DINAR REVALUATION REPORT: Winners and Losers from the Fluctuation of the Dollar Exchange Rate against the Dinar in Iraq, 2024, 13 SEPT

 Winners and Losers from the Fluctuation of the Dollar Exchange Rate against the Dinar in Iraq, 2024

The fluctuation of the dollar exchange rate against the Iraqi dinar has significant impacts on various sectors and individuals in Iraq. 1 As of September 13, 2024, the official exchange rate stands at 1,310.400767 IQD per USD. 1 a figure that has seen considerable volatility over the past year.

Impact on Importers and Exporters

Winners: Importers

Lower Import Costs: The revaluation of the dinar in February 2023, from 1,450 to 1,310 per dollar, has made imports cheaper for Iraqi importers. 4 Increased Competitiveness: The reduced cost of imports has allowed Iraqi businesses to increase their competitiveness in the domestic market by offering goods at lower prices. 4

Losers: Exporters

Decreased Revenue: Exporters of non-oil goods have been negatively impacted by the revaluation, as their products have become more expensive abroad.  4 Reduced Competitiveness: The stronger dinar has made Iraqi exports less competitive in international markets, potentially leading to a decrease in export volume. 4

Impact on Consumers

Winners: Consumers

Lower Prices for Imported Goods: With the dinar's revaluation, the prices of imported goods have decreased, benefiting consumers who rely on imported products. 4

Losers: Consumers

Increased Inflation: The disparity between the official and black market exchange rates has led to higher prices for some goods, causing inflationary pressures on consumers. 2 Uncertainty in Pricing: The volatility of the exchange rate has led to uncertainty in pricing, making it difficult for consumers to budget and plan for future expenses. 2

Impact on the Economy

Winners: Government

Increased Fiscal Capacity: The revaluation in 2023 was beneficial for the government as it helped in obtaining more dinars for each dollar of oil revenue. 4

Losers: Economy

Corruption and Black Market: The existence of dual exchange rates has encouraged corruption and facilitated the growth of the black market, as individuals and entities can profit from the difference between the official and market rates. 4Economic Disruption: The dual exchange rates have disrupted existing contracts and discouraged trade and investment, slowing economic growth. 4

Conclusion

The fluctuation of the dollar exchange rate against the Iraqi dinar presents a complex scenario with winners and losers across different segments of Iraq's economy. While importers and the government benefit from a stronger dinar, exporters and consumers face challenges due to increased competition and inflationary pressures. The long-term effects on the economy are mixed, with potential for economic disruption and increased corruption if the disparity between official and market exchange rates persists.