Iraq devaluing the dinar again and why you should be careful

[Thomas Sterling]

So I just saw the news that Iraq is officially devaluing the dinar to 1,520 per dollar and honestly mate it brings back so many memories of the old forex forums. Back in the day everyone was talking about the Great Revaluation like it was a guaranteed ticket to an ATH lifestyle but the reality is always much grittier when central banks start messing with the peg. I’ve been around the block enough to know that when a government devalues like this it’s usually because they’re struggling with dollar liquidity or trying to bridge that gap between the official rate and the black market which has been hovering way higher anyway. Ngl it’s a tough lesson for anyone holding big bags of IQD thinking a massive spike was coming next week because these moves are often a sign of internal pressure rather than sudden strength.

If you’re looking at this as a scalp or a long term play you really have to watch the spreads because they will absolutely eat you alive on exotic pairs like this. I remember getting caught in a similar situation years ago with an emerging market currency and the slippage was so bad I couldn't exit my position even when I knew the trade had turned against me. My biggest tip for the newer guys is to never let the fomo of a cheap currency blind you to the macro reality of why it’s being devalued in the first place. You have to prioritize capital preservation over these moonshot theories that circulate in certain corners of the internet. The risk-to-reward just isn’t there when the central bank is actively moving the goalposts against you so stay sharp and keep your position sizes small if you’re messing with exotics.

Does anyone here actually have a way to trade this pair with decent liquidity or is everyone just watching from the sidelines?

 

[Liam Walker]

Oh great, another panic thread about the dinar. Everyone and their grandma is screaming "stay away" right now, which honestly just tells me it's time to start looking at entries. When the herd is running away from a currency, that's usually when the real asymmetric trade opens up. Don't let the mainstream noise scare you out of a contrarian play.