New Iraqi dinar prompts buying frenzy

Motivated by the prospect of a lucrative windfall, small-time Pakistani investors and even ordinary people are flocking to currency dealers to buy the new Iraqi dinar at what they consider throwaway prices, hoping to reap the huge profits that could accrue when the situation in the war-ravaged oil-rich nation stabilises. "People are looking at the Iraqi dinar as a lucrative long-term investment, with the possibility that they might see their money double in the next year or so," Junaid Riaz, the owner of Riaz Moneychangers, a currency-exchange dealership that has an established clientele from the diplomatic community, told IRIN in the capital, Islamabad. The profits depended on how quickly the situation was gauged to have settled down in Iraq, Riaz said. "It will be profitable in the long-term, not in the short term. People are looking at one, possibly two years before they can gather the benefits," he added. For the moment, however, daily transactions in Pakistan concerning the Iraqi currency ranked in millions of dinars, he said. "Daily transactions average between 10 to 20 million dinars, which is somewhere between US $17,000-18,000," Riaz explained. The new Iraqi dinar was introduced in October 2003 by the Coalition Provisional Authority (CPA), becoming that country's sole currency. Since then, however, reports of large-scale smuggling to several Gulf states as well as to South Asia, have overshadowed the strong gains the new currency has made against the US dollar. In Pakistan, one Iraqi dinar was selling for Rs. 0.044 on Friday, creating a rush of customers eager to capitalise on what appears, to them, to be a get-rich-quick scheme come to vivid life. "Last week, I bought 1,000,000 Iraqi dinars for about Rs. 47,000 [US $850.925]," Saleha Rajput, a school-teacher, told IRIN in Islamabad. "If things go well, in about eight or nine months time, the profit should be about Rs. 10,000,000," she added, explaining that she had just invested another two thousand rupees from her daughter's savings after she found out about another dip in the dinar's parity against the rupee. "People are buying the dinar by the millions and throwing them in their cupboards as they hunker down and wait for their investment to mature," Asad-ul-Haque, a marketing executive, told IRIN from the eastern city of Lahore. "I personally know of so many people who have bought millions of dinars and stacked them away. The minimum anyone of these people has bought is 100,000 dinars," he maintained. Currency dealers say the spate of buying is unprecedented, but was expected once the news made the rounds that stability in Iraq would mean a quick upturn in the new currency's fortunes. "It was only to be expected. People see it as a long-term investment and want to make the most of it," Abdus Samad, a local manager at Khanani and Kaalia, the country's biggest currency dealership with branches in every major city, told IRIN in Islamabad.