The Iraq Stock Exchange opened in June 2004 after replacing the Baghdad Stock Exchange being in place since before the 2003 invasion of Iraq by coalition forces. In 2004 the ISX opened with 15 companies being represented and at the present time there are now more than 100 companies on the exchange. When the exchange opened in 2004, trading was done th eold fashioned was, with pen and paper and traders yelling trades across the floor where brokers then wrote on whiteboards the current price of a company's stock.

Fortunately in February of 2009 that all changed and a computerized system of keeping track of trades, but not electronic trading itself, was put in place. On April 19, 2009 electronic trading was put into place and there are currently only 5 stocks available to be traded that way with more being added in the next several months.

The Iraqi Stock Exchange is small compared to the NYSE as in 2006 there were only 92 trading sessions held trading a total of 58 billion shares. The trades had a total value of 146 billion Iraqi Dinars or $146 million USD and were actually 38,000 individual trades made. Currently the trading floor is only open 6 hours a week.

There you have a simple run down of the ISX as a fledgling market. The market is currently dominated by very wealthy Iraqis and the trades are called in from outside the country. Is it worth your time to invest in this kind of market? Maybe you should just buy Iraqi dinars on eBay and hope they will go up some day.

Under the Hussein government, every aspect of the economy was closely controlled. The Baghdad Stock Exchange, which was established in 1992, only traded approved stocks and only within a controlled price range.

Under the new regime, the stock exchange has surged and a financial market with good competition is developing. The international financial community also agreed to forgive over 80% of Iraq’s debt in exchange for a partial payment over the next 20 years.

Of course, Iraq’s economy is dominated by oil, but the returns on this resource were limited by a shortfall of capital investment. Under the new government, GDP is expanding by as much as 6.6%. (More accurate statistics are currently unavailable.) Unemployment has begun to slowly fall, but is still at a painfully high level.

When new notes were printed at the end of 2003, foreign investors began buying large amounts of the new currency on the speculation that the economy would soon improve. This practice is legal, but Iraqi companies exchanging the currency, sell it at various rates. The high volume of speculation has also led to significant counterfeiting.

However, the speculation played out for many investors, as dinars have appreciated almost 400% against the dollar since that time. Speculation on the dinar has significantly decreased since 2007. At the present time, the IMF together with the Central Bank of Iraq hold the dinar at a steady level, though an international exchange rate has not yet been set. For that reason, most banks and forex agencies do not exchange the dinar.

On the 6th of February, the Central Bank of Iraq revealed a plan to re-denominate the dinar later this year by removing zeros. In other words, 1,200 dinars (equivalent to $1) will become 12 dinars but with the same value against the dollar.

Based on the rapid growth in Iraq, there is every reason to believe that the value of the dinar will rise in the future. The greatest problem, however, is getting access to the currency within traditional forex trading systems. Even if you are able to do so, expect to pay a premium for the privilege and recognize that you run the risk of buying counterfeit. If you do make the investment, you should also be careful to take advantage of the re-denomination this year. Because the dinar is not traded internationally through standard channels, it is also impossible to follow forex signals or trade the currency using normal strategies.

In short, investing in the dinar is still a speculation. It is a particularly promising speculation, but a speculation none the less. For the sake of the Iraqi people, we can only hope that their fiscal policymakers continue to direct the nation well and that the dinar continues to be a risk worth taking. Perhaps, the dinar will be available through more standard means in the near future.

Now that violence has subsided somewhat since the US invasion in 2003 there was hope that foreign investors would be putting their money into Iraq and helping with housing, infrastructure and other much needed fiscal influx. But because of the bureaucracy, regulations and miles of red tape, investors had been very warry of risking their capital in the flegling nation. That concern now has gone out the window and many see this as a possible boom time for Iraq.

The new law basically only covers housing and not oil or hotel construction, which is much needed, but there is a huge opportunity here for foreign investors. Outdated Iraqi real estate laws had only allowed for foreigners to lease land for a limited amount of time, but not actually own it. Millions of new homes and apartments are needed in Iraq after year of war and political turmoil and there are construction companies in Dubai and other Arab and western nations that are eyeing Iraq for real estate development.

Iraq boasts the 3rd largest oil reserves in the world and the hopes are that as oil money is poured into rebuilding the nation's infrastructure of roads, bridges and public works, this new law will bring on much needed housing. While this law still needs to be passed by the Iraqi Presidential Council, the hope is that this will happen soon and new investment can begin as quickly as possible.

Of course if you can afford to invest in Iraqi real estate, you can always invest in Iraqi Dinar or trade the dinar through the Forex currency exchange.