The Iraqi currency market witnessed a significant development today, with the US dollar exchange rate experiencing a sharp increase in the parallel (black) market, reaching new record highs and exacerbating the economic pressures on the Iraqi people. The exchange rate surpassed 151,000 dinars per 100 dollars , while the official rate set by the Central Bank of Iraq remains at 132,000 dinars per 100 dollars, creating a large price gap that is disrupting daily commercial transactions.
Official pricing details and central bank mechanisms
Amid these fluctuations, the Central Bank of Iraq issued clarifications aimed at reassuring the markets, confirming that the official exchange rate to be adopted in the 2026 budget will remain fixed at 1,300 dinars per dollar , a rate that was officially approved and adopted in February 2023 by a decision of the Council of Ministers.
Informed financial sources revealed the mechanism currently in place, whereby the Central Bank buys dollars from the Ministry of Finance (oil revenues) at a price of 1300 dinars, then sells them to approved banks at a price of 1310 dinars, and these banks, in turn, sell them to the end beneficiaries, including traders, travelers, and for foreign transfer purposes, at a price of 1320 dinars per dollar.
Economic context and causes of the gap
To understand this surge, one must consider Iraq's economic context. Since the beginning of 2023, the Iraqi government and the Central Bank have adopted a policy of revaluing the dinar to increase its purchasing power and curb inflation. However, the parallel market has remained active. Experts attribute the persistence of this gap to the stringent measures imposed by the electronic financial transfer platform, which is subject to close monitoring to ensure compliance with international standards and prevent currency smuggling. This forces some traders unable to access the platform to resort to the parallel market to obtain dollars, thus driving up its price.
This coincided with rising metal prices and government measures
The rise of the dollar was not the only economic event, but it coincided with a remarkable rise in the prices of precious metals globally and locally, as gold and silver recorded unprecedented record highs, reflecting a state of economic uncertainty that is driving investors and citizens towards safe havens.
For its part, the government has not remained idle. Currency exchange dealers reported that authorities are taking a series of proactive steps to ensure market stability and prevent sharp fluctuations. In this context, Prime Minister Mohammed Shia al-Sudani a series of intensive meetings this month with his senior financial advisors. These meetings focused on addressing the financial situation, discussing frameworks for reducing unnecessary government spending, and maximizing non-oil state revenues in accordance with applicable laws, to ensure financial sustainability amidst market volatility.
In the context of future planning, the Central Bank addressed the Ministry of Finance regarding the preparation of the draft federal general budget law for the year 2026, fixing the official exchange rate at 1300 dinars, in a clear message to the markets that the official monetary policy is continuing in its current approach to support the Iraqi dinar despite the challenges of the parallel market.
