Iraq Economic News and Points To Ponder Tuesday Morning 10-6-26
Delete Zeros From The Iraqi Dinar... Change Of Currency Or Redrawing Of The Money Map?
The controversy over removing zeros from the Iraqi dinar is not limited to changing the shape of the currency or simplifying financial transactions, but extends to one of the most sensitive issues in the Iraqi economy, namely the size of the cash mass circulating outside banks and the money that citizens keep in their homes away from the banking system.
Observers believe that the proposal is returning to the forefront as a step that may go beyond the limits of monetary reform, and is linked to the extent of the ability of financial and banking policy to restore citizens' confidence and enhance economic stability.
Iraqi Minister of Communications Mustafa Sanad returned the issue of changing the currency and deleting zeros to the forefront of discussion, after he announced, a few weeks ago, a government decision in this regard, attributing the move to addressing the issue of money looted from state institutions, the value of which was estimated at about 8 trillion dinars, by making it out of circulation and unusable after the issuance of the new currency.
Deleting Zeros From The Iraqi Dinar Is Not A New Decision
Economic expert Youssef Al-Azzawi confirmed in an interview with Sputnik that "the proposal to remove zeros from the Iraqi currency is not new, as it was proposed more than once during previous government and parliamentary sessions, but it did not go ahead with its implementation, due to the economic repercussions resulting from it."
Al-Azzawi added: "The decision to delete the zeros depends primarily on the policies and decisions of the Central Bank of Iraq, as it is the body with the authority to make such a decision, or adopt alternative procedures to address files related to the monetary currency."
He continued: "The issue is not as easy as some people imagine, as it has a number of economic repercussions, and deleting zeros may be a measure to restructure the banking sector, or a regulatory step to manage and map the flow of cash in the markets".
Al-Azzawi pointed out that "making such a decision cannot be done overnight, but rather requires economic studies and integrated procedures set by the Central Bank," noting that "deleting zeros may be among the last options that can be resorted to."
The proposal to remove zeros is not new in Iraq. The Central Bank began researching and studying the possibility of its implementation in 2007, and it has been on the table for years. Meanwhile, the former governor of the Central Bank, Ali Al-Alaq, confirmed in 2024 that the project is still ongoing, without announcing a timetable for its implementation.
Warnings of the repercussions of deleting zeros from the dinar
On the other hand, economic journalist Wissam Al-Mulla warned of the potential repercussions of the decision to delete zeros from the Iraqi dinar, considering that "addressing imbalances in the market and the banking sector requires other measures before resorting to changing the currency".
Al-Mulla added in an interview with Sputnik: "Citizens keeping their money at home is not only linked to the availability of cash, but is also due to their weak confidence in the banking sector and their lack of conviction in dealing with Iraqi banks."
He pointed out that "the government and the Central Bank's resort to deleting zeros under these circumstances may constitute a new blow to the Iraqi economy", warning that "the measure will not address the basic problems associated with confidence in the banking sector"
Al-Mulla pointed out that "there are a set of measures that the government can take to address market imbalances and the mass of money in circulation," considering that "addressing these problems away from the option of deleting zeros may be more appropriate for the current economic conditions."
Currency Spokesperson Denies Dinar Devaluation Rumors Amid Market Panic
At a glance
Market Spokesperson Jabar Goran clarified that changing the exchange rate is an exclusive constitutional power of the Central Bank of Iraq, not the Ministry of Finance.
Contacts within the Parliamentary Finance Committee confirmed that the proposal is entirely speculative and has not been drafted into any formal bill.
Goran labeled a devaluation as "suicidal," warning it would devastate living standards.
Unverified reports originating from an Iraqi MP claiming a proposed devaluation from 132,000 to 150,000 IQD per $100 triggered a massive parallel market panic.
The Slemani Currency Exchange Market spokesperson warned that recent unverified rumors of an official dinar devaluation to 150,000 IQD per $100 are triggering severe parallel market panic and volatility, labeling any such policy move as a "suicidal decision" for the economy.
Key Statements and Focus Area
Currency Market spokesperson Jabar Goran stated that the instability in local exchange markets “was triggered by statements from an Iraqi Member of Parliament claiming that the Minister of Finance discussed adjusting the exchange rate—devaluing it from 132,000 dinars to 150,000 dinars [per $100].”
“This inherently created a highly negative reflection on the market and caused a massive panic. However, this proposal has neither become a draft bill nor has it been presented to the members of the Parliamentary Finance Committee,” Goran affirmed.
A currency trader told Channel8 that “any rumor circulated in the market—whether accurate or inaccurate, and whether it drives up demand or supply—directly impacts individuals and traders alike.”
Briefing reporters in Slemani on Monday, including Channel8, spokesperson Goran stated that according to the constitution and the regulations of the Central Bank of Iraq, "these powers reside exclusively with the Central Bank."
He noted that decisions of this nature require comprehensive analysis by Central Bank experts, adding, "a decision like this is never made haphazardly."
"This would be a suicidal decision,” he stressed, adding that it would create a severe negative impact on the market and drastically lower the citizens' standard of living.
"In my personal opinion, this decision will not be implemented,” he reaffirmed.
The spokesperson highlighted that "at a time when customs tariffs have already been increased on the public due to the ASYCUDA system, coming along and devaluing the currency on top of that would ultimately have a devastating impact on people's lives."
Goran confirmed that according to sources within the Parliamentary Finance Committee and the Central Bank, the exchange rate adjustment remains entirely speculative and has not been drafted into a formal legislative proposal.
Answering questions regarding the motives behind the circulated reports, he said that "the intention of the parliamentarians who circulated this news is either to gauge the public's reaction first or, in one way or another, to manipulate the market."
He called on media outlets not to broadcast this news until the source has been officially verified.
Meanwhile, a currency trader noted that the market witnessed intense volatility as the dollar rate surged past 160,000 IQD before retracing to 159,000 IQD, warning that the instability will persist until the Central Bank officially refutes the devaluation rumors.
He further said that the ASYCUDA system fails to adequately facilitate trade by significantly delaying dollar allocations for merchants importing essential goods, forcing them to purchase dollars directly from the parallel market and thereby driving up demand.
FYI
The instability in the parallel market across the Kurdistan Region comes as Iraqi Parliamentary Finance Committee member Dilan Ghafoor revealed that the draft 2027 budget proposes setting the exchange rate at 150,000 IQD per $100.
Lawmaker Ghafoor explained that this fiscal measure, developed by the Ministry of Finance, aims to completely eliminate the gap between official and parallel trading figures by aligning both rates at the 150,000 dinar threshold.
She added that while a principal agreement has been included in the initial budget draft to inject an additional 20 trillion dinars into state revenues, the adjustment is not yet final as it still requires formal approval and votes from both the Council of Ministers and Parliament.
The Central Bank of Iraq (CBI) has not issued any official statement regarding the matter so far.
However, the apex bank has previously and repeatedly reaffirmed its steadfast commitment to maintaining the official exchange rate at 1,320 IQD per dollar without any alterations. https://channel8.com/english/news/67202