Devaluation Decision in Iraqi Dinar and New Exchange Rate Level

The Iraqi administration decided to devalue its national currency against the dollar, raising the US dollar sales price for individuals to 1,520 dinars.

Exchange Rate Regulation from the Central Bank of Iraq

Following the urgent proposal submitted by the Central Bank of Iraq and the Ministry of Finance, the decision published by the General Secretariat of the Council of Ministers of Iraq was implemented.

With the regulation, the individual US dollar sales price, which was previously around the 1,310 to 1,320 dinar levels, was raised to 1,520 dinars.

Shock in Oil Revenues and Fiscal Measures

While approximately 90 percent of the country's revenues are generated from oil sales, conflicts between Iran and the United States, as well as transportation problems in the Strait of Hormuz, negatively affected exports.

Economists evaluated this move as a fiscal measure against the decline in oil revenues, and the Baghdad administration will obtain more dinars when it converts dollars into the local currency.

Economic Pressure on the Public and Imports

While the depreciation of the dinar partially alleviates the government's budget problem, it carries the potential to increase economic pressure on citizens.

The cost of imported goods such as food, medicine, automobiles, and construction materials in terms of dinars will rise, leading to price increases in the domestic market.

Foreign Exchange Markets and Change in Reserves

Before the official exchange rate change, the dollar exchange rate, which had climbed above 1,600 dinars in the market, exceeded the 1,700 dinar threshold following the decision.

As a result of these developments, it was reported that there was a decrease of approximately 20 billion dollars in the country's foreign exchange reserves.