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Saturday, August 4, 2018

WHAT IT MEANS TO INVEST IN A CURRENCY?, 4 AUGUST

First, here's a very rudimentary explanation of what it means to invest in a currency. For example, let's say the Iraqi dinar forex rate is 1 US$ = 1190 IQD. If you invest US$1000 in Iraqi dinars with that rate, you will get IQD 1.19 million. After this “investment,” you will wait and watch, expecting the IQD to rise against the US$. If your expectations come true, and the exchange rate improves to a hypothetical value--say 1 USD = 1 IQD, then your investment is now worth US$1.19 million. Under this hypothesis, the investor would become a millionaire by investing US$1000, which grew to US$1.19 million.

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