Iraq Economic News and Points To Ponder Wednesday Evening 10-7-26

EconomicsNews

Oct 7

Iraq’s Dollar Rate Increase Draws Lawmaker Backlash

2026-10-07 Shafaq News- Baghdad Iraq’s Finance Ministry said on Wednesday that it had adopted a base exchange rate of 1,500 Iraqi dinars per US dollar and suspended advance customs payments, prompting lawmakers to seek an emergency parliamentary session to reverse the currency decision.

Approved under Cabinet Resolution No. 544 on Oct. 6, 2026, the measures revised the official exchange rate and suspended Resolution No. 413 governing advance customs collection.

Following an emergency recommendation from the finance minister and Central Bank of Iraq governor, the Cabinet established three rates: 1,500 dinars per dollar for purchases from the Finance Ministry, 1,510 for sales to banks, and 1,520 for sales by banks and non-bank financial institutions to customers.

The adjustment raises the official retail rate from 132,000 to 152,000 dinars per $100, making each $100 purchase 20,000 dinars more expensive.

Concerned about rising consumer prices, lawmakers called for an emergency parliamentary session to reconsider the move. In a statement, MP Ibtisam Al-Hilali of the State of Law Coalition argued that, if the government sought to address the financial crisis through the exchange rate, it should be set at 1,400 dinars per dollar or lower to limit the impact on food prices. Parliament, she added, would have a say in any exchange-rate change through the budget law, in consultation with the government, to help control the parallel-market rate.

The revised rate brings the official price closer to that of the parallel market, where Baghdad exchange shops were selling $100 for 168,500 dinars on Wednesday.

Economist Ali Daadoush previously attributed the disparity largely to limited access to dollars through official banking channels rather than insufficient reserves, saying restrictions on overseas transfers, informal trade, speculation and market expectations were widening the gap and raising import costs.

Customs procedures have also added pressure. The suspended mechanism, approved in August and scheduled to take effect on Oct. 1, required importers to pay estimated duties and tax deposits before banks could transfer funds abroad to cover imported goods.

Under the system, authorities calculated payments through ASYCUDA using invoices, product classifications, and declared values. Baghdad Chamber of Commerce spokesperson Rashid al-Saadi previously told Shafaq News that customs duties could reach 30%, 35% or, in some cases, 40%, in addition to a 3% tax deposit, significantly increasing upfront expenses.

https://shafaq.com/en/Economy/Iraq-s-dollar-rate-increase-draws-lawmaker-backlash

Economist: Iraq May Need IMF After Dinar Devaluation

2026-10-07 Shafaq News- Baghdad Iraq may need a program with the International Monetary Fund if oil revenues continue to decline and the dinar devaluation that took effect on Wednesday fails to provide enough support to public finances, Standard Chartered economist Carla Slim told Asharq Bloomberg.

Slim said any potential IMF program could involve structural reforms, particularly to Iraq’s public-sector wage bill, if oil production fails to recover, while production is currently running at about 70% of its January level.

The dinar devaluation gives the government more local currency for every dollar earned from oil exports, helping it finance salaries, Slim said, but the effectiveness of the measure would depend on how long the fiscal pressure lasts and how quickly oil production and exports recover.

Earlier today, the Central Bank of Iraq (CBI) put into effect a new exchange-rate structure, buying dollars from the Finance Ministry at 1,500 dinars per dollar, selling them to banks at 1,510, and setting the cash selling rate to the public at 1,520, compared with the previous public rate of 1,320.

The adjustment would support domestic production and industry, encourage investment in non-oil sectors, and create jobs, the CBI said. Foreign reserves are “sufficient” to meet foreign-currency demand for trade financing, overseas bank-card transactions, and cash sales to travelers.

The devaluation followed mounting pressure on Iraq’s public finances after the US-Israeli war on Iran disrupted oil exports. Reuters reported that exports fell to about 2.34 million barrels per day (bpd) in August from more than 3.6 million previously, while Iraq’s proposed 2027 budget assumes exports of around 4 million bpd.

The official-rate change did not immediately close the gap with the parallel market. A Shafaq News survey put the dollar at 168,500 dinars per $100 in Baghdad’s Al-Kifah and Al-Harithiya central exchanges, compared with the new official public rate of 152,000 dinars per $100.

Another adjustment to the dinar’s exchange rate could also remain an option over the next six to 12 months, depending on oil revenues and foreign reserves, according to Slim. Over the longer term, she said reducing the budget’s dependence on oil from about 90% to 45% would require higher non-oil government revenues through stronger tax collection and the digitization of government services.

In June, Government spokesperson Haider Al-Aboudi said Al-Zaidi was heading a specialized committee seeking to reach the same 45% target within 10 years by increasing non-oil revenues, including receipts from border crossings, customs, and government collections.

https://shafaq.com/en/Economy/Economist-Iraq-may-need-IMF-after-dinar-devaluation

CBI Pledges Unrestricted Dollar Supply After Devaluation

2026-10-07 Shafaq News- Baghdad The Central Bank of Iraq (CBI) said on Wednesday its foreign reserves “are strong enough to meet all requests for dollars in full and without restrictions,” as its new exchange rate, weakening the dinar, took effect.

The reserves guarantee immediate coverage of all external transfer requests to finance trade, bank card settlements and cash sales to travelers, the bank said in a statement.

Under the new rate, the central bank buys dollars from the Finance Ministry at 1,500 dinars, sells them to banks at 1,510 dinars and sells cash dollars to the public at 1,520 dinars. The previous end-user rate was 1,320 dinars per dollar.

The bank described the change as a "positive adjustment" that would support Iraqi products and local industry by making domestic goods more competitive against imports. It said the move would encourage factories and national companies to expand, attract investment to non-oil sectors and create jobs, particularly for young Iraqis, by helping small and medium-sized businesses grow.

The adjustment was made in coordination with the Council of Ministers under the amended Central Bank Law No. 56 of 2004, according to the statement.

The Iraqi Contractors Union asked Prime Minister Ali Al-Zaidi on Wednesday to postpone applying the new rate, warning it would raise project costs. Lawmakers have also called for an emergency parliamentary session to reconsider the decision over concerns about consumer prices.

The new rate brings the official price closer to the parallel market, where Baghdad exchange shops were selling $100 for 168,500 dinars on Wednesday.

https://shafaq.com/en/Economy/CBI-pledges-unrestricted-dollar-supply-after-devaluation

Trade Bank Of Iraq Injects Dollars To Support Dinar

2026-10-07 Shafaq News- Baghdad The state-owned Trade Bank of Iraq (TBI) began on Wednesday supplying foreign currency to the market through official banking channels to support the Iraqi dinar and ease dollar shortages.

The bank said it is injecting cash in foreign currency to meet the needs of trade and other economic activities, while monitoring the market to assess demand. The aim is to limit exchange-rate swings and strengthen the banking sector's role in stabilizing the local market, it said.

Iraq's new official exchange rate took effect today, with the Central Bank now buying dollars from the Finance Ministry at 1,500 dinars, selling them to banks at 1,510 and selling cash dollars to the public at 1,520, up from 1,320 previously. On the parallel market, the dollar rose to about 1,680 dinars after the devaluation was announced.

https://shafaq.com/en/Economy/Trade-Bank-of-Iraq-injects-dollars-to-support-dinar-3

Cbi Official Clarifies Limits On Currency Trader Arrests

2026-10-07 Shafaq News- Baghdad The Central Bank of Iraq (CBI) has exclusive authority to regulate and oversee banking and non-banking financial institutions, a senior official told Shafaq News on Wednesday, clarifying that security forces cannot pursue or detain foreign currency traders without judicial authorization.

Security agencies may enforce laws and court rulings in coordination with relevant authorities when violations are formally reported, the official said, but cannot independently act against individuals dealing in foreign currencies without explicit judicial orders.

Earlier on Wednesday, the CBI introduced a new exchange-rate structure, setting the dollar at 1,500 dinars for purchases from the Finance Ministry, 1,510 for sales to banks, and 1,520 for sales to the public, up from the previous retail rate of 1,320. The parallel-market rate reached 1,680 dinars per dollar following the adjustment.

The bank had characterized the decision as a “strategic step” toward financial stability, assuring citizens and businesses that its foreign reserves remained strong and sufficient.

https://shafaq.com/en/Economy/CBI-official-clarifies-limits-on-currency-trader-arrests

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Iraq Economic News and Points To Ponder Wednesday Evening 10-7-26

FRANK26…10-7-26….STRATEGIC STEP

What Makes The Federal Reserve Decide To Raise Or Lower Interest Rates?