Iraq Devalues National Currency Once Again

From Wednesday, October 7, banks and exchange offices are selling dollars to the public at 1,520 dinars each, 200 dinars more than the previous rate.

From Wednesday, October 7, banks and exchanges will sell each dollar to the public at 1,520 dinars, which is 200 dinars more than the previous rate.

According to Ambassador Arjan, the government has approved the 2027 budget, which has a deficit of more than 40 trillion dinars (about 30 billion dollars). This deficit is due to the American war with Iran and the severe disruption in shipping in the Strait of Hormuz and the decrease in Iraq's oil exports.

More than 90% of Iraq's budget comes from oil revenue. The foreign exchange reserves of the central bank have increased from about 106 billion dollars before the war to about 80 billion dollars by the end of August.

Many parliamentarians are against this decision and say that it increases the cost of living. They say that they were not informed in advance and they want to cancel the decision. The Minister of Finance and the Governor of the Central Bank are scheduled to explain in the Parliament on Thursday.

The devaluation of the dinar makes imports more expensive, while prices had already risen due to the war and import disruption. The gap between the official rate and the open dollar market has also increased and most people do not have access to the official rate.

Iraq previously devalued the dinar from around 1,182 to 1,450 in December 2020. In January 2023, the dinar fell to around 1,670, but the next government strengthened it and set the rate at 1,320.