Why would anyone want to buy and sell Iraqi dinar? Well, most world currencies are traded, and there are U.S. businesses dealing in different countries around the world. Perhaps their representatives need to travel there, or they need to pay salaries to staff living there, and they would need to have a supply of the local currency. Also, if businesses or individuals buy goods in Iraq, they would probably have to pay in Iraqi dinars because the Iraqi government is keen on fighting dollarization of the economy.

International banks do not yet exchange Iraqi dinars, but the International Monetary Fund (IMF) has specified a fixed exchange rate at the Central Bank of Iraq, and there are individual commodity brokers who buy and sell dinars. In May 2007, the IMF released a statement that turned the tide regarding speculation on the Iraqi dinar by acknowledging that the government reduction of fuel subsidies and raising of central bank interest rates would reduce inflation; thereby, decreasing the risk of dollarization of the economy. Reducing fuel subsidies would free up public money for investment in other vital development projects.

Recently, and for the first time in twenty-five years, the IMF issued an economic assessment on Iraq, advising the Iraq government to increase the pace of reconstruction and investment, mainly in the oil sector. Iraq has rich resources of oil, and by world standards, production costs are relatively low. In 2006, real GDP growth reached 17% so there is a good chance that inflation will decrease substantially if security improves. Many financial investors would see this scenario as a good opportunity to buy dinars.

Of course, there is still a substantial risk in speculating at this stage, unless time and liquidity are not issues for you. A new law to determine the structure of oil industry institutions and international tendering is still being finalized; foreign investment vitally needed to modernize the industry cannot be accessed until new law is enacted. However, the Cabinet of the Iraqi parliament and the Kurdish regional government has approved a new law to determine how oil revenues will be divided between the Shiites, the Sunnis, and Kurds. So, important political progress is being made and, perhaps, it is a good time to buy dinars because inflation will decrease as stability returns, and the value of the dinar should, therefore, increase.

Of course, buying dinars at this stage, especially over the Internet, is still a substantial risk. The dinar is not traded on an international market, so banks will not openly trade dinars and dealers' rates vary wildly. Larger institutions are buying dinars at a rate of around 1,460 dinars to the dollar, and because there is little competition, traders are often not prepared to buy back dinars and U.S. banks won't transact in them. There is also a big risk of fraud, as some dealers will try to sell the old dinar notes mixed in with the new ones. On top of this, although power has been handed over to the regional governments, nobody knows how long insurgency, and therefore, political and economic instability, will persist.