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Expert says Iraqi currency risky investment
“Invest in the future.” “Buy Iraqi currency.” Those are the pitch lines in the ad. The company, USAcurrencytrade.com, a division of GID Associates located in Connecticut, offers Iraqi Dinars at a cheap price. But is the investment a safe one? Professor of finance at OSU’s Fisher College of Business, Andrew Karolyi, says not entirely.
“There is no doubt in my mind that this is a very speculative investment.”
The ad says anyone can purchase one million Iraqi Dinar for only $1,200. And it uses the Kuwaiti Dinar as an example as to why people should buy the new Iraqi currency.
The ad says the Kuwaiti dinar saw a 34 fold increase over the past 14 years. The time between Saddam’s invasion and today. But Karolyi says he would be leery of this kind of investment because Iraq may not be able to exchange the currency.
“The bottom line problem is that within a year’s time or two year’s time that currency may not be in a market setting fully convertible. And you may not be able to harvest that investment whether or not there’s a perception that that currency has appreciated or not.”
A worker at the Port Columbus currency exchange desk says it does not convert the new Iraqi Dinar or any other Iraqi currency and has not for some time.
GID Associates is registered with the Better Business Bureau and has had four complaints filed against it in the past 36 months for advertising, sales and delivery issues. All complaints have been resolved.
Repeated requests for an interview with GID Associates were not granted. The ad does note the company is not an investment firm and does not offer investment advice.
Finance Professor at OSU Andrew Karolyi says the new Iraqi dinar is important in helping Iraq’s economy grow. But it’s a risky investment until a central monetary authority is developed.
“They’re not there yet. And until that happens that monetary authority and its agents won’t be willing to give investors a fair exchange. They just won’t even offer you an exchange of that paper that they’ve issued in their name.”
Karolyi says a safe exchange may be five years away.