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Iraqi dinar gaining value

January 02, 2004

KARACHI, Jan 1: Iraqi dinars have flooded Pakistan's currency market as speculators get a free hand to play with investors' greed for easy and quick money. "You get a million Iraqi dinars at Rs35,500," a currency dealer responded to this correspondent's query on Thursday.

It means that one Iraqi dinar is worth three and a half paisa. "This is a bottom price of the Iraqi currency from where there is a greater possibility of increase in value and very little chances of further depreciation," the dealer offered a logic to convince his customer for dinar purchase and said that currency value of oil rich Iraq now under American occupation is bound to increase.

"From three paisa, Dinar's value can go to six paisa next fortnight and to nine paisa by next month," he went on with his marketing drive and was confident of converting Rs35,500 into Rs71,000 by middle of this month and to more than Rs100,000 by early next month.

Speculative trading in Iraqi dinar is reported to be going on in local currency market for last several weeks but picked up momentum after Saddam's arrest on December 14. After December 14, the exchange value for one million Iraqi dinars shot up from Rs27,000 to Rs30,000 and eventually up to Rs40,000 within 10 days.

Trade was brisk but exchange value remained volatile and changed rapidly in a single day. It has now come to stabilize at between Rs34,000 to Rs35,500 for a million dinars. The demand became so much that quite a few exchange companies set up special and separate counters for dealing in Iraqi dinars.

Currency dealers recall rich profit reaped by many of them in 1991 when exchange value of Kuwaiti dinar came down to Rs15 and Rs10 after Iraqi troops ran over the oil rich Gulf sheikhdom. The rulers fled Kuwait and for a few days its currency hit bottom value.

But no sooner Iraqis were made to vacate and order was restored in Kuwait, the dinar value shot up to Rs70 and Rs80. On Thursday Kuwaiti dinar was being offered at Rs194 in local currency market.

Speculators now wait for quick return of normalcy and an early beginning of US-led coalition's reconstruction in oil rich Iraq, which has far better road net work, irrigation system and infrastructure than Pakistan.

Dinars are pouring in billions and may be in trillions every day from Dubai to meet the mounting demand of speculators in Pakistan. These are in two denominations 10,000 and 25,000.

Strangely, the value of recently introduced and printed currency notes by Americans are worth far less than discarded and demonetised dinars bearing Saddam's picture. A discarded dinar bearing Saddam's picture is worth 75 paisa many times more than new printed dinar.

Dealers say the demonetised dinar may bring greater fortune when a stable Iraqi government would settle accounts of its gold deposits in Swiss banks. State Bank remains a silent spectator of Iraqi dinar's speculative trading as it did when finance cooperatives robbed people in Karachi and in Punjab cities of millions and later forex companies induced people to gamble on foreign currencies.

"There is no regulation to control inflow of foreign currencies in Pakistan," an official spokesman of State Bank responded to this correspondent's query. Technically every person coming to Pakistan from anywhere in the world can bring trunks load of currencies as Pakistan government continue to practice "no question ask" motto.

"But mind it not to carry more than 10,000 dollars or equivalent in foreign currencies and three thousand Pakistani rupees when going out of Pakistan," the SBP spokesman offered a friendly advice.

State Bank could do little to check outflow of Pakistan's currency notes to Kabul, Jalalabad and Kandahar from where dollars poured in Pakistan. Currency dealers are now preparing for a brisk trade in Indian currencies in anticipation of brisk travel between Pakistan and India by train, bus and also ferry.