It takes an investment of $1,250 (£707.49) to buy a million Iraqi dinars, which are a reddish colour and decorated with a drawing of Hammurabi, ruler of Babylon from the 1700s BC.
Policemen, construction workers and students are among those hoarding the six-month-old currency — even though it could be abolished by the new Iraqi government —– in the hope that the country will recover from war to become an economic powerhouse in the Middle East.
“I never thought of myself as a currency trader,” Bill Burbank, a fireman from San Diego, told The Wall Street Journal yesterday. “But I called the smartest people I know — a corporate lawyer, a Wall Street guy — and they said it sounds pretty viable.”
Mr Burbank sells dinars via a website and often delivers currency personally, handing over an envelope containing one million dinars to a customer in a local Starbucks outlet.
Other websites are also getting in on the act. One boasts “it is now legal for Americans to own dinar at this 100-year low price”, adding that “many people believe it’s very likely for the Iraq dinar to stabilise at $1 to 100 dinars in a few years.” The current exchange rate is 20 cents to 100 dinars.
Mr Burbank is a new breed of currency trader. Because there is no way to buy the Iraqi dinar electronically, he hires a corporate security consultant to fly to Jordan, pick-up bags of the currency and bring them through US customs. As long as the right forms are completed there are no problems bringing the cash into the United States.
His interest in the currency began when he made a $3,000 bid for 1.25 million dinar on eBay, and he is now one of America’s largest Iraqi currency investors, having bought about 100 million dinar for about $90,000.
He buys from middle men, who offer about 950 dinar to the dollar, instead of the Baghdad rate of 1,430 dinar to the dollar. He then sells them on his website for an exchange rate of about 500 dinar to the dollar, making $2 for every $1 he invests, before costs such as transport and newspaper advertising.
The recent violence in Iraq has caused a slight fall in the exchange rate, but speculative buying continues. However, without a trip to Baghdad investors cannot redeem their stake until banks create an international market in the Iraqi currency.