GO
Loading...

Why You Should Avoid the Iraqi Dinar

Palace of the Republican Guard
Ali Al-Saadi | AFP | Getty Images
Palace of the Republican Guard

Have you been hearing that the Iraqi dinar is a great investment? Be very careful.

Many, many readers have been asking about the Iraqi dinar's investment potential, and the idea behind it's theoretical appeal is simple: it's a bet on a recovering, oil-rich economy. But there's a hitch. A big one.

"You can't go to any major bank in the U.S.—frankly, many in the world—and trade this thing," says Rebecca Patterson, chief markets strategist for J.P. Morgan Asset Management, Institutional. "It's a collector's item. I can't say it will never appreciate, but doing something to make a quick buck off this today—nothing's going to happen soon," she told CNBC's Melissa Lee. Patterson points out that the dinar is a managed currency, and "the central bank keeps it steady at around 1,170 dinar per dollar."

Not only that, but there have been various scams involving the dinar of late.

So how can you use currencies to trade on an Iraqi recovery?

Andrew Busch, global currency and public policy strategist for BMO Capital, suggests a look at the Canadian dollar

or the Turkish lira as ways to play a recovery in the middle east. "Medium term, we're looking at oil being fairly robust."