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What is the Iraqi Dinar scam?

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Quick Answer

The Iraqi dinar scam tricks victims into believing Iraqi currency is about to undergo a revaluation, encouraging them to exchange their dollars for dinars. The scammers usually rely on fake websites and news reports to provide hype, and draw comparisons to the rise in value of the Kuwaiti dinar after the first Gulf War. Victims are told to hold their dinars until they become extremely valuable, which never happens.

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Full Answer

The Iraqi dinar scam is particularly nefarious because it's actually legal. As long as the scammers are careful not to promote the dinar as a financial investment but merely hint at the possibility of its increase in value, the sale is legal and unregulated. Victims actually receive the dinar in exchange for their money, making this simply an investment in foreign currency. And, as the scammers are quick to point out, the dinar could actually rise in value.

Unfortunately for the victims, the dinar is unlikely to experience the same rise in value as its Kuwaiti counterpart. In that case, the revaluation occurred due to the country's centrally controlled economy, something Iraq lacks in its current state. In addition, as of 2014, Iraq is suffering strong inflation, which reduces the value of its currency instead of causing it to appreciate. In addition, there are very few markets in which to sell dinars, and if the currency were to undergo a revaluation, it might be impossible to sell it outside of Iraq.

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