The Central Bank of Iraq on Wednesday raised the official exchange rate for the dollar from 1320 to 1520 dinars per dollar, the first adjustment to the rate in more than 3 years. The decision will take effect from the start of business on 7 October 2026.
Implementation of the new rate
In a statement dated 6 October, the central bank said the adoption of the new rate followed a government decision and set the dollar selling rate for the public at 1520 dinars per dollar.
The bank instructed commercial banks, electronic-payment companies and exchange companies to stop using the previous rate and adopt the new rate from the start of business on 7 October 2026.
Gap with the parallel market
The dollar rate in the parallel market reached around 1600 dinars at times in recent weeks, as the gap widened between the official rate and the rate traded in the unofficial market.
Iraq relies heavily on oil revenues, which account for around 90% of its revenues, to finance imports, support the dinar's stability and pay the salaries of public-sector employees and pensioners.
Decline in exports and reserves
Oil exports fell sharply for several months after the outbreak of the Israeli-American war on Iran in February and the closure of the Strait of Hormuz, alongside rising consumer-goods prices.
Iraq's foreign-currency reserves fell by around 20 billion dollars, while the authorities resorted to domestic borrowing as a result of declining oil revenues.
Dollar supply constraints
Iraq officially ended its dollar-auction system at the beginning of 2025 under US pressure to curb the transfer of dollars to sanctioned entities, particularly Iran. Restrictions on dollar supply contributed to the emergence of a parallel market and widened the gap between it and the official rate.
