to pre-valuation of over $3, that is a 400 times increase of its current value (as of March 2025).

  6. The main product of Iraq is oil exports and therefore the IQD is closely tide to the price of oil.

  7. For the IQD to increase 400 times means all assets and products of Iraq must also increase 400 times. 

  8. If the IQD were to increase 400 times based on the current money supply, the total value of the money supply would be $43 Trillion USD, more than double the money supply of the USA.

  9. Because the IQD is a closed currency, there is no easy way to convert it into millions of USD. In short, there is no high volume exchange. This means the exchanging of IQD to USD is subject to wide spreads and excessive fees.

  10. Finally, a sudden rise in the value of the IQD would hinder outside investment into the country and thwart the development of it's infrastructure. Developing countries usually keep their currency "cheap" to attract outside investment.

Summary

  1. If the IQD rose to $3 USD there is not enough available money to convert all IQD to USD.

  2. Any sudden price spike in the IQD will witness a sudden influx of sellers causing the supply to be greater than the demand and prices will drop.

  3. The ability to quickly sell hoards of IQD does not exist.

  4. While IQD valuation may fluctuate, the country is predicted to increase its national debt as it develops more infrastructure.

  5. Given the above supply and demand factors, it is highly unlikely that there will be a sudden and significant increase in the IQD in the foreseeable future.   

If you have any questions, please post in the comments below or reach out via the Contact page.
Disclaimer: This blog post is information only. None of the above is financial advise as I am not a licensed financial professional. Readers should seek the advice of a licensed professional with regards to any investment.

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