How the Gulf War affected the currencies of both Kuwait and Iraq
Oct 14, 2010
When a nation is invaded, what happens to its currency? Well, a good example is found in the Gulf War when Iraq invaded Kuwait. What happened to the Kuwaiti currency?
"The important point in all of this is that just before the Iraq invasion of Kuwait the United States dollar ("$") was trading at $3.55 for every Kuwaiti Dinar. So for every Kuwaiti Dinar that you owned you could get $3.55 back on the Kuwaiti Dinar exchange rate. Well, a strange thing happens to a nations currency when it is in the middle of a war zone.
"The money loses all value.
"You could buy Kuwaiti Dinar for roughly 5 cents to a dime during Operation Desert Storm.
"A year and a half later, that Kuwaiti Dinar you bought for a nickel could be traded in for over $3.00."
Those who understood such things became millionaires overnight. They bet on the defeat of Saddam Hussein and the reinstatement of the old Kuwait regime and its official currency.
Thus, they bought up the near-worthless currency for 5-10 cents, and a year later its value was reinstated at $3.00 per dinar.
As with any business deal, the idea is to buy low and sell high. Because of the UN sanctions on Iraq during its invasion of Kuwait, the Iraqi dinar collapsed in value from $3.23 down to 1/4000 of a penny. Those holding dinars before it collapsed saw their wealth wiped out.
Today the Iraqi dinar is still valued very low. A dollar will still buy 1168 dinars from Iraq. This price will last only until the UN sanctions are lifted, at which time the IMF will re-list the Iraqi dinar on the world market according to the new value set by the Saddam-free government of Iraq.
I first heard of this back in 2004 at the close of the war, when the US replaced the Iraqi dinar with a new Saddam-free currency. Its value did not change, of course, because it was still just a local currency. But investors began to take note that some day Iraq would form a new government and the UN sanctions would be lifted. The new currency would be backed by tremendous oil reserves, which would give it real value on the world markets.
That day is nearing, now that Iraq has held its second election and seems close to seating the new parliament after months of delays. The Iraqi president was interviewed two weeks ago, saying that he expected the UN to remove the sanctions (chapter VII bankruptcy) toward the end of this year.
Back in 2004, when I first got wind of this eventual revaluation, I was not led to do anything about it. But a year ago I met brother Vinnie in Pensacola, who explained the situation to me, and I saw my first dinar up close. He buys and sells dinars at about the same price as you will find online.
If you are interested in getting more information or in purchasing dinars, you can either go online, or you can talk to a live person that is a personal friend and brother in Christ that I can vouch for. Call Vinnie at:
or email him at: email@example.com
Dr. Stephen Jones