Betting Millions on Iraqi Money

ByABC News
September 15, 2006, 11:07 AM

Sept. 15, 2006 — -- The odds are debatable, but many people around the world have wagered that the new Iraq will flourish and democracy and free-market capitalism will thrive there. Some have even put money on that bet.

Phil Lloyd of Devon, England, 41 years old and unemployed, is one of them. A simple typing error while surfing the Internet gave him the idea to bet on Iraq and, perhaps, become a millionaire overnight.

Searching for a dinner set on eBay one evening in 2003, Lloyd misspelled the first word and found himself looking instead at a page of "dinar" auctions: wads of the new Iraqi dinar, introduced that year. Some of the listings claimed this was potentially a dynamite investment: Buying into the Iraqi currency at its historically low exchange rate would hold the potential for an enormous profit in the future.

After some Web-based research, Lloyd decided purchasing hard-cash dinars on eBay was a "good risk." He explained, "Since I live on a council estate [the British subsidized, low income housing] and know I won't be rich at all in my life, I decided to give it a go." By purchasing roughly 25,000 Iraqi dinars at regular auctions, he is now a dinar multimillionaire.

But will the Iraqi economy improve enough that Phil Lloyd's millions of dinars will eventually equal millions of dollars?

Lloyd is far from being the only investor to gamble on an improved economic situation in Iraq.

In 2003, the Bush administration argued that the military operation in Iraq would be largely self-financing, because of Iraq's enormous untapped oil reserves. After the fall of Saddam Hussein and the introduction of a new Iraqi currency, the former dinar-dollar rate of 3-1 altered to roughly 1400-1.

The Baathist regime had set the 3-1 rate, but it had never been tested on the open market. In the face of a prospective flood of international assistance and Iraqi enthusiasm for rebuilding the country, though, this detail didn't worry many investors. An increase in the dinar's worth seemed inevitable. Buying dinars at 1400-1 seemed like a great investment if the Iraqi currency exchange rate returned to 3-1, or even 1-1. Buying up as many dinars as possible as quickly as possible seemed the only rational thing to do.

Many of these investors, or "dinar-holics" as they're sometimes dubbed, have connections to -- or experience as -- military or contractor personnel in Iraq. Others found out about the investment in much the same way Lloyd did: They stumbled across the idea on Web sites like

Lloyd and several thousand others discuss their investments on, a message board forum in which members use shorthand forum names to chat, gossip, exchange information, and offer encouragement.

One regular exhortation for courage compares the Iraqi dinar's potential rise in value to the rise of the Kuwaiti dinar after the 1991 Gulf War. Following that war, the enormously devalued Kuwaiti dinar rallied steadily, bringing substantial returns to anyone who had bought the currency while its price was low.