Currencies can rise or fall in price just like a pound of grapes at a super market. The more the number of buyers is greater than the number of seller, the more the value of such currency and vice-versa. As we are in Iraqi market, so we consider Iraqi Dinar as a domestic currency.
Case Study: Iraqi Dinar
Since decades, we are observing drastic fall in the value of Iraqi Dinar due to different social, political, security and economic issues prevailing in the state. The value of Iraqi Dinar against U.S. dollars has been dropped down even from it bottom limit.
Other than war and security issues a major issue is the market equilibrium .That’s why government could not stabilize the value of Iraqi Dinar till now. The sellers of Iraqi Dinar are more than its buyers which cause this type of worse devaluation. For raising the value of Iraqi Dinar it’s essential to fill the gap of Market Demand and Supply .Therefore, government is taking few steps to organize different investment opportunities .But still people are having trust issues in this matter. They feel hesitant while investing in Iraqi Dinar and consider it as a risky investment.
Probability of Revaluation
In spite of all of those security and political issues, some people are still hopeful about the revaluation of Iraqi Dinar. According to the researcher ‘John Jagerson’ of LearningMarkets.com, It is possible that in few months or a year value of IQD will rise against U.S. Dollar. The reason for this hopeful conclusion is the improvement in Government and public policies as well as the Security plans of Iraqi Armed forces and the other security forces that are fighting inside against Daa’ish.
Strategies for Investing in weak Iraqi Dinar
Iraqi Dinar is a long-term profiting investment for an investor who invests passively. For investing in trending strong currency an investor should be active and should be fully aware of the market situations. But in case of a weak currency like Iraqi Dinar, an investor should adopt a passive type of investment strategy because he has to wait for a long time for earning handsome profits.
Buy and hold strategy:
Buy and hold strategy is also one of the passive investment strategy in which an investor should buy Iraqi Dinar and should hold it till the increase in its value. This can be a good strategy if a person is having a large investment which he doesn’t need for more than 1 or 2 years. In this case he can buy Iraqi Dinar and can sell them whenever the revaluation will occur.
Time-based long-term profiting:
Investment in Iraqi Dinar is a long-term profiting investment. If a person needs U.S. Dollars in future after 4 to 5 years for starting a new business or for his Children marriage, He can buy Iraqi Dinar today and can sell it because revaluation is expected and the value of Iraqi Dinar will be set-off against U.S. Dollar in future.
Take Competitive advantage:
Another important strategy that can be also useful in this regard is to get the competitive advantage of domestic products. As we all know that oil is the biggest precious natural resource of Iraq, so we can stabilize the value of our currency by selling our oil production on which our domestic cost is low at high prices to a country that is having a strong currency. By this our investors can earn profit as well as the value of our currency will be stable.
Consequently, we can say that a weak Iraqi Dinar can help investors to earn long-term profit .If investor will adopt most suitable strategy according to him life- style, needs and requirements.