|As ambiguity in Iraq persists: Jordanian money dealers reap profits
|Abu Kalam begins his morning by trading in Iraqi dinars. Although his other business in textiles remains profitable, Abu Kalam prefers dealing in currencies, a business he is familiar with since 12 years.
Moneychangers like Abu Kalam refuse to trade in less than one million Iraqi dinars per deal.
"We canít deal in less than one million dinar as the Iraqi currency has no real purchasing power," Abu Kalam said.
He pointed that no rules regulate the selling of Iraqi dinars in Amman. "No dealer can deal in Iraqi dinars if there is no real demand. The minute you receive Iraqi dinars you have to sell them immediately. You canít hold on to them."
Trading in currencies is certainly a risky business. However, it is believed such a business is still profitable since speculative tendencies remain the prime mover in the currency exchange market.
Despite the fall of Saddam Husseinís regime four weeks ago, the Iraqi currency is still being circulated.
Most of the demand is made on an Iraqi banknote, better known as the "Swiss version" that carries the image of Arabian horses on one side. It was printed in Switzerland, but was banned by Saddam in 1993 to be replaced by the one that carries his image.
Speculation on the Iraqi currency usually begins in the morning at higher rates than the close of the previous day, but continue to fluctuate depending on demand.
One million dinars of the Swiss version are being sold at around JD 20,000 in Amman. The Saddam version is sold at JD 13,000 for a million. One month ago, merchants used to sell one million Iraqi dinars at JD 40,000.
Dealers attribute the big demand on the Swiss version to the notion that any forthcoming Iraqi government will not permit the circulation of Saddamís version in postwar Iraq.
Money exchanger Abdel Salam Al Saudi disagrees. "I believe the new Iraqi government will have to maintain the current currency since there is no other alternative," Al Saudi told The Star. "People inside Iraq are still trading in the last legal tender, as no government exists that would decide on a new currency."
Local money dealers estimate the total volume of daily trade in Amman at more than 50 million equivalent to JD 1 million. "I believe the demand on the Iraqi currency will continue as long as there is no clear leadership to enact and empower change," Abu Kalam said.
"There is a rumor among dealers and buyers that the Americans will ask the forthcoming Iraqi government to take into account people who have sizeable amounts of the current version," said Abu Osama, one of the dealers who spends most of his day speculating on the Iraqi currency in downtown Amman. "Most of the demand is made on the Swiss version."
Dealers and merchants gather every morning in downtown speculating on the Iraqi dinar. The affair also attracts Jordanians who like to have a piece of the cake.
Exchange rates of the Iraqi dinar are subject to demand and supply. Dealers agree they are still not aware of the reason behind the increasing demand on the Iraqi dinar. But they agree that most of the deals are made from abroad.
"Most of the speculators are working for businessmen and even for members of the Royal families in the Gulf states, notably Kuwait and the United Arab Emirates who ask their dealers in Amman to buy sizeable amounts of Iraqi dinars on their account in the prospect of exchanging the money with legal Iraqi tender," said one of the Jordanian dealers, who preferred anonymity.
Al Saoudi noted that every Iraqi banknote maintains its purchasing power even if there is no a legitimate government in Baghdad. "Any new Iraqi government is under obligation to protect the interests of its people. If the new leadership in Baghdad wants to have credibility with the people, it must show its responsibility towards them," explained Al Saoudi, who owns a money exchange company in Amman.
He urged the Iraq to introduce a new currency before the end of this year, employing technical support from the US to develop its economy. "Iraq has plenty of natural resources that can restore its economy for the better. A future government should employ these resources to activate the economy and regain the power of its currency."
But Awad Fadayel, another money exchanger, emphasizes those who deal in dinars are sure losers. "No one is confident the future Iraqi government improve things," Fadayel said. Speculations boomed soon after the Iraqi invasion of Kuwait in August 1990. More than 12 years later, UN sanctions and the consequences of two Gulf wars laid the Iraqi economy to waste.
Money experts recommend specific steps to stabilize the Iraqi currency to stop looming hyperinflation. They suggest the Swiss version should be traded for 8 dinars to the US dollar while the Iraqi Central Bank must give Iraqis the right to trade in dollars.
"The dollar is always the currency of choice whenever you have economic problems," said Sarkis Khouri, an Arab finance professor. He noted that Iraqis working on the docks, at oil wells and in public departments are usually paid in US dollar.
Two weeks ago, the US government shipped $20 million in currency from New York, as part of the Iraqi governmentís accounts frozen by the US in March. "A healthy Iraqi economy needs a stable currency," stressed Al Saudi, who added that "the next step for the Iraqis is to lay the foundation for a strong and well-restructured banking sector to ensure a stable currency."