Better Business Bureau (BBB) warns consumers across the country to be careful when considering any foreign currency investment, particularly in the Iraqi dinar. BBB advises consumers looking to buy dinar, familiar with the most common scams involving the Iraqi dinar and recommends make an informed decision.
According to the U.S. Commodity Futures Trading Commission (CFTC, for its acronym in English), in recent years a growing number of investment opportunities has been accompanied by an increase in scams involving the exchange of foreign currencies. While there are legitimate companies that change foreign currency in the foreign exchange market, others use promises of big profits, religious associations, and affiliations with charitable organizations to just take money from consumers.
"The web is full of promises of making millions of dollars by investing in Iraqi currency," said Catherine Ralls, Specialist Trade Practices and Research of BBB. "Consumers should know that investing in promises of quick profits in currency trading may result in losses."
BBB offers the following advice those considering investing in the Iraqi dinar:
● Check the product: To avoid buying fake foreign bills, buy forex dealer registered as a Financial Services Company (Money Services Business) with the Department of Treasury of the United States. However, the register does not reflect the experience of exchanging currency trader or imply some capacity by the trader, but basic requirements on money laundering. Also, make sure you get the new dinar introduced in 2003, the dinar before has a picture of Saddam Hussein.
● Learn about exchange rates and fees: The Iraqi dinar is sold online in various denominations and various prices. As the Iraqi dinar is not exchanged freely in international markets, it is difficult to find objective exchange rates. The current exchange rate of the Central Bank of Iraq is 1170 dinars per dollar. Take into account the prices charged by traders, which essentially affect the price paid for the dinar. Traders have made a lot of money by charging fees to buyer’s conversion.
● Be skeptical about predictions: The announcement that Iraq wants to eliminate three zeros from its currency has caused many to believe that the "appreciation" given 1,000 times the gain of the original investment. However, Iraq is likely to issue a new currency trading with a new 1.000 dinars deleting three zeros. While some vendors anticipate that the Iraqi currency will increase in value, foreign investors face considerable risk. If Iraq inflated or devalued its currency, the dinar's value could fall. Civil conflicts could also put under pressure the Iraqi currency.
● Do not mix apples and oranges: Some vendors exaggerate introducing the dinar as an investment opportunity, referring to the increase in the value of the Kuwaiti dinar after the Gulf War and the German mark after World War II. Neither Kuwait nor Germany had a floating currency. Its value was largely an official policy. An economy in Iraq's situation - with an unstable government, acts of terrorism and corruption - are likely to experience a fall in the international currency or devaluation.
● Beware of unsubstantiated claims, religious or charitable affiliations: Statements like "pray for a sign from God before you buy" or "our company is committed to giving 10% of the proceeds to military charities", can be used to trying to convince consumers to invest in the dinar.
Other statements like "everyone will want to be part of this," are also used. However, currently there is no active market for the dinar - you can buy, but can be sold?
Consumers are advised to avoid the "opportunities" published by advisers that are not registered as foreign investors or those without experience. Legitimate opportunities must disclose all the risks and avoid modifying or making history an opportunity to make it look better than it is.
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