When the smugglers came to Nabaroh with suitcases full of the stuff, people in the Nile-delta city went wild. Om Alaa, a 63-year-old widow, sold her gold wedding ring to buy some. Ahmed Abul-Ela, a farmer, traded his only buffalo for a couple pounds of it. Khaled and Alaa, co-owners of a taxi, sold their vehicle to get in on the action. Last week Cairo finally sent in the police forces to get the place under control. Soldiers stopped and searched every newcomer for what has become the hottest new contraband, not only in the delta but across much of the Mideast: Iraqi dinars.

Baghdad's American administrators hoped the new bills would catch on--but not like this. The idea was to replace Iraq's old dinars with higher-quality bank notes, tougher to counterfeit and without the portraits of Saddam Hussein. (The new bills display historical figures and national landmarks.) By Jan. 15, when the three-month changeover ended, 4.5 trillion new dinars had been issued. But with the Iraqi economy in ruins, unemployment at 60 percent and an ongoing insurgency, millions of Iraqis feared that the new currency would crash and traded their bank notes for U.S. dollars instead.

Good logic, but a bad move. Speculators began bidding up the "Bremer dinar," nicknamed after L. Paul Bremer, the chief U.S. civilian in Iraq. Instead of plunging, the Bremer dinar has soared 25 percent from its launch rate of 2,000, officially trading at 1,450 to the dollar last week. The day before the currency swap became final, the dinar gained a whopping 21 percent in a few hours. Unofficial rates have taken even wider swings, hitting 900 dinars to the dollar in Baghdad's street markets a week ago. Local currency traders like Jassim Noor Muhammad say the ride is scarcely over. "If all goes well," he asserts, "the dinar's natural home is $3.50 to one dinar." That was the rate in the oil-boom days of the '70s, before Saddam plunged Iraq into a series of ruinous wars. If the flush times came back, dinars bought for $100 at today's prices would fetch nearly $500,000.

How long can the mania last? According to Ahmed Muhammad, a deputy governor of Iraq's central bank, roughly half the 4.5 trillion new dinars have been removed from domestic circulation, either stashed away at home or smuggled out for sale abroad. Iraqi officials say it's illegal to export the dinar, but it's quoted on exchanges as far afield as Pakistan. In Kuwait, where Iraqi currency was scrap paper as recently as last year, trading grew so hot it's been outlawed.

In Egypt the dinar rose as high as 330 to the dollar. Khaled and Alaa sold their taxi at 560 to the dollar for 2 million dinars. "America will not let this currency fall," says Alaa. Abul-Ela the farmer, who joined the game sooner, sold his buffalo at 1,366 to the dollar and likewise collected 2 million dinars. Now he's sitting tight, even though he has no buffalo to plow his fields and could probably double his money today. "I expect... maybe six times as much if I wait until Iraq is stable," he says. No one knows yet when or if that day will come. And the central bank could print more dinars to offset the artificially low supply--and risk a massive sell-off. The dinar has a mind of its own. Saddam himself, with all his power, never managed to control it.