KARACHI, April 8: The demand for Iraqi dinar — a least-traded currency in this part of the world — has risen after the US invasion of Iraq.

Money changers at Boulton market told Dawn that two versions of Iraqi dinar were trading around 70 paisa and 85 paisa, respectively, before the US attack on Iraq. Now they are trading around Rs2.40 and Rs1.30. “Call them investors or speculators ...there are some people out there who are buying Iraqi dinar as they believe that the currency may regain value once Saddam is out,” said one of the money changers at Boulton market. Leading money changers say a very little amount of Iraqi dinar is traded physically as there is very little inflow of this currency into Pakistan.

“Much of the Iraqi currency that you see now had come prior to or during the Gulf war in 1991,” said a currency dealer. He said people who had stocked Iraqi dinar when speculation was rife in this currency during the Gulf war are the ones buying and selling it for profit taking. “So big is the demand now that there are buyers at Rs2.50 but no sellers for Iraqi dinar Ghorawala,” he said. There are two main versions of Iraqi dinar available in the local market — Ghorawala and Saddamwala (the one showing a picture of a horse on its front and the other showing a picture of Saddam Hussain).

Whereas some leading currency dealers claim that Iraqi dinar is traded physically — and by almost all money changers — many others say this currency is hardly traded physically and is often used in book keeping only. “This is all book running,” said a currency dealer, who also owns a foreign exchange company, adding that currencies like Iraqi dinar and afghani are used for speculation — though afghani is also physically traded after it’s re-denomination into multiples of 1,000 old afghani.

He said during the Gulf war of 1991 also Iraqi dinar was a favourite among speculators and millions were made and lost in this business. Currency dealers say a limited number of money changers have specialized in speculation through Iraqi dinar — and in some cases through afghani.

The difference between the two currencies is that there are some real buyers and sellers also for afghani because of the presence of Afghan businessmen here. Whereas the volume of business or even book-keeping in afghani runs into hundreds of thousand a day, Iraqi dinar is traded in much lower volume. Some money changers at Boulton market say less than a hundred thousand worth of Iraqi dinar change hands daily — without making it clear how much of this quantity is traded only through books. But they say that after the US invasion of Iraq the volume of Iraqi dinar being traded has risen to a few hundred thousands.

They say that not only the old speculators have renewed their accounts with the book-keepers to make money by speculating in Iraqi dinar after the US started bombing Iraq two weeks ago but some new ones have also joined in. Speculators normally have accounts with the book-keepers operating in the guise of money changers, who continue making entries in buying and selling columns of their clients.

The speculators, who insist to be identified as investors, issue instructions to the bookies to buy the currency at X level and sell at Y. Some gain in the process and others lose, but anything under the sun that the speculators believe can bring in volatility on exchange rates of a particular currency enliven their spirits. And there is nothing like a war to create uncertainty in the exchange rates of the currency of a country at war — or under attack by another country as is the case with Iraq.