At a Glance

• High demand and low supply pushed the dinar down to 170,000 per $100, said Slemani currency trader Dana Mawlood.

• Excluded from the 155,000-dinar official allocation, merchants buy most Baghdad inflows at 170,000 dinars, noted Erbil spokesperson Kaifi Khoshnaw.

• Mawlood added that the Central Bank of Iraq has taken no new steps to boost market dollar supply.

Surging demand and tight dollar supply have pushed the Iraqi dinar down to 170,000 per $100 across Kurdistan Region exchange markets, widening the gap with the Central Bank of Iraq's official 150,000-dinar rate amid merchant buying and delayed federal liquidity measures, traders told Channel8.

Key Statements and Focus Area

• Dana Mawlood, a currency trader at the Slemani Dollar Market, told Channel8 that high demand and shrinking market supply have driven the dinar down to 170,000 dinars per $100.

• Kaifi Khoshnaw, spokesperson for the Erbil Currency Exchange Market, stated that while the Iraqi government and the Central Bank promised to supply dollars to the public at 155,000 dinars, merchants are excluded from this allocation and are buying up most of the dollars arriving from Baghdad at 170,000 dinars.

According to Mawlood, the Central Bank of Iraq has introduced no new measures to ensure sufficient dollar liquidity reaches exchange markets, noting that the Kurdistan Region relies entirely on inflows from Baghdad.

Khoshnaw also noted that citizens, much like merchants, are converting their savings into U.S. dollars, preferring to hold onto the foreign currency rather than the Iraqi dinar.

The spokesperson highlighted that the approval of the 2027 draft budget and broader economic stabilization would help lift the dinar's value against the dollar.

However, he added that the Iraqi government has so far failed to supply enough dollars to meet the needs of both merchants and citizens.

FYI

The official exchange rate set by the Central Bank of Iraq (CBI) stands at 150,000 dinars per $100 (1,500 dinars per dollar for Ministry of Finance purchases and up to 152,000 dinars per $100 for public sales through banks), creating a gap of roughly 20,000 dinars per $100 compared to the parallel market exchange rate of 170,000 dinars. 

This marks the third major official exchange rate adjustment by Iraqi authorities in recent years. In December 2020, the CBI devalued the dinar from 1,182 to 1,450 dinars per dollar (1,470 for public sales) before revaluing it in February 2023 to 1,300 dinars per dollar (1,320 for public sales). 

Most recently, on October 7 this year, the Iraqi Council of Ministers and the CBI approved Cabinet Resolution No. 544, raising the official rate by 20,000 dinars per $100 to address a growing budget deficit and declining oil revenues amid regional tensions and disruptions in the Strait of Hormuz. 

Since the October devaluation, federal officials have repeatedly pledged to narrow the gap between the official and parallel market rates. 

Government spokesperson Haider al-Aboudi stated in mid-October that Baghdad and the CBI had a plan backed by sufficient foreign currency reserves to bring the market rate down to 155,000 dinars per $100 in the near term, while Prime Minister Ali Faleh al-Zaidi announced later that month that Washington would send $1 billion in cash to help ease market pressure. 

In late October, CBI Governor Ali al-Allaq told lawmakers that the gap between the official and parallel rates had narrowed to around 9 percent and affirmed that no new currency was being printed. 

Meanwhile, CBI spokesperson and adviser Mahmoud Dagher noted that uncontrolled borders and foreign trade conducted outside official banking channels continue to drive demand for cash dollars on the parallel market, even as the central bank maintains that it is meeting all legitimate import requests at the official rate.

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