The Iraqi dinar rallied sharply against the U.S. dollar in Kurdistan Region’s markets following stabilization pledges from the Central Bank of Iraq (CBI) and the rollout of a new financial system, with market traders forecasting a continued drop in the parallel exchange rate.

The Iraqi dinar gained ground against the US dollar, with the parallel market rate strengthening to 154,250 dinars per $100 after coming down from a high of 157,000 dinars last week.

Local currency traders attribute the market shift directly to stabilization assurances issued by the Central Bank.

Amid wild rumors of a rate hike to 160,000 IQD, the Central Bank of Iraq stepped in to reassure the public on June 22 that the official rate remains strictly locked at 132,000 IQD.

Traders Report Shift as Citizens Sell U.S. Dollars for Dinars

According to Sulaymaniyah currency trader Dana Mawloud, citizens are reversing previous trends by selling U.S. dollars for Iraqi dinars.

Mawloud noted no immediate risk to the dinar's value, citing the Central Bank's fixed rate of 132,000 dinars per $100.

Erbil Market Spokesperson Forecasts Stronger Dinar 

Meanwhile, Kaifi Khoshnaw, the spokesperson for the Erbil Currency Exchange Market, predicts that the value of the dinar will rise even further.

Khoshnaw said it is expected that with Ali Faleh Zaidi's visit to the United States in the middle of this month, the value of $100 will drop to the level of 151,000 to 152,000 dinars.

Several key factors are expected to drive the long-term appreciation of the Iraqi dinar, according to the currency exchange market spokesperson.

Chief among these structural drivers are the ongoing implementation of the ASYCUDA customs system and sustained political stability across Iraq, both of which are projected to solidify the national currency's position against the U.S. dollar.

Kurdistan Regional Government and Iraqi federal officials convened in Baghdad recently to resolve technical hurdles surrounding the ASYCUDA. However, high-level talks between both governments remain in progress pending final ratification by the Federal Cabinet.