Iraq Economic News and Points To Ponder Friday Morning 1-30-26

Monetary And Financial Measures To Control The Market And Protect The Iraqi Dinar

Baghdad: Shukran Al-Fatlawi    Saja Al-Gharawi

As part of the government’s efforts to regulate the market and enhance monetary stability, the relevant financial institutions continue to implement a package of integrated policies aimed at protecting the exchange rate of the Iraqi dinar and reducing the impact of emerging changes on the national economy, especially with regard to the price gap between the official and unofficial markets for foreign currencies.

For the past two days, Iraqi markets have witnessed fluctuations in the exchange rate of the US dollar, which has exceeded 150,000 dinars.

Jassim Al-Aradi, a member of the Baghdad Economic Forum, said that the recent increases in exchange rates within the local markets came as a result of the overlap of a group of factors, most notably the application of the “Askoda” system, which prompted some traders to look for quick alternatives to secure the requirements of their foreign trade. 

Procedural Paths

He added to “Al-Sabah” that some traders turned to the parallel market to obtain dollars, due to the delays or procedural paths that accompanied the first stages of implementing the system, which led to an increase in the unregulated demand for foreign currency, and directly affected the movement of the market and price levels.

Real Demand

Al-Aradi stated that the Central Bank of Iraq continues to play its role in meeting the real demand for dollars for foreign trade purposes, through official channels, and in accordance with compliance controls and international standards.

 He pointed out that addressing these increases requires giving the market a period of time. 

Sufficient to adapt to the new mechanisms, along with simplifying procedures and intensifying coordination between the concerned parties, which contributes to reducing recourse to the parallel market, restoring balance to the exchange market, and maintaining the stability of the dinar and the confidence of dealers in the adopted monetary policies. 

The Prime Minister’s financial advisor, Dr. Mazhar Muhammad Saleh, told Al-Sabah: “Reducing the gap between the official exchange rate in the organized market and its counterpart in the unorganized market is not a single monetary decision, but rather a conscious coordination between fiscal and monetary policy, supported by financial reforms that contribute to strengthening confidence and reducing risks.”

Economic Behavior

Saleh pointed out that this coordination aims to redirect economic behavior from hedging and speculation to stability, through the continuation of financial and trade policies and in full cooperation with the Central Bank of Iraq, in a way that enhances monetary stability and preserves the purchasing power of the citizen.

He stressed that controlling public spending and directing it towards development priorities, along with regulating the demand for foreign currency through official banking channels, represent two fundamental pillars in reducing the artificial pressures on the parallel market and narrowing the gap between the official and parallel prices, in line with the objectives of monetary stability stipulated in the Central Bank of Iraq Law No. (56) of 2004.

Boosting Confidence In The Dinar

Saleh explained that the monetary authorities' continued adoption of a policy to defend the exchange rate, supported by strong foreign reserves, in conjunction with liquidity management and bolstering confidence in the national currency, has contributed to maintaining stable prices for basic commodities and citizens' living standards within safe inflation ranges.

He pointed out that these measures are part of a broader reform path aimed at enhancing the transparency of public finances, improving compliance with the global financial system, and supporting the resilience of the banking sector, thereby consolidating economic stability and strengthening the confidence of citizens and stakeholders in the national economy.

Market Regulation

For his part, economist Ziad al-Hashemi told Al-Sabah that regulatory and control measures in local markets directly contribute to reducing speculation, which in turn reduces artificial demand for dollars in the parallel market, even if it doesn't eliminate it entirely. Al-Hashemi explained that factors contributing to high exchange rates remain, especially with the implementation of new systems such as the unified customs system (ASYCUDA), which was accompanied by uncontrolled demand for dollars, leading to additional pressure on the exchange rate in the recent period.

Cash Reserve

For his part, Dr. Sadiq Al-Rikabi, Director of Economic Research at the Global Center for Development Studies in the United Kingdom, pointed out that the Central Bank of Iraq's reserves represent the first line of defense for the dinar. He explained that the reserves' ability to meet the demand for dollars during any significant increases contributes to strengthening public and commercial confidence in the national currency.

Al-Rikabi also addressed the issue of inflation, clarifying that the rise in prices is not related to monetary inflation, but rather to structural inflation stemming from Iraq's heavy reliance on imports to meet its needs. This creates a continuous demand for dollars and affects the exchange rate.   https://alsabaah.iq/127173-.html

Economists: Lower Inflation Rates Reflect A State Of Stability

 Baghdad: Al-Sabah   Economists described the decline in inflation rates as a positive sign reflecting a state of relative stability in local markets. These indicators come at a time when many countries are facing inflationary pressures resulting from geopolitical tensions and rising energy and transportation costs, giving the Iraqi experience special importance in understanding the current economic landscape.

Economic expert Dr. Salwan al-Hashemi stated that the current decline in inflation rates in Iraq indicates a period of relative economic stability, particularly given the challenging economic conditions facing the region and the world. He noted that geopolitical fluctuations and rising global transportation and energy costs often impact local markets, but recent indicators suggest the Iraqi market's ability to absorb some of these pressures.

Trade Finance

Al-Nouri added that this decrease is largely due to the stability of foreign trade financing at the official exchange rate, which contributed to reducing the waves of unjustified increases in commodity prices, especially imported ones, indicating that monetary and regulatory measures helped to control market activity and limit speculation that was a direct burden on the purchasing power of the citizen.

Local Products

For his part, economist Ahmed Mukallaf confirmed that the abundance of supply in local markets, whether of imported goods or local products, contributed to creating a state of balance between supply and demand, and indicated that this balance helped to curb inflation, despite the continued challenges related to operational costs, fees and taxes imposed on commercial activity. 

Makhlef pointed out that maintaining low inflation rates requires continued monetary stability and boosting domestic production, along with diversifying income sources and reducing reliance on imports, and that these steps represent the real guarantee for the sustainability of price stability.

Food Department

At a time when the Ministry of Planning announced a decrease in the annual inflation rate by (1.2 percent) during December of 2025, compared to the same period of 2024. The Ministry explained that the food sector recorded a decrease in its prices by (0.7 percent) during the same month, in a positive indicator related to basic commodities.

Inflation Rate

Ministry spokesperson Abdul Zahra al-Hindawi told the Iraqi News Agency (INA) that the inflation rate in December 2025 remained stable, showing no increase or decrease compared to the preceding month of November. He added that the core inflation rate decreased by 0.4 percent, noting that seven sectors experienced slight price increases, while three sectors saw price decreases, and two sectors maintained the same price levels as the previous month. https://alsabaah.iq/126932-.html

Expert: Salary Payments Delayed Due To Cash Liquidity Crisis... And This Is The Reason For The Dollar's Rise

Time: 2026/01/29  Readings: 375 times  {Economic: Al-Furat News} Economic expert, Jalil Al-Lami, confirmed that the delay in paying employee salaries is due to a cash liquidity crisis, while he attributed the reason for the rise in the dollar exchange rate to the law of supply and demand and the increase in speculation in the parallel market.

Al-Lami told Al-Furat News Agency that "the delay in employee salaries is technical due to poor management of transfers between the Ministry of Finance and the banks, in addition to problems with the electronic file and the existence of a liquidity crisis for the Iraqi dinar, which greatly affected the disbursement of salaries, and I believe that the crisis has been overcome after the Ministry of Finance's statement."

He added that "the dollar is subject to the law of supply and demand, and the rise in its prices is due to speculators and demand from small traders in the parallel market to cover their needs. Information also indicates a decline in the value of the dollar globally, which is met with a rise in the prices of goods and services, which has increased the demand for the currency in Iraq."

Al-Lami stressed "the need for the government to work through market and bank monitoring committees to ensure the stability of exchange rates, and for there to be transparency in dealings between the Iraqi bank and importing merchants, especially with the approach of the month of Ramadan."

He explained that "there is a direct relationship between gold and oil on one hand and the dollar on the other, as demand for oil from China has increased from two million barrels per day to three million barrels per day, at a time when OPEC has decided to reduce production by about one million two hundred thousand barrels per day. In addition, most global oil traders are working to raise prices to control the volatility in the markets."

Al-Lami concluded by saying, "The rise in oil prices is yielding positive results for the Iraqi economy and contributing to covering employee salaries."

Global oil prices recorded a significant jump in trading on Thursday, achieving gains of more than 4.3%, pushing Brent crude above the $70 per barrel mark, recording $70.33.   Wafaa Al-Fatlaw     LINK